Quitman Bancorp, Inc.

                               Annual Report
                             For the Year Ended
                             September 30, 2000



<PAGE>
                           Quitman Bancorp, Inc.
                               Annual Report

                             TABLE OF CONTENTS



Letter to Stockholders                                                  1


Company Information                                                     2


Common Stock Information                                                3


Management's Discussion and Analysis of Financial Condition
and Results of Operations                                               4


Independent Auditors' Report                                           13


Consolidated Financial Statements                                      14


Notes to Consolidated Financial Statements                             19


Office Locations and Other Corporate Information                       40


<PAGE> 1

December 11, 2000

Dear Fellow Stockholders:

This is the third annual stockholders' report for Quitman Bancorp, Inc. the
holding  company for Quitman Federal Savings Bank.  The bank completed  its
conversion  from a federally chartered mutual savings bank to  a  federally
chartered stock savings bank in April 1998.  The conversion generated  $6.2
million  of  new capital, although the bank's current financial safety  and
soundness  is  the  result of many years of conservative  management.   Our
successful management of capital remains a key challenge.

As  we  wrote last year, we believe the company is well positioned to  meet
tomorrow's challenges and demands as a community savings bank, and we  look
forward to the future with enthusiasm and optimism.  Here are some  of  the
reasons why.

We  operate from our new office that opened in April 1999.  This new office
is  substantially larger than our old office and allows us to focus on  our
customers  instead  of  trying to find space for  our  employees  to  work.
Through  time,  our goal is to more than offset the dramatically  increased
expenses  of our new office with additional income.  We correctly  presumed
that  we would not accomplish this goal before the end of our fiscal  year.
However, while our net income in the aggregate and on a per share basis  is
less  than last year, our income from operations is greater than last year,
due  to  the non-recurring gain on the sale of our old office building  and
equipment reported in last year.

We  still have a loyal customer base, a dedicated board of directors and an
excellent staff who recognize the importance of quality service.   We  will
continue  to focus on what we do best.  These have been the key ingredients
to our profitability and growth for more than 60 years and will continue to
share our future.

The  market for savings bank stocks has not significantly improved from the
decline  that  occurred in 1998.  This market has definitely  affected  the
price  of  your  company  stock.  While we, as fellow  stockholders,  can't
control  the  market, we can continue to run the bank and  trust  that  our
stock  price will eventually increase because of the actions we are  taking
now.   However,  we are not sitting still.  During the fiscal  years  ended
September 30, 2000 and 1999, we repurchased common stock at a total cost of
$1.7 million.  We hope that the future proves this to be an investment from
which we all benefit.

Your  board  of  directors and management are committed to  protecting  and
enhancing  the value of your investment in the company.  To do so,  we  are
challenged  to  continue delivering high quality services to our  customers
and  community.  We appreciate the confidence, support, and loyalty of  our
customers,  employees,  and  stockholders.   If  you  know  people  who  or
businesses that want a better banking relationship, then send them  to  us.
You and they will be glad you did.

Sincerely,


/s/ MELVIN E. PLAIR                               /s/ CLAUDE R. BUTLER
-------------------------                         --------------------------
Melvin E. Plair                                   Claude R. Butler
President and CEO                                 Chairman of the Board


<PAGE> 2
                           QUITMAN BANCORP, INC.

Company Information
-------------------
Quitman  Bancorp,  Inc. (the "Company") is a Georgia-chartered  corporation
organized at the direction of Quitman Federal Savings Bank (the "Bank")  in
connection  with  the  Bank's conversion from a mutual  to  stock  form  of
organization (the "Conversion").  On April 2, 1998, the Bank completed  the
Conversion  and  became  a wholly owned subsidiary  of  the  Company.   The
Company is a unitary savings and loan holding company which, under existing
laws,  generally is not restricted in the types of business  activities  in
which  it  may engage provided the Bank retains a specified amount  of  its
assets in housing-related investments.

Because  the  Company owns the Bank and most of the income  and  operations
that are being reported are those of the Bank, in this report references to
"we," "us," and "our" refer to the Company and the Bank.

The  Bank  is  a  federally  chartered stock savings  bank  that  commenced
business  in  1936.  The Bank is examined and regulated by  the  Office  of
Thrift  Supervision ("OTS") and its deposits are federally insured  by  the
Savings   Association  Insurance  Fund  ("SAIF")  of  the  Federal  Deposit
Insurance  Corporation ("FDIC").  The Bank is a member of and owns  capital
stock  in the Federal Home Loan Bank ("FHLB") of Atlanta, which is  one  of
the 12 regional banks in the FHLB System.

We  are located in Quitman, which is in the center of the southern part  of
Georgia, approximately 15 miles west of Valdosta and Interstate 75  and  10
miles  north of the Florida border.  Our market area is Brooks  county  (in
which Quitman is located) as well as parts of Lowndes county, both of which
are  in Georgia.  Our market area is based primarily on agricultural  goods
such as cotton, peanuts, corn, tobacco and dairy products.

We  attract  deposits  from  the  general public  and  use  these  deposits
primarily  to originate residential loans. Our principal sources  of  funds
for  lending activities are deposits, Federal Home Loan Bank borrowings and
the   amortization,  repayment,  and  maturity  of  loans  and   investment
securities.   We  do not rely on brokered deposits.  Principal  sources  of
income  are  interest  on loans and investment securities.   Our  principal
expense is interest paid on deposits.


<PAGE> 3

Common Stock Information
------------------------
Since  its  issuance in April 1998, our common stock ("Common  Stock")  has
been  traded  in  the  over-the-counter market  with  quotations  available
through the OTC Bulletin Board (symbol: QTMB). The following table reflects
high  and  low  bid quotations as published by Charles Schwab  &  Co.   The
quotations  reflect inter-dealer prices, without retail mark-up, mark-down,
or commission, and may not represent actual transactions.

<TABLE>
<CAPTION>
        Date                                         High     Low
        ------------------------------------        ------   ------
        <S>                                         <C>      <C>
        October 1, 1998 to December 31, 1998        11.125    9.250
        January 1, 1999 to March 31, 1999           11.750   10.000
        April 1, 1999 to June 30, 1999              11.500   10.000
        July 1, 1999 to September 30, 1999          11.500   10.625
        October 1, 1999 to December 31, 1999        10.625    9.250
        January 1, 2000 to March 31, 2000           10.110    9.500
        April 1, 2000 to June 30, 2000              10.500    8.000
        July 1, 2000 to September 30, 2000          9.0625    8.750
</TABLE>

The  number of shareholders of record of Common Stock as of  September  30,
2000,  was  approximately 196.  At September 30, 2000, there  were  507,262
shares   issued  and  outstanding.   Our  ability  to  pay   dividends   to
stockholders is primarily dependent upon the dividends we receive from  the
Bank.   The Bank may not declare or pay a cash dividend on any of its stock
if  that  dividend would cause the Bank's regulatory capital to be  reduced
below  (1)  the amount required for the liquidation account established  in
connection  with the Conversion, or (2) the regulatory capital requirements
imposed by the OTS.  We paid dividends on the Common Stock in the amount of
$101,452 on May 31, 2000.  These dividends were declared on April  4,  2000
in the amount of $0.20 per share.  We paid dividends on the Common Stock in
the  amount of $112,413 on May 24, 1999.  These dividends were declared  on
April 20, 1999 in the amount of $0.20 per share.


<PAGE> 4
                   MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General
-------
      We  may  from  time  to  time make written or  oral  "forward-looking
statements",  including  statements  contained  in  our  filings  with  the
Securities and Exchange Commission, in our reports to stockholders  and  in
our  other  communications, which are made in good faith  pursuant  to  the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995.

     These forward-looking statements involve risks and uncertainties, such
as statements of our plans, expectations, and estimates that are subject to
change  based  on several factors (some of which are beyond  our  control).
The  following factors, among others, could cause our financial performance
to  differ materially from the plans, expectations, and estimates expressed
in  our  forward-looking  statements: the strength  of  the  United  States
economy  and  the strength of the local economies in which we operate;  the
effects  of, and changes in, trade, monetary and fiscal policies and  laws,
including  interest rate policies of the Board of Governors of the  Federal
Reserve System, inflation, interest rate, market and monetary fluctuations;
the  timely development of and acceptance of our new products and  services
and  the  perceived  overall  value  of  these  products  and  services  by
customers,  including  the  features and pricing compared  to  competitors'
products  and  services;  the willingness of customers  to  substitute  our
products  and services for those of our competitors; the impact of  changes
in  financial  services'  laws and regulations (including  laws  concerning
taxes,  banking,  and  securities);  technological  changes,  acquisitions;
changes  in consumer spending and saving habits; and our success in dealing
with these factors.

      This list of factors is not exclusive.  We do not undertake to update
any  forward-looking statement, whether written or oral, that may  be  made
from time to time by us or on our behalf.

      Our  results  of operations depend primarily on net interest  income,
which is determined by (i) the difference between rates of interest we earn
on  our  interest-earning assets and the rates we pay  on  interest-bearing
liabilities  (interest  rate  spread), and (ii)  the  relative  amounts  of
interest-earning assets and interest-bearing liabilities.  Our  results  of
operations  are also affected by non-interest income, including, primarily,
income from customer deposit account service charges, gains and losses from
the  sale  of  investments and mortgage-backed securities and  non-interest
expense, including, primarily, compensation and employee benefits,  federal
deposit  insurance  premiums, office occupancy costs, and  data  processing
cost.  Our results of operations also are affected significantly by general
and  economic  and competitive conditions, particularly changes  in  market
interest  rates, government policies and actions of regulatory authorities,
all of which are beyond our control.

Market Risk Analysis
--------------------
      Asset/Liability  Management.   Our  assets  and  liabilities  may  be
analyzed  by  examining the extent to which our assets and liabilities  are
interest  rate sensitive and by monitoring the expected effects of interest
rate  changes on our net portfolio value.  We also use this information  to
analyze  the  risk that changes in market interest rates will have  on  our
operations.  Part of this analysis of market risk is made by estimating how
our  operations  would  be  affected by  instantaneous  changes  in  market
interest rates.  We discuss these estimates under "Net Portfolio Value."

      An  asset  or liability is interest rate sensitive within a  specific
time  period if it will mature or reprice within that time period.  If  our
assets  mature  or  reprice more quickly or to a greater  extent  than  our

<PAGE> 5

liabilities, our net portfolio value and net interest income would tend  to
increase  during  periods  of rising interest  rates  but  decrease  during
periods  of  falling interest rates. Conversely, if our  assets  mature  or
reprice  more  slowly or to a lesser extent than our liabilities,  our  net
portfolio  value  and  net interest income would tend  to  decrease  during
periods  of  rising interest rates but increase during periods  of  falling
interest  rates.  As described in the following paragraph, our  policy  has
been  to  address the interest rate risk inherent in the historical savings
institution  business of originating long-term loans funded  by  short-term
deposits by maintaining liquid assets in excess of regulatory minimums  for
material  and prolonged changes in interest rates.  At September 30,  2000,
our liquid asset ratio was 13.01%.

      We originate fixed rate real estate loans which approximated 92.0% of
our  loan portfolio at September 30, 2000. To manage the interest rate risk
of this type of loan portfolio, generally we limit maturities of fixed rate
loans  to  no more than 5 years and maintain a portfolio of liquid  assets.
Our  liquid  assets  include  cash  and  cash  equivalents  and  investment
securities available-for-sale.  At September 30, 2000, these liquid  assets
totaled  $8.2  million, which was 15.5% of our total liabilities  of  $52.8
million.  We maintain these liquid assets to protect us in the event market
interest rates rise and we experience losses because we are paying more for
our liabilities than we are earning on our assets.  If this happens, we may
need  liquid  assets  to continue paying our liabilities  and  to  continue
operating with required capital levels.  However, maintaining liquid assets
tends  to reduce potential net income because liquid assets usually provide
a  lower yield than less liquid assets.  In the past several years we  have
increased the size of our construction lending portfolio through, in  part,
the use of short-term borrowings from the FHLB.  Construction loans have  a
shorter duration than most of our other loans and this type of lending  and
borrowing  has  somewhat reduced our interest rate risk.  At September  30,
2000, the average weighted *term to maturity of our mortgage loan portfolio
was  slightly  more  than  3 years and the average  weighted  term  of  our
deposits  was  slightly less than 15 months.  In the future, we  may  begin
funding parts of loans originated by other financial institutions as a  way
of increasing our interest rate spread.  However, these loan participations
and  the method we use to fund them may result in additional interest  rate
risk as well as, possibly, credit risk.

      Net  Portfolio Value.  In recent years, we have measured our interest
rate  sensitivity by computing the "gap" between the assets and liabilities
which were expected to mature or reprice within certain time periods, based
on  assumptions regarding loan prepayment and deposit decay rates  formerly
provided  by the OTS.  However, we now receive computations of  amounts  by
which  our net interest income over the next 12 months ("NII") would change
in  the  event of assumed changes in market interest rates.   We  use  this
information  to  analyze the risk we face from changes in  market  interest
rates.  We also analyze market risk in managing our assets and liabilities.
See  "Asset/Liability Management."  These computations indicate to  us  how
the  net  present value of our cash flow from assets, liabilities  and  off
balance sheet items (our net portfolio value or "NPV") would change in  the
event  of  assumed  changes in market interest rates.   These  computations
estimate  the effect on our NII from instantaneous and permanent  increases
and  decreases  in  market  interest rates.   In  our  interest  rate  risk
management  policy we have set maximum decreases in NII  and  NPV  that  we
would  be willing to tolerate under these assumed conditions.  In addition,
we  have  also received computations of how these assumed conditions  would
impact our NPV.

<PAGE> 6
<TABLE>
<CAPTION>
                         Board Limit of a
                       Percentage Change In           Change in NPV
                    --------------------------  --------------------------
   Changes
  in Market
Interest rates(1)       NII           NPV         Dollars      Percentages
-----------------   ------------  ------------  ------------  ------------
 (basis points)                                (in thousands)
<S>                 <C>           <C>           <C>           <C>
      +400             -60%          -65%         -$1,570        -24.33%
      +300             -60%          -60%         -$1,116        -17.30%
      +200             -40%          -40%           -$737        -11.42%
      +100             -20%          -25%           -$382         -5.92%
      -100             -25%          -25%            $503          7.80%
      -200             -40%          -40%          $1,037         16.07%
      -300             -50%          -50%          $1,606         24.89%
      -400             -60%          -60%          $2,266         35.12%

  (1)  100 basis points equals 1%.

    Management now requires a minimum NPV ratio of 6%.
</TABLE>

      Because  most  of  our  loans have a longer term  than  most  of  our
deposits,  the  computation of the impact on our net  income  indicated  we
would  earn  more income if interest rates were to fall and we  would  earn
less income if interest rates were to rise.  If interest rates were to rise
materially,  we could report losses.  Specifically, the computation  of  an
instantaneous  and  permanent 200 basis point decrease in  market  interest
rates  indicated an approximately 29% increase in estimated pre-tax income.
The  computation of an instantaneous and permanent 200 basis point increase
in  market  interest  rates  indicated an  approximately  33%  decrease  in
estimated  pre-tax income.  Both of these computations (1)  were  based  on
financial  information at September 30, 2000, (2) assumed net  income  over
the  12  months following September 30, 1999 and (3) resulted in  financial
results within the guidelines shown in the table above.  These computations
assumed  that certain types of our loans, securities, and deposit  accounts
would have certain interest rates during the 12 month period.  For example,
our  savings and NOW accounts were assumed to yield no more than 3.95%  and
our  consumer  loans and fixed rate mortgage loans were  assumed  to  yield
9.50% and 8.75%, respectively.  The use of different assumptions would also
result in different results.

      While we cannot predict future interest rates or their effects on our
NPV  or  net  interest  income, we do not expect  current  interest  rates,
assuming rates remain stable, to have a material adverse effect on our  NPV
or net interest income. Computations of prospective effects of hypothetical
interest rate changes are based on numerous assumptions, including relative
levels  of  market interest rates resulting in specific interest rates  for
our  various investment securities, loan portfolios and liabilities.  These
assumptions  also include estimates of other components of our  income  and
the   duration  of  certain  of  our  investment  securities  as  well   as
prepayments,  deposit run-offs and growth rates and should  not  be  relied
upon as indicative of actual results. Certain shortcomings are inherent  in
such computations. Although certain

<PAGE> 7

assets  and  liabilities may have similar maturity or periods of  repricing
they  may  react at different times and in different degrees to changes  in
the  market interest rates. The interest rates on certain types  of  assets
and  liabilities  may fluctuate in advance of changes  in  market  interest
rates,  while rates on other types of assets and liabilities may lag behind
changes  in  market  interest rates. In the event of a change  in  interest
rates,  prepayments and early withdrawal levels could deviate significantly
from   those   assumed   in  making  the  calculations   discussed   above.
Additionally,  an increased credit risk may result as the ability  of  many
borrowers  to service their debt may decrease in the event of  an  interest
rate increase.

      The board of directors reviews our asset and liability policies.  The
board of directors meets quarterly to review interest rate risk and trends,
as  well  as  liquidity  and  capital ratios and  requirements.  Management
administers the policies and determinations of the board of directors  with
respect to our asset and liability goals and strategies.

Financial Condition
-------------------
      Total  consolidated assets increased $7.6 million, or 14.4% to  $60.5
million  at September 30, 2000, from $52.8 million at September  30,  1999.
The  increase  in  total assets reflects a $7.9 million increase  in  loans
receivable.   Our increase in loans receivable is mainly due  to  increased
demand for loans in our market area.

     Deposits increased $5.3 million or 12.6% to $47.3 million at September
30,  2000 from $42.0 million at September 30, 1999. The increase in  fiscal
2000  was  a  result of competitive pricing to fund loan demand.   Advances
from  the Federal Home Loan Bank ("FHLB") of Atlanta increased $2.5 million
to  $5.0 million.  Other liabilities decreased by $165,000 primarily due to
the  purchase  of investment securities in September 1999,  which  did  not
close  until  October 1999 of $221,000.  As a result of the acquisition  of
treasury stock, our equity decreased $.3 million.

<PAGE> 8

Average Balance Sheet

      The  following  table  sets  forth certain  information  relating  to  the
Company's  average balance sheet and reflects the average yield  on  assets  and
average  cost  of liabilities for the periods indicated and the  average  yields
earned and rates paid.  Such yields and costs are derived by dividing income  or
expense  by the average balance of assets or liabilities, respectively, for  the
periods  presented.   Average  balances are  derived  from  month-end  balances.
Management does not believe that the use of month-end balances instead of  daily
average  balances  has  caused  any  material  differences  in  the  information
presented.
<TABLE>
<CAPTION>
                                              Year Ended September 30,
                                ------------------------------------------------------
                                          2000                         1999
                                --------------------------  --------------------------
                                Average            Average  Average            Average
                                Balance Interest    Yield/  Balance Interest    Yield/
                                                     Cost                        Cost
                                -------  -------  --------  -------  -------   -------
                                                (Dollars in thousands)
<S>                             <C>       <C>     <C>       <C>      <C>       <C>
Interest-earning assets:
  Loans receivable(1)           $45,086   $4,113     9.12%  $38,759   $3,505     9.04%
  Mortgage-backed securities        958       60     6.26       701       40     5.71
  Investment securities           5,898      336     5.70     5,499      325     5.91
  Other interest-earning assets     580       36     6.21       488       31     6.35
                                -------   ------            -------   ------
  Total interest-earning assets  52,522    4,545     8.65    45,447    3,901     8.58

Non-interest-earning assets       4,134        -              3,155        -
                                -------   ------            -------   ------
  Total assets                  $56,656   $4,545            $48,602   $3,901
                                =======   ======            =======   ======

Interest-bearing liabilities:
  NOW Accounts                  $ 2,202   $   67     3.04   $ 1,795   $   62     3.45
  Savings accounts                2,157       86     3.99     1,847       77     4.17
  Money market accounts               -        -        -         -        -        -
  Certificates of deposit        38,700    2,330      6.02   34,671    2,030     5.86
  Other liabilities               4,230      270      6.38      634       35     5.52
                                -------   ------            -------   ------
  Total interest-bearing
    liabilities                  47,289    2,753      5.82   38,947    2,204     5.66

Non-interest bearing liabilities  1,717        -              1,336        -
                                -------   ------            -------   ------
  Total liabilities              49,006   $2,753             40,283   $2,204
                                          ======                      ======
Equity                            7,650                       8,319
                                -------                     -------
  Total liabilities and
    retained earnings           $56,656                     $48,602
                                =======                     =======
Net interest income                       $1,792                      $1,697
Interest rate spread(2)                               2.83%                      2.92%
Net yield on interest-earning assets(3)               3.41%                      3.73%
Ratio of average interest-earning assets
  earning assets to average interest-
  bearing liabilities                               111.07%                    116.69%
_________________________________
(1)  Average balances include non-accrual loans.
(2)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets   and  the  average  cost   of   interest-bearing
     liabilities.
(3)  Net  yield on interest-earning assets represents net interest income  as  a
     percentage of average interest-earning assets.

</TABLE>

<PAGE> 9

      The  table  below  sets  forth certain information  regarding  changes  in
interest  income and interest expense of the Company for the periods  indicated.
For  each  category of interest-earning assets and interest-bearing liabilities,
information  is  provided  on changes attributable  to  (i)  changes  in  volume
(changes  in  average  volume multiplied by old rate);  (ii)  changes  in  rates
(changes in rate multiplied by old average volume); (iii) changes in rate-volume
(changes in rate multiplied by the change in average volume).

<TABLE>
<CAPTION>
                                                      Year Ended September 30,
                                  --------------------------------------------------------------
                                      2000     vs.     1999           1999     vs.     1998
                                  ------------------------------  ------------------------------
                                       Increase (Decrease)             Increase (Decrease)
                                             Due to                          Due to
                                  ------------------------------  ------------------------------
                                                   Rate/                           Rate/
                                  Volume   Rate   Volume   Net    Volume   Rate   Volume   Net
                                  ------  ------  ------  ------  ------  ------  ------  ------
                                                       (Dollars in thousands)
<S>                               <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Interest income:
  Loans receivable                $  572      31       5     608     382     (30)     (3)    349
  Investment securities               39      (7)     (1)     31     142     (24)    (13)    105
  Other interest-earning assets        6      (1)      -       5     (68)      3      (3)    (68)
                                  ------  ------  ------  ------  ------  ------  ------  ------
                                     617      23       4     644     456     (51)    (19)    386
                                  ------  ------  ------  ------  ------  ------  ------  ------
Interest expense:
  NOW accounts                        14      (7)     (2)      5      12      (1)     (1)     10
  Savings accounts                    13      (3)     (1)      9     (15)      6      (1)    (10)
  Money market accounts                -       -       -       -       -       -       -       -
  Certificate of deposit             236      57       7     300     175     (68)     (6)    101
  Other liabilities                  199       5      31     235       1      (2)      -      (1)
                                  ------  ------  ------  ------  ------  ------  ------  ------
    Total interest-bearing
      liabilities                    462      52      35     549     173     (65)     (8)    100
                                  ------  ------  ------  ------  ------  ------  ------  ------
Net change in interest income     $  155     (29)    (31)     95     283      14     (11)    286
                                  ======  ======  ======  ======  ======  ======  ======  ======
</TABLE>

<PAGE> 10

Results of Operations for the Years Ended September 30, 2000 and 1999
---------------------------------------------------------------------
      Net  Income. Net income decreased $75,924 or 21.8% from $348,299  for
fiscal  1999  to $272,305 for fiscal 2000. The decrease was  primarily  the
result  of  an increase in noninterest  expense of $185,000 that more  than
offsets  an  increase in net interest after provision for  loan  losses  of
$55,000.   As discussed below, an increase in interest on loans  receivable
due  to  an increase in the average balance of $6.3 million and an increase
in  other  interest  income  on other interest earning  assets  due  to  an
increase  in  the  average balance of $.7 million partially  offset  by  an
increase  in interest expense due to an increase in the average balance  of
interest-bearing liabilities of $8.3 million.  In addition, the net  income
for fiscal 1999 included a non-recurring gain of $84,000 on the sale of our
old office facilities and equipment.

     Net Interest Income. Our net interest income increased $95,551 or 5.6%
to  $1,791,667  in fiscal 2000 compared to $1,696,116 in fiscal  1999.  The
increase was due primarily to the growth of average interest-earning assets
from $45.4 million in fiscal 1999 to $52.5 million in fiscal 2000.

      The  increase in our average interest-earning assets of $7.1  million
reflects  an  increase of $6.3 million in average loans.  Our  increase  in
average loans receivable is mainly due to increased demand for loans in our
market area.

      Our  interest  rate  spread decreased .09% and  net  interest  margin
decreased  .32% in fiscal 2000 compared to fiscal 1999. This was due to the
increase in the yield on interest-earning assets from 8.58% in fiscal  1999
to  8.65%  in fiscal 2000 and the increase in the interest cost of  average
interest-bearing liabilities from 5.66% in fiscal 1999 to 5.82%  in  fiscal
2000.

      The  yield on our average interest-earning assets increased in fiscal
1999  primarily  due to an increase in the yield on loans receivable.  This
increase  in yield on our loans receivable primarily reflected an  increase
in the average interest rates.

      The  increase in the cost of our average interest-bearing liabilities
was due primarily to an increase in the average balance of our certificates
of  deposit  from $34.7 million in fiscal 1999 to $38.7 million  in  fiscal
2000 and a nominal increase in the average rates.

      Provision  for  Loan Losses. Our provision for loan losses  increased
$40,250  from  $19,900  for fiscal 1999 to $60,150  for  fiscal  2000.  The
increase  in  the provision for fiscal 2000 was the result of  management's
review  of  our loan portfolio, the potential losses in our loan  portfolio
and  our  history  of experiencing only nominal losses on loans  in  recent
years.

      Noninterest  Income. Our non-interest income decreased  approximately
$1,000 in fiscal 2000 as compared to fiscal 1999. This was attributable  to
a  non-recurring gain of $84,000 on the sale of fixed assets in fiscal 1999
partially offset by an increase in  service charge income of $64,000 and an
increase in gain on sale of other real estate of $14,000 in fiscal 2000.

     Noninterest Expense. Our non-interest expense increased by $184,940 or
13.87%  from $1,333,189 for fiscal 1999 to $1,518,129 for fiscal 2000.  The
increase was primarily attributable to increases in compensation and  other
personnel expense and depreciation expense on equipment additions.

<PAGE> 11

      We  expected  noninterest expense to increase  as  a  result  of  the
staffing  and equipping of the new bank building opened in April 1999,  and
these  expenses did increase dramatically. We expected a reduction  in  net
income (and possibly losses) compared to prior periods as a result of these
expenses until the new building resulted in higher overall levels  of  loan
and  deposit  activity to offset the additional expenses.  We believe  that
this  expansion  should enhance shareholder value and  that  the  expansion
costs  have  stabilized.   We  do, however, expect  that  our  compensation
expense  will  increase  during fiscal year  2001  because  of  annual  pay
adjustments  that  will likely be made near the end of  the  2000  calendar
year.  However, our greater concern for the coming fiscal year would be  if
market  interest  rates  continue  to increase.   The  negative  impact  of
interest rate increases is discussed earlier in this section under  "Market
Risk  Analysis".  Our statement of beliefs concerning our  expansion  is  a
forward looking statement.  The Private Securities Litigation Reform Act of
1995  (the  "Act")  provides  protection to us in  making  certain  forward
looking  statements that are accompanied by the factors  that  could  cause
actual results to differ materially from the forward looking statement.  As
with  any  expansion,  if  a  new office or  additional  personnel  do  not
ultimately result in increased loan and deposit activity and increased  net
income,  these  expenses would continue to have an adverse  affect  on  net
income.  Our noninterest expense would further increase if we build the new
branch discussed below.

      We  offered  checking  accounts and the use of  an  automated  teller
machine  (an  "ATM") to our customers during fiscal 1999.  Our  preparation
costs for these products and the costs of soliciting checking account funds
also  increased  our expenses in fiscal year 2000.  Although  our  checking
account  funds  have increased, we have not yet received  sufficient  other
income from the ATM to offset its additional cost.

     Although no definite plans have been made, we are exploring whether to
purchase  land  and construct a branch.  We would likely  hire  experts  or
spend  money  before  we commit to purchasing land or  constructing  a  new
branch.   If  we decided not to build a new branch, the money that  we  had
spent  up  to that time would be a noninterest expense and would negatively
affect our income.

      Income  Tax  Expense. Our income tax expense decreased  $54,538  from
$190,785  in fiscal 1999 to $136,247 in fiscal 2000 due to the decrease  in
income before taxes.

     Return on Equity and Assets:

<TABLE>
<CAPTION>
                                                    YEAR ENDED SEPTEMBER 30,
                                                   --------------------------
                                                      2000            1999
                                                   ----------      ----------
<S>                                                <C>             <C>
  Return on Assets (Net income divided
    by average assets)                                   .48%            .72%
  Return on Equity (Net income divided by
    average equity)                                     3.56%           4.19%
  Dividend Payout Ratio (Dividends paid
    divided by net income)                             37.26%          32.27%
  Equity to Assets Ratio (Equity divided by total
    assets)                                            12.61%          14.52%

</TABLE>

Liquidity and Capital Resources
-------------------------------
     We are required to maintain minimum levels of liquid assets as defined
by  OTS  regulations.  This requirement, which varies  from  time  to  time
depending  upon  economic conditions and deposit flows,  is  based  upon  a
percentage of our deposits and short-term borrowings. The required ratio is
4.0%  and our liquidity ratio average was 13% and 15% at September 30, 2000
and 1999, respectively.

<PAGE> 12

      Our  primary  sources of funds are deposits, repayment of  loans  and
mortgage-backed  securities, maturities of investments and interest-bearing
deposits,  funds  provided from operations and advances from  the  FHLB  of
Atlanta. While scheduled repayments of loans and mortgage-backed securities
and  maturities of investment securities are predicable sources  of  funds,
deposit  flows, and loan prepayments are greatly influenced by the  general
level  of interest rates, economic conditions and competition. We  use  our
liquidity   resources  principally  to  fund  existing  and   future   loan
commitments,  to fund maturing certificates of deposit and  demand  deposit
withdrawals,  to  invest  in  other interest-earning  assets,  to  maintain
liquidity, and to meet operating expenses.  We expect that these  liquidity
needs will continue to exist in future years.

      Net  cash  provided by our operating activities (the cash effects  of
transactions  that  enter into our determination of  net  income  --  e.g.,
non-cash  items, amortization and depreciation, provision for loan  losses)
for  the year ended September 30, 2000 was $432,766 as compared to $278,259
for the year ended September 30, 1999.

      Net  cash  used  in  our investing activities (i.e.,  cash  receipts,
primarily  from  our  investment securities and mortgage-backed  securities
portfolios  and our loan portfolio) for the year ended September  30,  2000
totaled $8.3 million, an increase of $1.6 million from September 30,  1999.
The  increase was primarily attributable to our use of $.8 million in  cash
to  fund  the purchase of available-for-sale investment securities and  the
use  of $8.0 million in cash to fund the net increase in loan originations,
partially  offset by the proceeds from the maturity and sale of  investment
securities and sale of foreclosed property.

      Net  cash  provided by our financing activities (i.e., cash  receipts
primarily from net increases in deposits and net FHLB advances) for  fiscal
2000 totaled $7.5 million compared to $8.0 million for fiscal 1999. This is
a  result of a net increase in deposits of $5.3 million in fiscal  2000  as
compared to an increase of $7.0 million in fiscal 1999 and proceeds of $2.5
million in FHLB advances.

     During the fiscal year ending September 30, 2001, approximately  $36.0
million  of  certificates  of  deposit  (approximately  76%  of  our  total
deposits)  will  mature.   We expect that most  of  these  certificates  of
deposit will be renewed.  Even if many of these certificates of deposit are
not renewed, we believe that we have sufficient liquidity and other sources
of funds to successfully manage the outflow of funds.

     A  new  bank building was constructed during the year ended  September
30,  1999,  the cost of the new facility and land was $1,059,931.   We  are
exploring  whether  to purchase land and construct a branch.   Although  no
definite  plans  have  been made, if a new branch is built,  the  land  and
construction costs could total approximately $600,000.  We have  sufficient
liquid assets to pay for these costs.

     Pursuant to FASB No. 130 the Company is required to record changes  in
the value of its investment portfolio as regards unrealized gains or losses
that  may  result  from movements in interest rates.  As of  September  30,
2000,  the  Company  shows unrealized losses, net of tax  effect,  totaling
$72,000  due  to the recent upward surge in interest rates as the  national
money  markets  reacted  to actions by the Federal Open  Market  Committee.
Management  does  not anticipate the realization of the  above  loss.   The
unrealized loss does however negatively impact the Company's capital.   The
unrealized losses combined with net operating income of $272,000  yields  a
net increase in the Company's capital of $200,000, net of applicable taxes,
and  a corresponding increase in the book value of common stock from $14.37
on  September  30,  1999 to $15.03 as of September 30,  2000.   The  Bank's
capital  continues to exceed regulatory requirements and  continues  to  be
adequate to support future asset growth.

<PAGE> 13




                       INDEPENDENT AUDITOR'S REPORT
                       ----------------------------






To the Board of Directors and Stockholders
Quitman Bancorp, Inc. and Subsidiary
Quitman, Georgia

We  have  audited  the  accompanying consolidated statements  of  financial
condition of Quitman Bancorp, Inc. and Subsidiary as of September 30,  2000
and  1999, and the related consolidated statements of income, comprehensive
income,  stockholders'  equity and cash flows for  the  years  then  ended.
These   financial  statements  are  the  responsibility  of  the  Company's
management.   Our  responsibility  is  to  express  an  opinion  on   these
consolidated financial statements based on our audits.

We  conducted  our  audits in accordance with generally  accepted  auditing
standards.  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  consolidated  financial
position  of Quitman Bancorp, Inc. and Subsidiary as of September 30,  2000
and  1999,  and  the  consolidated results of their  operations  and  their
consolidated  cash  flows  for  the years then  ended  in  conformity  with
generally accepted accounting principles.




/s/ STEWART, FOWLER & STALVEY, P.C.
-----------------------------------

Valdosta, Georgia
October 16, 2000

<PAGE> 14
<TABLE>
<CAPTION>
                   QUITMAN BANCORP, INC. AND SUBSIDIARY

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

                                  ASSETS
                                  ------

                                                      SEPTEMBER 30,
                                                ------------------------
                                                    2000        1999
                                                -----------  -----------
<S>                                             <C>          <C>
Cash and Cash Equivalents, Notes 1 and 2:
 Cash and amounts due from depository
   institutions                                 $   598,471    1,706,799
 Interest-bearing deposits in other banks         1,064,984      261,896
                                                -----------  -----------
     Total Cash and Cash Equivalents              1,663,455    1,968,695
Investment securities:
 Available-for-sale (fair value
   $6,546,404 in 2000 and $6,558,701
   in 1999), Notes 1 and 3                        6,546,404    6,558,701
Loans receivable, Notes 1 and 4                  49,052,004   41,120,768
Office properties and equipment,
 at cost, net of accumulated
 depreciation, Notes 1 and 5                      1,483,607    1,601,398
Real estate acquired in settlement
 of loans, Note 1                                         0      139,045
Accrued interest receivable, Note 6                 583,330      514,290
Investment required by law-stock in Federal
 Home Loan Bank, at cost, Note 13                   320,300      286,700
Cash value of life insurance, Note 11               626,638      482,354
Other assets, Notes 1 and 9                         193,195      170,198
                                                -----------  -----------
     Total Assets                               $60,468,933   52,842,149
                                                ===========  ===========

                   LIABILITIES AND STOCKHOLDERS' EQUITY
                   ------------------------------------

Liabilities:
 Deposits, Note 7                               $47,336,018   41,993,095
 Advances from Federal Home Loan Bank,
   Note 13                                        5,000,000    2,500,000
 Accrued interest payable                           337,586      303,512
 Income taxes payable, Note 9                        14,770        1,312
 Other liabilities                                  156,446      369,230
                                                -----------  -----------
   Total Liabilities                             52,844,820   45,167,149
                                                -----------  -----------
Stockholders' Equity:
 Common stock, $.10 par value, 4,000,000
   shares authorized, 661,250 shares
   issued and 507,262 shares outstanding
   at September 30, 2000 (533,960-
   September 30, 1999)                               66,125       66,125
 Preferred stock, no par value, 1,000,000
   shares authorized, no shares issued or
   outstanding                                            0            0
 Additional paid in capital                       6,135,412    6,135,412
 Retained Earnings, Note 8                        3,662,836    3,491,984
 Accumulated other comprehensive income (loss)      (72,086)     (77,699)
 Treasury stock, at cost, 153,988 shares,
   (127,290 shares at September 30, 1999)        (1,718,524)  (1,438,272)
 Receivable from ESOP, Note 11                     (449,650)    (502,550)
                                                -----------  -----------
   Total Stockholders' Equity                     7,624,113    7,675,000
                                                -----------  -----------
   Total Liabilities and Stockholders' Equity   $60,468,933   52,842,149
                                                ===========  ===========
</TABLE>

<PAGE> 15
<TABLE>
<CAPTION>
               QUITMAN BANCORP, INC. AND SUBSIDIARY

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

                                                YEAR ENDED SEPTEMBER 30,
                                                ------------------------
                                                    2000        1999
                                                -----------  -----------
<S>                                             <C>          <C>
Interest Income:
 Loans receivable:
   First mortgage loans                         $ 3,835,384    3,290,099
   Consumer and other loans                         277,221      214,504
 Interest on FHLMC Pool                                 104          171
 Investment securities                              396,245      364,730
 Interest-bearing deposits                           33,865       30,374
 Federal funds sold                                   2,119          481
                                                -----------  -----------
     Total Interest Income                        4,544,938    3,900,359
                                                -----------  -----------
Interest Expense:
 Deposits, Note 7                                 2,483,483    2,169,361
 Interest on Federal Home Loan
   Bank advances                                    269,788       34,882
                                                -----------  -----------
     Total Interest Expense                       2,753,271    2,204,243
                                                -----------  -----------

Net Interest Income                               1,791,667    1,696,116

Provision for loan losses, Notes 1 and 4             60,154       19,900
                                                -----------  -----------
Net Interest Income After Provision for Losses    1,731,513    1,676,216
                                                -----------  -----------
Non-Interest Income:
 Gain (loss) on sale of securities                   (7,387)       2,594
 Gain on sale of fixed assets                             0       84,019
 Gain (loss) on sale of other real estate            20,610        6,402
 Late charges on loans                               38,904       35,349
 Insurance commissions                               10,517        1,192
 Service charge income                              105,556       41,576
 Other income                                        26,968       24,925
                                                -----------  -----------
     Total Non-Interest Income                      195,168      196,057
                                                -----------  -----------
Non-Interest Expense:
 Compensation                                       540,266      464,815
 Other personnel expenses, Note 11                  255,153      218,218
 Occupancy expenses of premises                      49,873       33,111
 Furniture and equipment expenses                   211,765      162,272
 Business Occupation and other taxes                 59,630       55,552
 Other operating expenses                           401,442      399,221
                                                -----------  -----------
     Total Non-Interest Expense                   1,518,129    1,333,189
                                                -----------  -----------

Income Before Income Taxes                          408,552      539,084

Provision for Income Taxes, Note 9                  136,247      190,785
                                                -----------  -----------
Net Income                                      $   272,305      348,299
                                                ===========  ===========

Earnings Per Share, Note 1:
 Basic                                          $       .59  $       .65
                                                ===========  ===========
 Diluted                                        $       .59  $       .65
                                                ===========  ===========
</TABLE>

<PAGE> 16
<TABLE>
<CAPTION>
                   QUITMAN BANCORP, INC. AND SUBSIDIARY

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

                                                YEAR ENDED SEPTEMBER 30,
                                                ------------------------
                                                    2000        1999
                                                -----------  -----------
<S>                                             <C>          <C>
Net Income                                      $   272,305      348,299
                                                -----------  -----------
Other comprehensive income (loss), net of tax:
 Unrealized gains (losses) on securities:
   Unrealized holding gains (losses) arising
     during period                                      738     (111,106)
   Less:  reclassification adjustment for
     (gains)losses included in net income             4,875       (1,712)
                                                -----------  -----------
   Other comprehensive income (loss)                  5,613     (112,818)
                                                -----------  -----------
Comprehensive Income                            $   277,918      235,481
                                                ===========  ===========
</TABLE>

<PAGE> 17
<TABLE>
<CAPTION>
                   QUITMAN BANCORP, INC. AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              -----------------------------------------------

                                                                                ACCUMULATED
                                                                                   OTHER
                          COMMON STOCK       ADDITIONAL              RECEIVABLE COMPREHENSIVE
                     ----------------------    PAID IN    RETAINED      FROM       INCOME    TREASURY
                       SHARES      AMOUNT      CAPITAL    EARNINGS      ESOP       (LOSS)      STOCK       TOTAL
                     ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
<S>                  <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Balances,
 September 30,
 1998                   661,250      66,125   6,135,412   3,256,097    (529,000)     35,119           0   8,963,753

Acquisition of
 shares of treasury
 stock                 (127,290)          0           0           0           0           0  (1,438,272) (1,438,272)

Net income                    0           0           0     348,299           0           0           0     348,299

Dividends paid                0           0           0    (112,412)          0           0           0    (112,412)

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

Change in other
 comprehensive
 income (loss)                0           0           0           0           0    (112,818)          0    (112,818)
                     ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Balances,
 September 30,
 1999                   533,960      66,125   6,135,412   3,491,984    (502,550)    (77,699) (1,438,272)  7,675,000

Acquisition of
 shares of treasury
 stock                  (26,698)          0           0           0           0           0    (280,252)   (280,252)

Net income                    0           0           0     272,305           0           0           0     272,305

Dividends paid                0           0           0    (101,453)          0           0           0    (101,453)

Change in loan
 receivable from
 employee stock
 ownership plan               0           0           0           0      52,900           0           0      52,900

Change in other
 comprehensive
 income (loss)                0           0           0           0           0       5,613           0       5,613
                     ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Balances,
 September 30,
   2000                 507,262  $   66,125   6,135,412   3,662,836    (449,650)    (72,086) (1,718,524)  7,624,113
                     ==========  ==========  ==========  ==========  ==========  ==========  ==========  ==========
</TABLE>

<PAGE> 18
<TABLE>
<CAPTION>

                   QUITMAN BANCORP, INC. AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                   -------------------------------------

                                                YEAR ENDED SEPTEMBER 30,
                                                ------------------------
                                                    2000        1999
                                                -----------  -----------
<S>                                             <C>          <C>
Cash Flows From Operating Activities:
   Net income                                   $   272,305      348,299
 Adjustments to reconcile net income
   to net cash provided by operating
    activities:
   Depreciation                                     142,339      110,046
   Provision for loan losses                         60,154       19,900
   Deferred income taxes                             12,013      (18,366)
   Amortization (Accretion) of securities            11,371       15,715
   (Gain) Loss on sale of other real estate         (20,610)      (6,402)
   (Gain) Loss on sale of securities                  7,387       (2,594)
   (Gain) Loss on sale of fixed assets                    0      (84,019)
 Change in Assets and Liabilities:
   (Increase) Decrease in accrued interest
    receivable                                      (70,109)     (65,367)
   Increase (Decrease) in accrued interest
    payable                                          34,074       28,484
   Increase (Decrease) in other liabilities           8,285        4,442
   Increase (Decrease) in income taxes payable       13,458      (23,348)
   (Increase) Decrease in other assets              (37,901)     (48,531)
                                                -----------  -----------
    Net cash provided by operating activities       432,766      278,259
                                                -----------  -----------
Cash Flows From Investing Activities:
 Capital expenditures                               (24,548)  (1,220,972)
 Purchase of available-for-sale securities         (873,319)  (3,845,382)
 Proceeds from sale of foreclosed property          228,057      139,380
 Proceeds from maturity of held-to-maturity
   securities                                             0      200,000
 Net (increase) decrease in loans                (8,059,792)  (5,015,624)
 Purchase of stock in Federal Home Loan Bank        (33,600)     (46,900)
 Principal collected on mortgage-backed
   securities                                       113,885      163,332
 Proceeds from sale of available-for-sale
   securities                                       541,477      500,000
 Proceeds from sale of fixed assets                       0      275,000
 Proceeds from maturity of available-for-sale
   securities                                             0    2,300,000
 Increase in cash value of life insurance          (144,284)    (144,541)
                                                -----------  -----------
    Net cash provided (used) by
      investing activities                       (8,252,124)  (6,695,707)
                                                -----------  -----------
Cash Flows From Financing Activities:
 Net increase (decrease) in deposits              5,342,923    7,038,511
 Proceeds from Federal Home Loan Bank advances    2,500,000    2,500,000
 (Increase) Decrease in loan to employee stock
   ownership plan                                    52,900       26,450
 Purchase of treasury stock                        (280,252)  (1,438,272)
 Dividends paid                                    (101,453)    (112,412)
                                                -----------  -----------
    Net cash provided (used) by
      financing activities                        7,514,118    8,014,277
                                                -----------  -----------
Net Increase (Decrease) in cash
  and cash equivalents                             (305,240)   1,596,829

Cash and Cash Equivalents at Beginning of Period  1,968,695      371,866
                                                -----------  -----------
Cash and Cash Equivalents at End of Period      $ 1,663,455    1,968,695
                                                ===========  ===========

Supplemental Disclosures of Cash Flow Information
-------------------------------------------------
 Cash paid during the year for:
   Income taxes                                 $   130,744      221,974
                                                ===========  ===========
   Interest                                     $ 2,719,197    2,175,759
                                                ===========  ===========

Schedule of Non-Cash Investing and Financing Activities
-------------------------------------------------------
 Total increase (decrease) in unrealized gains
   on securities available-for-sale             $     8,504     (170,937)
                                                ===========  ===========
 Loans transferred to foreclosed real estate    $    68,402      272,023
                                                ===========  ===========
 Securities purchased and closed in
   subsequent year                              $         0      221,069
                                                ===========  ===========
</TABLE>

<PAGE> 19

                   QUITMAN BANCORP, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                ------------------------------------------

Note 1 - Summary of Significant Accounting Policies
---------------------------------------------------
Nature of Operations:  Quitman Bancorp, Inc. (the "Company") is a Georgia -
chartered corporation organized at the direction of Quitman Federal Savings
Bank (the "Bank") (formerly Quitman Federal Savings & Loan Association)  in
connection  with  the  Bank's conversion from a mutual  to  stock  form  of
organization (the "Conversion").  On April 2, 1998, the Bank completed  the
conversion and became a wholly owned subsidiary of the Company.

The  Company  is  engaged in the activity of providing traditional  banking
services through its banking subsidiary, Quitman Federal Savings Bank.  The
Bank is a federally chartered stock savings bank that commenced business in
1936.   Business activities are predominately with customers in the  Brooks
and Lowndes County, Georgia area.

Consolidated financial statements:  The accompanying consolidated financial
statements  include the accounts of Quitman Bancorp, Inc.  and  its  wholly
owned   subsidiary,  Quitman  Federal  Savings  Bank.   All   inter-company
transactions and accounts have been eliminated in consolidation.

Investment Securities:  Investment securities for which the management  has
the  ability  and  intent  to hold to maturity are classified  as  held-to-
maturity  and  carried  at amortized cost using methods  approximating  the
interest method.  Other securities are classified as available-for-sale and
are  carried  at  fair  value.  Unrealized gains and losses  on  securities
available-for-sale  are  recognized as direct  increases  or  decreases  in
stockholders'  equity.  Cost of any securities sold is  recognized  by  the
specific identification method.

Loans   Receivable:   Loans  receivable  are  stated  at  unpaid  principal
balances,  less  the  allowance  for loan losses  and  net  deferred  loan-
origination fees and discounts.  Uncollectible interest on loans  that  are
contractually past due is charged off or an allowance is established  based
on  management's  periodic evaluation.  The allowance is established  by  a
charge  to  interest  income equal to all interest previously  accrued  and
income is subsequently recognized only to the extent that cash payments are
received until, in management's judgement, the borrower's ability  to  make
periodic  interest and principal payments is back to normal, in which  case
the loan is returned to accrual status.

Office  properties and equipment and related depreciation and amortization:
Office  properties and equipment, consisting of land, buildings,  furniture
and   fixtures  and  automobile  are  carried  at  cost,  less  accumulated
depreciation.   The building, furniture, fixtures and equipment  are  being
depreciated on the straight-line method.

Loan  origination fees:  Commencing with loans originated during  the  year
ended September 30, 1988, mortgage loan origination fees and related direct
loan  origination  costs are deferred and the net  amount  so  deferred  is
amortized over the life of the loan by a method that approximates the level
yield  method and reflected as an adjustment of interest income.  Fees  for
originating  consumer loans which do not materially exceed the direct  loan
origination cost, are recorded as income when received and the direct  loan
origination costs are expensed as incurred.

Real  estate  and other property acquired in settlement of loans:   At  the
time  of foreclosure, real estate and other property acquired in settlement
of  loans  is  recorded at fair value, less estimated costs to  sell.   Any
write-downs  based  on the asset's fair value at date  of  acquisition  are
charged to the allowance for loan losses.  Subsequent to acquisition,  such
assets  are  carried  at the lower of cost or market value  less  estimated
costs to sell.  Cost incurred in maintaining such assets and any subsequent
write-downs  to  reflect declines in the fair value  of  the  property  are
included in income (loss) on foreclosed assets.

<PAGE> 20

Note 1 - Summary of Significant Accounting Policies (Continued)
---------------------------------------------------------------
Allowance  for  losses:   An  allowance  for  loan  losses  is  charged  to
operations  based upon management's evaluation of the potential  losses  in
its  loan  portfolio.  This evaluation includes a review of  all  loans  on
which  full  collectibility may not be reasonably  assured,  considers  the
estimated value of the underlying collateral and such other factors as,  in
management's   judgement,  deserve  recognition  under  existing   economic
conditions.

Income taxes:  Income taxes have been computed under Statement of Financial
Accounting  Standards No. 109.  Implementation of Statement  No.  109  with
regard to income taxes did not have a material effect on the tax provisions
of the Company. Deferral of income taxes results primarily from differences
in  the  provision for loan losses, depreciation and unrealized  gains  and
losses  on  available-for-sale securities for tax  purposes  and  financial
reporting purposes.  The deferred tax assets and liabilities represent  the
future  tax return consequences of those differences, which will either  be
taxable  or  deductible when the assets and liabilities  are  recovered  or
settled.  The financial statements reflect a net deferred asset of $112,512
and $103,391 at September 30, 2000 and 1999, respectively.

Cash  and  cash equivalents:  For purposes of the statement of cash  flows,
the  Company considers all highly liquid debt instruments purchased with  a
maturity  of three months or less to be cash equivalents and includes  cash
on hand and amounts due from banks (excluding certificates of deposit).

Off  balance  sheet  financial instruments:   In  the  ordinary  course  of
business, the Bank has entered into off balance sheet financial instruments
consisting  of commitments to extend credit and standby letters of  credit.
Such  financial  instruments are recorded in the financial statements  when
they become payable.

Use  of  estimates:  The preparation of financial statements in  conformity
with  generally accepted accounting principles requires management to  make
estimates  and assumptions that effect the reported amounts of  assets  and
liabilities and disclosure of contingent assets and liabilities at the date
of  the  financial  statements and the reported  amounts  of  revenues  and
expenses  during  the reporting period.  Actual results could  differ  from
those estimates.

Certain  significant estimates:  Material estimates that  are  particularly
susceptible  to  significant  change relate to  the  determination  of  the
allowance for losses on loans and the valuation of real estate acquired  in
connection  with foreclosures or in satisfaction of loans.   In  connection
with  the determination of allowances for losses on loans and the valuation
of  foreclosed  real estate, management obtains independent appraisals  for
significant properties.

While  management uses available information to recognize losses  on  loans
and  foreclosed  real  estate, future additions to the  allowances  may  be
necessary  based  on  changes in local economic conditions.   In  addition,
regulatory  agencies,  as  an integral part of their  examination  process,
periodically  review  the  Bank's  allowances  for  losses  on  loans   and
foreclosed  real estate.  Such agencies may require the Bank  to  recognize
additions  to  the  allowances based on their judgements about  information
available  to  them  at  the time of their examination.   It  is  at  least
reasonably  possible that the allowances for losses on loans and foreclosed
real estate may change in the near term.

Advertising  costs:   The  Bank  expenses advertising  costs  as  they  are
incurred.   Advertising costs charged to expenses were $33,678 and  $42,379
for the years ended September 30, 2000 and 1999, respectively.

Stock-based  compensation:   In  October  1995,  the  Financial  Accounting
Standards  Board issued Statement of Financial Accounting Standards  (SFAS)
No.  123, Accounting for Stock-Based Compensation.  The Company has elected
to  disclose  the proforma effect on net income as if the fair value  based
method of accounting for stock options had been used.

<PAGE> 21

Note 1 - Summary of Significant Accounting Policies (Continued)
---------------------------------------------------------------
Fair  values  of financial instruments:  Statement of Financial  Accounting
Standards  No.  107, Disclosure about Fair Value of Financial  Instruments,
requires  disclosure of fair value information about financial instruments,
whether  or  not  recognized in the statement of financial  condition.   In
cases  where quoted market prices are not available, fair values are  based
on  estimates  using  present value or other valuation  techniques.   Those
techniques  are  significantly affected by the assumptions used,  including
the  discount rate and estimates of future cash flows. In that regard,  the
derived  fair  value  estimates cannot be substantiated  by  comparison  to
independent markets, and, in many cases, could not be realized in immediate
settlement  of  the  instruments.   Statement  No.  107  excludes   certain
financial  instruments and all nonfinancial instruments from its disclosure
requirements.  Accordingly, the aggregate fair value amounts  presented  do
not represent the underlying value of the Company.

The  following  methods  and  assumptions  were  used  by  the  Company  in
estimating its fair value disclosures for financial instruments:

 Cash  and  cash  equivalents:   The  carrying  amounts  reported  in   the
 statement   of   financial  condition  for  cash  and   cash   equivalents
 approximate those assets' fair values.

 Time  deposits:   Fair  values for time deposits  are  estimated  using  a
 discounted cash flow analysis that applies interest rates currently  being
 offered   on   certificates  to  a  schedule  of  aggregated   contractual
 maturities on such time deposits.

 Investment  securities:  Fair values for investment securities  are  based
 on  quoted  market prices, where available.  If quoted market  prices  are
 not  available,  fair  values  are  based  on  quoted  market  prices   of
 comparable instruments.

 Loans:   For  variable-rate  loans that reprice  frequently  and  with  no
 significant  change  in  credit risk, fair values are  based  on  carrying
 amounts.   The  fair  values  for other loans  (for  example,  fixed  rate
 commercial  real  estate,  mortgage loans and  commercial  and  industrial
 loans)  are  estimated  using  discounted cash  flow  analysis,  based  on
 interest  rates  currently being offered for loans with similar  terms  to
 borrowers  of  similar credit quality.  Loan fair value estimates  include
 judgements   regarding   future  expected   loss   experience   and   risk
 characteristics.   The  carrying  amount of  accrued  interest  receivable
 approximates its fair value.

 Deposits:   The  fair values disclosed for demand deposits  (for  example,
 checking   accounts,  interest-bearing  checking  accounts   and   savings
 accounts)  are, by definition, equal to the amount payable  on  demand  at
 the  reporting  date (that is, their carrying amounts).  The  fair  values
 for  certificates  of deposit are estimated using a discounted  cash  flow
 calculation  that  applies  interest  rates  currently  being  offered  on
 certificates  to a schedule of aggregated contractual maturities  on  such
 time   deposits.    The  carrying  amount  of  accrued  interest   payable
 approximates fair value.

 Advances  from Federal Home Loan Bank:  The carrying amounts  of  advances
 from the Federal Home Loan Bank approximate their fair value.

 Other  liabilities:  Commitments to extend credit were evaluated and  fair
 value  was  estimated using the terms for similar agreements, taking  into
 account   the   remaining  terms  of  the  agreements  and   the   present
 creditworthiness of the counterparties.  For fixed-rate loan  commitments,
 fair  value  also  considers  the difference  between  current  levels  of
 interest rates and the committed rates.

<PAGE> 22

Note 1 - Summary of Significant Accounting Policies (Continued)
---------------------------------------------------------------
 Earnings per share:  The following table sets forth the reconciliation  of
 the  numerators  and  denominator of the basic and  diluted  earnings  per
 share (EPS) computations:

 <TABLE>
 <CAPTION>

                                                YEAR ENDED SEPTEMBER 30,
                                                ------------------------
                                                    2000        1999
                                                -----------  -----------
 <S>                                            <C>          <C>
 (a) Net income available to shareholders       $   272,305      348,299
                                                -----------  -----------
     Denominator:
       Weighted-average shares outstanding          512,085      584,111
       Less:  ESOP weighted-average shares
         Unallocated                                 46,741       50,916
                                                -----------  -----------
 (b) Basic EPS weighted-average shares
       outstanding                                  465,344      533,195

     Effect of dilutive securities:
       Stock options                                      0        1,030
                                                -----------  -----------
 (c) Diluted EPS weighted-average shares
       outstanding                                  465,344      534,225
                                                ===========  ===========

     Basic earnings per share (a/b)             $       .59          .65
                                                ===========  ===========
     Diluted earnings per share (a/c)           $       .59          .65
                                                ===========  ===========
 </TABLE>

 Segment  reporting:  The Company is engaged in the activity  of  providing
 traditional  banking  services through its commercial  banking  subsidiary
 previously discussed under "nature of operations".  The Company  does  not
 have  reportable segments, foreign operations, assets located  in  foreign
 countries  or  major  customers,  as defined  in  Statement  of  Financial
 Accounting  Standards No. 131 (Disclosures About Segments of an Enterprise
 and Related Information).

 New  accounting  standards:  In June 1998, the FASB issued  SFAS  No.  133
 (Accounting  for  Derivative Instruments and  Hedging  Activities).   This
 statement  establishes accounting and reporting standards  for  derivative
 instruments,  including certain derivative instruments embedded  in  other
 contracts,  (collectively  referred to as  derivatives)  and  for  hedging
 activities.   It  requires  that an entity recognize  all  derivatives  as
 either  assets or liabilities in the statement of financial  position  and
 measure  those instruments at fair value.  If certain conditions are  met,
 a  derivative  may  be  specifically designated as  (a)  a  hedge  of  the
 exposure  to changes in the fair value of a recognized asset or  liability
 or  an  unrecognized  firm  commitment, (b) a hedge  of  the  exposure  to
 variable  cash flows of a forecasted transaction, or (c) a  hedge  of  the
 foreign  currency exposure of a net investment in a foreign operation,  an
 unrecognized firm commitment, an available-for-sale security or a foreign-
 currency-denominated  forecasted transaction.  Under  this  statement,  an
 entity  that elects to apply hedge accounting is required to establish  at
 the  inception  of  the  hedge the method it will use  for  assessing  the
 effectiveness of the hedging derivative and the measurement  approach  for
 determining  the ineffective aspect of the hedge.  Those methods  must  be
 consistent  with the entity's approach to managing risk.   This  statement
 is  effective for all fiscal quarters of fiscal years beginning after June
 15,  1999.   In  June 1999, the FASB issued SFAS No. 137  (Accounting  for
 Derivative Instruments and Hedging Activities - Deferral of the  Effective
 Date of SFAS No. 133).  This statement deferred the effective date to  all
 fiscal  quarters of fiscal years beginning after June 15,  2000.   Initial
 application  of  this  statement should be  as  of  the  beginning  of  an
 entity's  fiscal  quarter;  on that date, hedging  relationships  must  be
 designated  anew  and  documented  pursuant  to  the  provisions  of  this
 statement.  The adoption of this statement had no material impact  on  the
 Company's financial statements.

<PAGE> 23

Note 1 - Summary of Significant Accounting Policies (Continued)
---------------------------------------------------------------
 In  October  1998, the FASB issued SFAS No. 134 (Accounting for  Mortgage-
 Backed  Securities  Retained after the Securitization  of  Mortgage  Loans
 Held  For  Sale by a Mortgage Banking Enterprise).  This statement  amends
 Statement  No. 65 (Accounting for Certain Mortgage Banking Activities)  to
 require  that after the securitization of a mortgage loan held  for  sale,
 an  entity  engaged in mortgage banking activities classify the  resulting
 mortgage-backed  securities  or  other retained  interests  based  on  its
 ability  and  intent  to sale or hold those investments.   This  statement
 conforms  the  subsequent  accounting for securities  retained  after  the
 securitization  of  mortgage loans by a mortgage banking  enterprise  with
 the    subsequent   accounting   for   securities   retained   after   the
 securitization  of  other  types  of  assets  by  a  non-mortgage  banking
 enterprise.   This  statement  shall be effective  for  the  first  fiscal
 quarter  beginning  after  December  15,  1998.   The  adoption  of   this
 statement had no material impact on the Company's financial statements.

 In  February 1999, the FASB issued SFAS No. 135 (Rescission of SFAS No. 75
 and   Technical  Corrections).   This  statement  rescinds  SFAS  No.  75,
 Deferral  of  the  Effective Date of Certain Accounting  Requirements  for
 Pension Plans of State and Local Governmental Units.  This statement  also
 amends  SFAS  No. 35, Accounting and Reporting by Defined Benefit  Pension
 Plans,  to exclude from its scope plans that are sponsored by and  provide
 benefits  for  the  employees of one or more  state  or  local  government
 units.    This   statement   also  amends  other  existing   authoritative
 literature  to  make  various technical corrections, clarify  meaning,  or
 describe  applicability  under  changed  conditions.   This  statement  is
 effective  for financial statements issued for fiscal years  ending  after
 February  15, 1999. The adoption of this statement had no material  impact
 on the Company's financial statement.

 In  June 1999, the FASB issued SFAS No. 136 (Transfers of Assets to a Not-
 for-Profit  Organization  or  Charitable  Trust  that  Raises   or   Holds
 Contributions  for  Others).   This statement  establishes  standards  for
 transactions  in  which  an entity, the donor,  makes  a  contribution  by
 transferring assets to a not-for-profit organization or charitable  trust,
 the  recipient  organization, that accepts the assets from the  donor  and
 agrees  to  use  those assets on behalf of or transfer those  assets,  the
 return  on  investment  of those assets, or both to  another  entity,  the
 beneficiary,  that  is  specified  by  the  donor.   It  also  establishes
 standards  for  transactions that take place in a similar manner  but  are
 not  contributions  because  the transfers  are  revocable,  repayable  or
 reciprocal.   This statement is effective for financial statements  issued
 for  fiscal  periods beginning after December 15, 1999.  The  adoption  of
 this  statement is not expected to have a material impact on the Company's
 financial statements.

 In  June  2000,  the  FASB  issued SFAS No. 138  (Accounting  for  Certain
 Derivative  Instruments and Certain Hedging Activities).   This  statement
 amends  the accounting and reporting standards of SFAS No. 133 for certain
 derivative instruments and certain hedging activities.  Adoption  of  this
 statement had no material impact on the Company's financial statements.

 In  June 2000, the FASB issued SFAS No. 139 (Recission of SFAS No. 53  and
 amendments to SFAS No. 63, 89 and 121).  This statement rescinds SFAS  No.
 53  and  amends  SFAS No. 63, 89 and 121, which established standards  for
 financial  reporting  by  producers and  distributors  of  motion  picture
 films.   This  statement  will have no impact on the  Company's  financial
 statements.

<PAGE> 24

Note 1 - Summary of Significant Accounting Policies (Continued)
---------------------------------------------------------------
 In  September 2000, the FASB issued SFAS No. 140 (Accounting for Transfers
 and  Servicing  of  Financial Assets and Extinguishments of  Liabilities).
 This  statement  replaces  SFAS No. 125.  It  revises  the  standards  for
 accounting  for  securitizations and other transfers of  financial  assets
 and  collateral and requires certain disclosures, but it carries over most
 of  Statement  125's provisions without reconsideration.   This  statement
 provides  accounting and reporting standards for transfers  and  servicing
 of  financial assets and extinguishements of liabilities.  Those standards
 are  based  on  consistent application of a financial-components  approach
 that  focuses  on  control.   Under that approach,  after  a  transfer  of
 financial assets, an entity recognizes the financial and servicing  assets
 it  controls  and the liabilities it has incurred, derecognizes  financial
 assets  when  control  has been surrendered, and derecognizes  liabilities
 when  extinguished.   This  statement provides  consistent  standards  for
 distinguishing  transfers  of  financial  assets  that  are   sales   from
 transfers  that are secured borrowings.  This statement is  effective  for
 transfers  and  servicing  of  financial  assets  and  extinguishments  of
 liabilities  occurring after March 31, 2001.  Adoption of  this  statement
 had no material impact on the Company's financial statements.


Note 2 - Cash
-------------
As of September 30, 2000, the Bank had cash on deposit with certain
commercial banks in excess of federal depository insurance as follows:
<TABLE>
<CAPTION>
                                                           FEDERAL
                                   BOOK         BANK      DEPOSITORY
                                 BALANCE      BALANCE     INSURANCE
                                ----------   ----------   ----------
<S>                             <C>          <C>          <C>
     Total                      $1,249,905      350,906      331,446
                                ==========   ==========   ==========
</TABLE>

As  of  September  30,  1999, the Bank had cash  on  deposit  with  certain
commercial banks in excess of federal depository insurance as follows:
<TABLE>
<CAPTION>
                                                           FEDERAL
                                   BOOK         BANK      DEPOSITORY
                                 BALANCE      BALANCE     INSURANCE
                                ----------   ----------   ----------
<S>                             <C>          <C>          <C>
     Total                      $1,018,659      625,459      323,755
                                ==========   ==========   ==========
</TABLE>


Note 3 - Investment Securities
------------------------------
Investment  securities are carried in the accompanying  balance  sheets  as
follows:

Securities available-for-sale consist of the following:
-------------------------------------------------------
As of September 30, 2000:
<TABLE>
<CAPTION>
                                           GROSS      GROSS
                             AMORTIZED  UNREALIZED  UNREALIZED   MARKET
                                COST       GAINS      LOSSES     VALUE
                            ----------  ----------  ---------  ---------
<S>                         <C>         <C>         <C>        <C>
Obligations of other U.S.
 Government agencies        $4,928,756           0     97,773  4,830,983
Mortgage-backed securities   1,033,594       3,543     12,192  1,024,945
State, County and Municipal
 securities                    693,277         821      3,622    690,476
                            ----------  ----------  ---------  ---------
                            $6,655,627       4,364    113,587  6,546,404
                            ==========  ==========  =========  =========
</TABLE>

<PAGE> 25

Note 3 - Investment Securities (Continued)
------------------------------------------
As of September 30, 1999:
<TABLE>
<CAPTION>
                                           GROSS      GROSS
                             AMORTIZED  UNREALIZED  UNREALIZED   MARKET
                                COST       GAINS      LOSSES     VALUE
                            ----------  ----------  ---------  ---------
<S>                         <C>         <C>         <C>        <C>
U.S. Treasury Obligations   $  298,413       1,665          0    300,078
Obligations of other U.S.
 Government agencies         5,091,933           0    112,126  4,979,807
Mortgage-backed securities     896,081       7,382     12,680    890,783
State, County and Municipal
 securities                    390,000           0      1,967    388,033
                            ----------  ----------  ---------  ---------
                            $6,676,427       9,047    126,773  6,558,701
                            ==========  ==========  =========  =========
</TABLE>

The  amortized  cost  and  estimated market value  of  debt  securities  at
September  30,  2000, by contractual maturity, are shown  below.   Expected
maturities  will differ from contractual maturities because  borrowers  may
have  the  right  to  call or prepay obligations with or  without  call  or
prepayment penalties.
<TABLE>
<CAPTION>

                                                       SECURITIES
                                                   AVAILABLE-FOR-SALE
                                                 -----------------------
                                                  AMORTIZED      MARKET
                                                     COST        VALUE
                                                 ----------   ----------
<S>                                              <C>          <C>
Due in one year or less                          $  452,219      442,270
Due after one year through
 five years                                       4,915,415    4,829,388
Due after five years through
 ten years                                          203,277      201,500
Due after ten years through
 fifteen years                                      837,791      827,556
Due after fifteen years through
 twenty years                                       246,925     245,690
                                                 ----------   ----------
                                                 $6,655,627    6,546,404
                                                 ==========   ==========
</TABLE>

Proceeds from sales of available-for-sale securities during the years ended
September  30,  2000 and 1999 were $541,477 and $500,000 with  gross  gains
(losses)  of  $(7,387)  and $2,594 being realized, respectively.   Proceeds
from  maturities  of available-for-sale securities during the  years  ended
September 30, 2000 and 1999 were $0 and $2,300,000, respectively.  Proceeds
from  maturities  of  held-to-maturity securities during  the  years  ended
September 30, 2000 and 1999 were $0 and $200,000, respectively.

Securities with a carrying value of $780,188 and $586,314 at September  30,
2000  and  1999,  respectively, were pledged to  secure  public  monies  as
required by law.

<PAGE> 26

Note 4 - Loans Receivable
-------------------------
A summary of loans receivable is presented below:
<TABLE>
<CAPTION>

                                                      SEPTEMBER 30,
                                                ------------------------
                                                   2000        1999
                                                -----------  -----------
<S>                                             <C>          <C>
First mortgage loans                            $43,030,387   38,302,559
Construction loans                                4,155,435    2,801,542
FHLMC pool                                            1,044        1,787
Share loans                                         551,954      469,609
Consumer loans                                    3,248,972    1,812,528
                                                -----------  -----------
                                                 50,987,792   43,388,025

Loans in process                                 (1,425,127)  (1,825,400)
Allowance for loan losses                          (438,456)    (389,000)
Deferred loan origination fees                      (72,205)     (52,857)
                                                -----------  -----------
                                                $49,052,004   41,120,768
                                                ===========  ===========
</TABLE>

An analysis of changes in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
                                                YEAR ENDED SEPTEMBER 30,
                                                ------------------------
                                                    2000        1999
                                                -----------  -----------
<S>                                             <C>          <C>
 Balance at beginning of period                 $   389,000      370,000
 Provision charged to income                         60,154       19,900
 Recoveries                                               0            0
 Losses charged to allowance                        (10,698)        (900)
                                                -----------  -----------
                                                $   438,456      389,000
                                                ===========  ===========
</TABLE>

First  mortgage  loans on residential (one-to-four units) real  estate  are
pledged  to secure advances from the Federal Home Loan Bank (See Note  13).
The  advances must be fully secured after discounting the qualifying  loans
at 75% of the principal balances outstanding.

The  Bank predominately grants mortgage and consumer loans to customers  in
the  immediate Quitman and South Georgia area.  The Bank has a  diversified
loan portfolio consisting predominately of mortgage loans collateralized by
residential  properties.   The following schedule  provides  an  additional
summary of the Bank's loans:
<TABLE>
<CAPTION>

                                                      SEPTEMBER 30,
                                                ------------------------
                                                   2000        1999
                                                -----------  -----------
<S>                                             <C>          <C>
First Mortgage Loans:
 Secured by 1 to 4 family
   residences                                   $36,014,298   31,580,020
 Secured by over 4 family
   residences                                       856,130      612,668
 Other real estate                                6,159,959    6,109,871
Construction loans                                4,155,435    2,801,542
FHLMC pools                                           1,044        1,787
Share loans                                         551,954      469,609
Consumer loans                                    3,248,972    1,812,528
                                                -----------  -----------
                                                 50,987,792   43,388,025

Loans in Process                                 (1,425,127)  (1,825,400)
Allowance for loan losses                          (438,456)    (389,000)
Deferred loan origination fees                      (72,205)     (52,857)
                                                -----------  -----------
    Total                                       $49,052,004   41,120,768
                                                ===========  ===========
</TABLE>

<PAGE> 27

Note 4 - Loans Receivable (Continued)
-------------------------------------
Loans  on  which the accrual of interest has been discontinued amounted  to
$193,819  and  $228,113 at September 30, 2000 and 1999,  respectively.   If
interest  on  those  loans  had  been  accrued,  such  income  would   have
approximated $14,200 and $19,745 for the years ended September 30, 2000 and
1999, respectively.  Interest income on those loans, which is recorded only
when received, amounted to $10,086 and $8,392 for the years ended September
30,  2000  and 1999, respectively.  No contractual modifications have  been
made to these loans that would affect the interest ultimately due.

There  were  no  loans  at  September 30, 2000 or 1999,  which  the  Bank's
management considered to be impaired.

Loans  receivable  includes loans to officers and  directors  of  the  Bank
totaling  approximately $1,167,543 and $980,056 at September 30,  2000  and
1999,  respectively. Since November 1996, loans to officers  and  directors
are  made at an interest rate equal to two percent (2.00%) above the Bank's
cost  of  funds  rate.  All related party loans were made in  the  ordinary
course  of  business  and  did not involve more than  the  normal  risk  of
collectibility or present other unfavorable features.


Note 5 - Office Properties and Equipment
----------------------------------------
Office properties and equipment, at cost, are summarized as follows:
<TABLE>
<CAPTION>

                                        SEPTEMBER 30,         ESTIMATED
                                      2000         1999      USEFUL LIVES
                                   ----------   ----------   ------------
<S>                                <C>          <C>          <C>
 Land                              $  228,914      228,914
 Buildings                            831,017      831,017   20-31 years
 Furniture and fixtures               773,862      749,315   5-10 years
 Automobile                            31,337       31,337   5 years
                                   ----------   ----------
                                    1,865,130    1,840,583
 Less accumulated depreciation        381,523      239,185
                                   ----------   ----------
                                   $1,483,607    1,601,398
                                   ==========   ==========
</TABLE>

Depreciation  expense for the years ended September 30, 2000 and  1999  was
$142,339 and $110,046, respectively.


Note 6 - Accrued Interest Receivable
------------------------------------
Accrued interest receivable is summarized as follows:
<TABLE>
<CAPTION>

                                                      SEPTEMBER 30,
                                                ------------------------
                                                   2000        1999
                                                -----------  -----------
<S>                                             <C>          <C>
 Investment securities                          $   103,059      100,059
 Loans receivable                                   480,271      414,231
                                                -----------  -----------
                                                $   583,330      514,290
                                                ===========  ===========
</TABLE>

<PAGE> 28

Note 7 - Deposit Account Analysis
---------------------------------
An  analysis of deposit accounts and the weighted average interest rates as
of the dates indicated is presented below:
<TABLE>
<CAPTION>
                                             SEPTEMBER 30,
                              -------------------------------------------
                                      2000                   1999
                              --------------------   --------------------
                               BOOK VALUE     %       BOOK VALUE     %
                              -----------  -------   -----------  -------
<S>                           <C>          <C>       <C>          <C>
Type of Account:
 Checking Accounts            $ 1,002,609    2.12        636,751    1.52
 N.O.W. Accounts - 3.04%
   (1999 - 3.48%)               2,062,054    4.35      2,029,835    4.83
 Passbook - 4.02%
    (1999 - 3.14%)              1,949,812    4.12      2,068,427    4.93
 Certificates - 6.01%
   (1999 - 5.86%)              42,321,543   89.41     37,258,082   88.72
                              -----------  -------   -----------  -------
                              $47,336,018  100.00%    41,993,095  100.00%
                              ===========  =======   ===========  =======
</TABLE>

The  aggregate  amount  of  certificates of  deposit  in  denominations  of
$100,000  or more was $9,369,333 and $9,694,268 at September 30,  2000  and
1999, respectively.

At September 30, 2000, scheduled maturities of certificates of deposit were
as follows:
<TABLE>
<CAPTION>
             YEAR ENDING
            SEPTEMBER 30,
            -------------
<S>                                         <C>
               2001                         $35,994,381
               2002                           4,548,978
               2003                           1,524,362
               2004                             229,396
               2005                              24,426
                                            -----------
                                            $42,321,543
                                            ===========
</TABLE>

The  Bank  held  deposits of $596,776 and $395,778 for related  parties  at
September 30, 2000 and 1999, respectively.

Interest expense on deposits is summarized as follows:
<TABLE>
<CAPTION>
                                                 YEAR ENDED SEPTEMBER 30,
                                                     2000        1999
                                                 ----------   ----------
<S>                                              <C>          <C>
 Passbook savings                                $   86,747       77,195
 NOW                                                 66,839       62,406
 Certificates of deposit                          2,329,897    2,029,760
                                                 ----------   ----------
                                                 $2,483,483    2,169,361
                                                 ==========   ==========
</TABLE>

Note 8 - Stockholders' Equity and Regulatory Matters
----------------------------------------------------
On October 14, 1997, the Bank's Board of Directors formally approved a plan
("Plan")  to convert from a federally-chartered mutual savings  bank  to  a
federally-chartered stock savings bank.  The Plan, which included formation
of  a  holding  company, was approved by the Office of  Thrift  Supervision
(OTS)  and  included  the  filing  of a  registration  statement  with  the
Securities and Exchange Commission.  The conversion was completed on  April
2, 1998.

The  Plan  called for the common stock of the Bank to be purchased  by  the
holding  company  and  for the common stock of the holding  company  to  be
offered  to various parties in a subscription offering at a price based  on
an  independent appraisal.  The proceeds received under the conversion were
as follows:
<TABLE>
<S>                                          <C>
 661,250 shares of  common stock issued
   @ $10 per share                           $6,612,500
 Cost of conversion                             410,963
                                             ----------
 Net Proceeds                                $6,201,537
                                             ==========
</TABLE>

<PAGE> 29

Note 8 - Stockholders' Equity and Regulatory Matters (Continued)
----------------------------------------------------------------
The Bank may not declare or pay a cash dividend if the effect thereof would
cause its net worth to be reduced below either the amounts required for the
liquidation  account discussed below or the regulatory capital requirements
imposed by federal regulations.

At  the  time  of  conversion, the Bank established a liquidation  account,
which  will  be  a memorandum account that does not appear on  the  balance
sheet, in an amount equal to its retained income as reflected in the latest
consolidated  balance sheet used in the final conversion  prospectus.   The
liquidation account will be maintained for the benefit of eligible  account
holders  who continue to maintain their deposit accounts in the Bank  after
conversion.  In the event of a complete liquidation of the Bank  (and  only
in  such  an event), eligible depositors who continue to maintain  accounts
shall  be  entitled to receive a distribution from the liquidation  account
before any liquidation may be made with respect to common stock.

The Bank is 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  - 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  classification  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 Bank to maintain minimum amounts and ratios (set forth  in  the
table below) of risk-based capital (as defined in the regulations) to risk-
weighted  assets  (as defined), tangible capital (as defined)  to  adjusted
total  assets (as defined) and core capital (as defined) to adjusted  total
assets  (as  defined).  Management believes, as of September 30,  2000  and
1999, that the Bank meets all capital adequacy requirements to which it  is
subject.

As  of June 30, 1998, the most recent notification from the OTS 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 tangible, core and risk-based ratios as set forth in
the  following  tables.   There  are no conditions  or  events  since  that
notification  that  management  believes  have  changed  the  institution's
category.

The  following tables reconcile capital under generally accepted accounting
principles (GAAP) to regulatory capital (in thousands).
<TABLE>
<CAPTION>
                                     TANGIBLE       CORE      RISK-BASED
                                     CAPITAL       CAPITAL      CAPITAL
                                    ----------   ----------   ----------
<S>                                 <C>          <C>          <C>
At September 30, 2000:
  Total equity                      $    6,317        6,317        6,317
  Unrealized (gains) losses
    on securities                           66           66           66
  General valuation allowance                0            0          438
                                    ----------   ----------   ----------
  Regulatory Capital                $    6,383        6,383        6,821
                                    ==========   ==========   ==========

At September 30, 1999:
  Total equity                      $    6,108        6,108        6,108
  Unrealized (gains) losses
    on securities                           67           67           67
  General valuation allowance                0            0          389
                                    ----------   ----------   ----------
  Regulatory Capital                $    6,175        6,175        6,564
                                    ==========   ==========   ==========
</TABLE>

<PAGE> 30

Note 8 - Stockholders' Equity and Regulatory Matters (Continued)
----------------------------------------------------------------
The  Bank's  actual  capital amounts and ratios are presented  (dollars  in
thousands) as follows:
<TABLE>
<CAPTION>
                                                                 TO BE WELL
                                                                CAPITALIZED
                                                                UNDER PROMPT
                                                 FOR CAPITAL     CORRECTIVE
                                                  ADEQUACY         ACTION
                                   ACTUAL         PURPOSES       PROVISIONS
                               --------------  --------------  --------------
                               AMOUNT   RATIO  AMOUNT   RATIO  AMOUNT   RATIO
                               ------  ------  ------  ------  ------  ------
<S>                            <C>     <C>     <C>     <C>     <C>     <C>
As of September 30, 2000:
 Tangible Capital
   (to adjusted total assets)  $6,383  10.69%     896    1.5%   2,986    5.0%
 Core Capital
   (to adjusted total assets)   6,383  10.69%   2,388    4.0%   2,986    5.0%
 Risk-Based Capital
   (to risk-weighted assets)    6,821  16.53%   3,301    8.0%   4,126   10.0%

As of September 30, 1999:
 Tangible Capital
   (to adjusted total assets)  $6,175  11.91%     778    1.5%   2,593    5.0%
 Core Capital
   (to adjusted total assets)   6,175  11.91%   2,074    4.0%   2,593    5.0%
 Risk-Based Capital
   (to risk-weighted assets)    6,564  18.49%   2,840    8.0%   3,550   10.0%
</TABLE>


Note 9 - Provision For Income Taxes
-----------------------------------
The income tax provision is as follows:
<TABLE>
<CAPTION>
                                                 YEAR ENDED SEPTEMBER 30,
                                                 -----------------------
                                                     2000        1999
                                                 ----------   ----------
<S>                                              <C>          <C>
 Taxes payable currently                         $  124,234      209,151
 Deferred taxes (benefit)                            12,013     (18,366)
 Total tax provision                             $  136,247      190,785
</TABLE>

The  provision for income taxes represents the portion of estimated  income
taxes relating to the years ended September 30, 2000 and 1999.

Through  1995, the Bank qualified under provisions of the Internal  Revenue
Code  which  permitted annual bad debt deductions based on a percentage  of
taxable  income  before  such  deductions.  The  maximum  annual  bad  debt
deduction  was  8% under the Tax Reform Act of 1986.  New  tax  legislation
effective  for 1996 eliminates the percentage of taxable income method  for
computing  the provision for bad debts of thrift institutions and  requires
the  recapture of the provision for bad debts since 1987 to the extent that
the  provision  computed  under the percentage  of  taxable  income  method
exceeds  that  which would have been computed under the experience  method.
Such  recapture totals $142,587 for the Bank and results in  an  additional
income tax liability of $48,480.  This additional tax may be repaid over  a
six year period beginning in 1996 or, if certain conditions are met, over a
six  year  period beginning in 1998.  The full amount of the recapture  was
accrued as of September 30, 1996.

Retained  earnings  at  September 30, 2000  include  accumulated  bad  debt
deductions  prior to 1988 amounting to approximately $6,000  for  which  no
provision for income taxes has been made.  If, in the future, these amounts
are  used for any purpose other than to absorb losses on bad debts, federal
income  taxes will be imposed at the then applicable rates.  The amount  of
unrecognized deferred tax liability is approximately $2,040.

<PAGE> 31

Note 9 - Provision for Income Taxes (Continued)
-----------------------------------------------
Deferred  taxes on income result from timing differences in the recognition
of  revenue and expense for tax and financial statement purposes.  Deferred
tax  assets have been recorded.  No valuation allowance was required.   The
amount and sources of these assets were as follows:
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Deferred Tax Assets:
 Allowance for loan losses                       $  138,875      122,060
 Unrealized losses on available-for-sale
   securities                                        37,135       40,027
 Deferred compensation payable                        1,331            0
                                                 ----------   ----------
    Total                                           177,341      162,087
                                                 ----------   ----------
Deferred Tax Liabilities:
 Bad debt deduction recapture                        26,259       36,788
 Depreciation                                        38,570       21,908
                                                 ----------   ----------
   Total                                             64,829       58,696
                                                 ----------   ----------
 Net Deferred Tax Assets (Liabilities)           $  112,512      103,391
                                                 ==========   ==========
</TABLE>

The  following  is  a  summary of the differences between  the  income  tax
expense  as  shown in the accompanying financial statements and the  income
tax expense which would result from applying the Federal statutory tax rate
of 34% to earnings before taxes on income:
<TABLE>
<CAPTION>
                                                 YEAR ENDED SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
 Expected income tax                             $  138,908      183,289
 Increase (decrease) in tax resulting from:
   State and local taxes                             14,088       18,949
   Other, net                                       (16,749)     (11,453)
                                                 ----------   ----------
 Actual income tax expense                       $  136,247      190,785
                                                 ==========   ==========
</TABLE>

Note 10 - Commitments, Contingencies and Financial Instruments With Off-
Balance-Sheet Risk
------------------------------------------------------------------------
The  consolidated  financial statements do not reflect various  commitments
and contingent liabilities which arise in the normal course of business and
which  involve  elements of credit risk, interest rate risk  and  liquidity
risk.   These  commitments and contingent liabilities  are  commitments  to
extend  credit  and standby letters of credit.  A summary  of  the  Bank's'
commitments and contingent liabilities is as follows:
<TABLE>
<CAPTION>
                                                     NOTIONAL AMOUNT
                                                 -----------------------
                                                      SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
  Commitments to extend credit                   $1,425,127    1,825,400
  Standby letters of credit                          61,300      109,790
</TABLE>

Commitments  to  extend credit and standby letters of  credit  all  include
exposure  to  some  credit  loss  in the event  of  nonperformance  by  the
customer.  The Bank's credit policies and procedures for credit commitments
are  the  same as those for extensions of credit that are reported  in  the
financial statements.  Because these instruments have fixed maturity  dates
and  because  many  of them expire without being drawn upon,  they  do  not
generally present any significant liquidity risk to the Bank.  The Bank has
not  incurred any losses on its commitments in the year ended September 30,
2000 or 1999.

<PAGE> 32

Note 11 - Retirement Plans
--------------------------
401(k)  Plan - The Bank has a 401(k) plan, covering all full-time employees
who  meet  the  plan's eligibility requirements.  The  plan  is  a  defined
contribution plan.  The Bank made contributions to the plan in  the  amount
of $0 and $0 for the years ended September 30, 2000 and 1999, respectively.

Deferred Compensation Plan - Effective December 15, 1996, the Bank  adopted
a deferred compensation plan for the benefit of its officers and directors.
Although the plan is to be funded from the general assets of the Bank, life
insurance policies were acquired for the purpose of serving as the  primary
funding  source.   As of September 30, 2000 and 1999, the  cash  values  of
those  policies  were $626,638 and $482,354 and the liability  accrued  for
benefits payable under the plan was $3,914 and $0, respectively.

Employee  Stock Ownership Plan - Effective April 2, 1998, the Bank  adopted
an  employee stock ownership plan (ESOP) for those employees who  meet  the
eligibility requirements of the plan.

The  ESOP  trust  borrowed $529,000 on April 2, 1998 from the  Company  and
purchased 52,900 shares of the Company's common stock at a price of $10 per
share.   The  loan  is a ten-year loan with principal payments  of  $52,900
annually plus interest at 8.5% and is guaranteed by the Bank.

ESOP  shares  are  maintained  in  a suspense  account  until  released  to
participants' accounts.  The release of shares from the suspense account is
based  on  the debt service paid in the year in proportion to the total  of
current year and remaining debt service.  Allocation of released shares  to
participants'  accounts is done as of December 31 based on  the  then  fair
market value of the shares.  Fair market value is determined from the  last
published trade on or prior to the valuation date.

As  of  September  30, 2000 and 1999, the ESOP held 52,900  shares  of  the
Company's common stock as follows:
<TABLE>
<CAPTION>
                                                       SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Number of Shares:
    Released and allocated                            7,935        2,645
    Suspense                                         44,965       50,255

Fair Value:
    Released and allocated                       $   71,911       28,090
    Suspense                                        407,495      533,708

</TABLE>

The  expense recorded by the Company is based on contributions to the  ESOP
accrued during the year in amounts determined by the Board of Directors and
represents compensation and interest as follows:
<TABLE>
<CAPTION>
                                                       YEAR ENDED
                                                      SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Compensation                                     $   33,605       27,851
Interest                                             39,344       43,459
                                                 ----------   ----------
                                                 $   72,949       71,310
                                                 ==========   ==========
</TABLE>

<PAGE> 33

Note 12 - Reconciliation of Regulatory Reports
----------------------------------------------
Net  income  and net worth of the Bank reported in these audited  financial
statements  is  the  same as amounts in reports filed with  the  Office  of
Thrift Supervision (OTS) as follows (In Thousands):

Net Income:
<TABLE>
<CAPTION>
                                                 YEAR ENDED SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Net Income reported to OTS                       $      256          338

Reconciling Items                                         0            0
                                                 ----------   ----------
Net Income for the twelve months ended
 September 30 per audited financial statement    $      256          338
                                                 ==========   ==========
</TABLE>

Net Worth:
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Net Worth reported to OTS                        $    6,317        6,108

Reconciling Items                                         0            0
                                                 ----------   ----------
Total Net Worth on September 30, per audited
 financial statement                             $    6,317        6,108
                                                 ==========   ==========
</TABLE>


Note 13 - Advances From Federal Home Loan Bank
----------------------------------------------
Advances consist of the following:
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Advances payable - Federal Home Loan Bank of
  Atlanta, bearing interest at 6.94%,
  due October 4, 2000, collateralized by all
  stock in the Federal Home Loan Bank and
  qualifying first mortgage loans.               $5,000,000    2,500,000
                                                 ==========   ==========
</TABLE>


Note 14 - Fair Values of Financial Instruments
----------------------------------------------
The  estimated  fair values of the Company's financial instruments  are  as
follows:
<TABLE>
<CAPTION>
                               SEPTEMBER 30, 2000      SEPTEMBER 30, 1999
                             ----------------------- -----------------------
                               CARRYING      FAIR      CARRYING      FAIR
                                AMOUNT      VALUE       AMOUNT      VALUE
                             ----------- ----------- ----------- -----------
<S>                          <C>         <C>         <C>         <C>
Financial assets:
 Cash and cash equivalents   $ 1,663,455   1,663,455   1,968,695   1,968,695
 Investment securities         6,546,404   6,546,404   6,558,701   6,558,701
 Loans, net of allowance
   for loan losses            49,052,004  49,021,000  41,120,768  41,308,000
 Accrued interest receivable     583,330     583,330     514,290     514,290
 Investment in Federal Home
   Loan Bank stock               320,300     320,300     286,700     286,700

Financial liabilities:
 Deposits                     47,336,018  47,260,000  41,993,095  42,058,000
 Advances from Federal Home
   Loan Bank                   5,000,000   5,000,000   2,500,000   2,500,000
 Accrued interest payable        337,586     337,586     303,512     303,512

</TABLE>

<PAGE> 34

Note - 14- Fair Values of Financial Instruments (Continued)
-----------------------------------------------------------
The  carrying amounts in the preceding table are included in the  statement
of financial condition under the applicable captions.
<TABLE>
<CAPTION>
                               SEPTEMBER 30, 2000      SEPTEMBER 30, 1999
                             ----------------------- -----------------------
                               CARRYING      FAIR      CARRYING      FAIR
                                AMOUNT      VALUE       AMOUNT      VALUE
                             ----------- ----------- ----------- -----------
<S>                          <C>         <C>         <C>         <C>
Other:
 Loan commitments            $ 1,425,127   1,425,127   1,825,400   1,825,400
 Standby letters of credit        61,300      61,300     109,790     109,790

</TABLE>


Note 15 - Related Party Transactions
------------------------------------
Related  parties  to  the  Company  are  identified  as  its  officers  and
directors.  During the years ended September 30, 2000 and 1999, the Company
had the following related party transactions:
<TABLE>
<CAPTION>
                                                 YEAR ENDED SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Loans to officers and directors (balance at
 September 30), Note 4                           $1,167,543      980,056
Deposits held for officers and directors (balance
 at September 30), Note 7                           596,776      395,778
Insurance premiums paid - director                   15,845       47,664
Legal fees paid - director                            3,090        5,616
Supplies purchased - officers and directors           8,295        3,369
Furnishings purchased                                 1,011       78,158

</TABLE>

<PAGE> 35

Note 16 - Financial Information of Quitman Bancorp, Inc. (Parent Only)
----------------------------------------------------------------------
<TABLE>
<CAPTION>

                     STATEMENT OF FINANCIAL CONDITION
                     --------------------------------

                                  ASSETS
                                  ------
                                                      SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Cash on deposit                                  $   79,016       22,425
Investment in Quitman Federal Savings Bank        6,316,975    6,108,324
Investment securities available-for-sale            739,062      986,400
Loans receivable - subsidiary ESOP                  449,650      502,550
Accrued interest receivable                          42,206       50,975
Other assets                                          3,243        5,638
                                                 ----------   ----------
     Total Assets                                $7,630,152    7,676,312
                                                 ==========   ==========

                   LIABILITIES AND STOCKHOLDERS' EQUITY
                   ------------------------------------
Liabilities:
 Income taxes payable                            $    6,039        1,312
                                                 ----------   ----------
Stockholders' Equity:
 Capital stock                                       66,125       66,125
 Additional paid in capital                       6,135,412    6,135,412
 Retained earnings                                3,662,836    3,491,984
 Accumulated other comprehensive income (loss)      (72,086)     (77,699)
 ESOP loan guaranty of subsidiary                  (449,650)    (502,550)
 Treasury stock                                  (1,718,524)  (1,438,272)
                                                 ----------   ----------
                                                  7,624,113    7,675,000
                                                 ----------   ----------
     Total Liabilities and Stockholders' Equity  $7,630,152    7,676,312
                                                 ==========   ==========
</TABLE>

<PAGE> 36

Note 16 - Financial Information of Quitman Bancorp, Inc. (Parent Only)
(Continued)
----------------------------------------------------------------------
<TABLE>
<CAPTION>
                            STATEMENT OF INCOME
                            -------------------
                                                 YEAR ENDED SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Income:
 Equity in income of subsidiary                  $  256,239      338,392
 Interest income                                     82,863       99,695
     Gain (Loss) on sale of securities               (7,319)           0
     Miscellaneous                                      673            0
                                                 ----------   ----------
                                                    332,456      438,087

Expenses                                             50,413       83,416
                                                 ----------   ----------
Income before taxes                                 282,043      354,671

Income taxes                                          9,738        6,372
                                                 ----------   ----------
Net Income                                       $  272,305      348,299
                                                 ==========   ==========
</TABLE>

<PAGE> 37

Note 16 - Financial Information of Quitman Bancorp, Inc. (Parent Only)
(Continued)
----------------------------------------------------------------------
<TABLE>
<CAPTION>
                          STATEMENT OF CASH FLOWS
                          -----------------------
                                                 YEAR ENDED SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
Cash Flows From Operating Activities:
 Net income                                      $  272,305      348,299
 Adjustments:
   Equity in income of subsidiary                  (256,239)    (338,392)
   Amortization of premium on securities              4,210        3,890
   (Gain) Loss on sale of securities                  7,319            0
   Dividends received from subsidiary               101,452            0
   (Increase) decrease in accrued
     interest receivable                              8,769       (7,273)
   Increase (decrease) in income
     taxes payable                                    4,727       (8,105)
                                                 ----------   ----------
Net Cash Provided (Used) By Operating Activities    142,543       (1,581)
                                                 ----------   ----------
Cash Flows From Investing Activities:
 Purchase of available-for-sale securities                0     (505,665)
 Maturity of available-for-sale securities                0      500,000
 Payments received on loan to subsidiary ESOP        52,900       26,450
 Proceeds from sale of available-for-sale
   Securities                                       242,851            0
                                                 ----------   ----------
Net Cash Provided (Used) By Investing Activities    295,751       20,785
                                                 ----------   ----------
Cash Flows From Financing Activities:
 Dividends paid                                    (101,452)    (112,413)
 Purchase of treasury stock                        (280,251)  (1,438,272)
                                                 ----------   ----------
Net Cash Provided By Financing Activities          (381,703)  (1,550,685)
                                                 ----------   ----------
Net Increase In Cash                                 56,591   (1,531,481)

Cash And Cash Equivalents At Beginning Of Period     22,425    1,553,906
                                                 ----------   ----------
Cash And Cash Equivalents At End Of Period       $   79,016       22,425
                                                 ==========   ==========

Supplemental Disclosure of Cash Flow Information:
-------------------------------------------------
 Cash Paid During The Period For:
  Interest                                       $        0            0
                                                 ==========   ==========
  Income taxes                                   $    5,011       14,477
                                                 ==========   ==========

Schedule Of Non-Cash Investing And Financing Activities:
--------------------------------------------------------
 Total increase (decrease) in unrealized gains on
   Securities available-for-sale                 $    7,042      (25,576)
                                                 ==========   ==========
</TABLE>

<PAGE> 38

Note 17 - 1999 Stock Option Plan
--------------------------------
The  Company adopted a Stock Option Plan (the Plan), which was approved  by
the  stockholders on April 13, 1999.  The purpose of the plan is to attract
and  retain qualified personnel for positions of substantial responsibility
and  to  provide  additional incentive to certain officers, directors,  key
employees and other persons to promote the success of the business  of  the
Company  and  the Bank.  The Plan authorizes the granting of stock  options
for  up  to  66,125 shares of common stock.  Under the Plan,  the  exercise
price of each option equals the market price of the Company's stock on  the
grant date, and an option's maximum term is ten years.  Options are granted
as administered by the Board of Directors.

The fair value of each option grant is estimated on the grant date using an
options pricing model with the following weighted-average assumptions  used
for  grants  in the year ended September 30, 1999:  dividend  yield  1.87%,
risk-free interest rate of 4.81%, expected lives of 5 years for the options
and a volatility rate of 23.06%.

Weighted-average  assumptions used for grants in the year  ended  September
30, 2000 are as follows:  dividend yield 2.10%, risk free interest rate  of
6.00%, expected lives of 4.5 years for the options and a volatility rate  of
3.05%.

A  summary  of  the  statement of the Company's Stock  Option  Plan  as  of
September 30, 2000 and 1999 and the changes during the years then ended  is
presented below:
<TABLE>
<CAPTION>

                                    YEAR ENDED             YEAR ENDED
                                SEPTEMBER 30, 2000     SEPTEMBER 30, 1999
                                ------------------     ------------------
                                         WEIGHTED-              WEIGHTED-
                                         AVERAGE                AVERAGE
                                         EXERCISE               EXERCISE
                                SHARES    PRICE        SHARES    PRICE
                                ------  ----------     ------  ----------
<S>                             <C>     <C>            <C>     <C>
 Outstanding at
   beginning of
   year                         66,121  $     9.75          0  $      .00
 Granted                             0         .00     66,121        9.75
 Exercised                           0         .00          0         .00
 Forfeited                           0         .00          0         .00
                                ------                 ------
 Outstanding at end of year     66,121  $     9.75     66,121        9.75
                                ======                 ======
 Exercisable at
   September 30                 66,121                 44,961
                                ======                 ======
 Weighted-average fair
   value of options
   granted during
   the year                             $     1.20             $     2.97
                                        ==========             ==========
</TABLE>

The following table summarizes information about fixed stock options
outstanding at September 30, 2000:
<TABLE>
<CAPTION>

                           WEIGHTED-
  RANGE OF                  AVERAGE     WEIGHTED-                 WEIGHTED-
  OR ACTUAL    NUMBER      REMAINING    AVERAGE       NUMBER      AVERAGE
  EXERCISE   OUTSTANDING  CONTRACTUAL   EXERCISE    EXERCISABLE   EXERCISE
   PRICES    AT 9-30-00      LIFE        PRICE      AT 9-30-00     PRICE
-----------  -----------  -----------  -----------  -----------  -----------
<C>          <C>          <C>          <C>          <C>          <C>
  $  9.75       66,121      8 YEARS      $  9.75       66,121      $  9.75
</TABLE>

If  the Company had used the fair value based method of accounting for  its
Stock  Option  Plan,  as  prescribed by Statement of  Financial  Accounting
Standards  No. 123, directors and officers compensation cost in net  income
for  the  year  ended September 30, 2000 would have increased  by  $25,392,
resulting in net income of $257,070, net of tax.  Basic earnings per  share
would  have declined from $.59 to $.55 and diluted earnings per share would
have declined from $.59 to $.55.

<PAGE> 39

Note 17 - Stock Option Plan (Continued)
---------------------------------------
If  the Company had used the fair value based method of accounting for  its
Stock  Option  Plan,  as  prescribed by Statement of  Financial  Accounting
Standards  No. 123, directors and officers compensation cost in net  income
for  the  year  ended September 30, 1999 would have increased by  $133,534,
resulting in net income of $268,179, net of tax.  Basic earnings per  share
would  have declined from $.65 to $.50 and diluted earnings per share would
have declined from $.65 to $.50.


Note 18 - Restricted Stock Plan
-------------------------------
The  Company  adopted a Restricted Stock Plan (RSP), which was approved  by
the  stockholders on April 13, 1999.  The RSP was adopted as  a  method  of
providing  directors,  officers  and key  employees  of  the  Bank  with  a
proprietary interest in the Company in a manner designed to encourage  such
persons to remain in the employment or service of the Bank.

The  Bank  will  contribute sufficient funds to the RSP to purchase  common
stock representing up to 4% of the aggregate number of shares issued in the
conversion  (i.e.,  26,450  shares of common stock)  in  the  open  market.
Alternatively,  the  RSP  may purchase authorized but  unissued  shares  of
common stock or treasury shares from the Company.  All of the common  stock
to  be  purchased by the RSP will be purchased at the fair market value  of
such stock on the date of purchase.

The  RSP  is administered by a Committee appointed by the Bank's  Board  of
Directors.  Plan share awards under the RSP will be determined by  the  RSP
Committee.  All 26,449 shares of common stock were awarded to officers  and
directors  by the RSP during the year ended September 30, 1999.   All  plan
share awards shall be vested at the rate of 20% as of September 1, 1999 and
20% annually thereafter.

Contributions made by the Bank to the RSP for the year ended September  30,
2000 and 1999 were as follows:
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,
                                                 -----------------------
                                                    2000         1999
                                                 ----------   ----------
<S>                                              <C>          <C>
 Number of awards outstanding at
   beginning of year                                 21,159            0
 Number of awards granted                                 0       26,449
 Number of awards earned - 20%                        5,290        5,290
                                                 ----------   ----------
 Number of awards outstanding at end of year         15,869       21,159
                                                 ==========   ==========
 Fair market value of Company's stock,
   per share, on September 1, 2000 and 1999      $    10.00        11.00
                                                 ==========   ==========
 Contributions                                   $   52,900       58,190
                                                 ==========   ==========
</TABLE>

Stock issued under this plan was purchased on the open market at a cost  of
$52,900 and $58,190, which was expensed as compensation for the year  ended
September 30, 2000 and 1999, respectively.

<PAGE> 40
                        QUITMAN BANCORP, INC.
                       602 East Screven Street
                       Quitman, Georgia  31643
                            (912) 263-7538

  Board of Directors and Executive Officers of Quitman Bancorp, Inc.
  ------------------------------------------------------------------

   Claude R. Butler                    John W. Romine
   Chairman of the Board               President and owner
   Pork Producer                       Romine Furniture Co., Inc.

   Robert L. Cunningham, III           Melvin E. Plair
   Vice Chairman of the Board          President and Chief Executive Officer
   Secretary & Treasurer of            Quitman Bancorp, Inc. and Quitman
   R.L. Cunningham & Sons, Inc.        Federal Savings Bank
   Peanut warehouse and peanut
     seed business
                                       Peggy L. Forgione
   Walter B. Holwell                   Vice President and Controller
   Vice President and co-owner         Quitman Bancorp, Inc. and Quitman
   Holwell-Fletcher Insurance          Federal Savings Bank
     Agency, Inc. Insurance agents

   Daniel M. Mitchell, Jr.
   Attorney at Law



      Corporate Counsel                   Independent Auditors
      --------------------------------    -------------------------------
      Daniel M. Mitchell, Jr., Esquire    Stewart, Fowler & Stalvey, P.C.
      110 S. Washington Street            3208 Wildwood Plantation Drive
      Quitman, Georgia  31643             Valdosta, Georgia  31605

      Special Counsel                     Transfer Agent and Registrar
      --------------------------------    ----------------------------
      Manatt, Phelps & Phillips, LLP      Registrar & Transfer Company
      1001 Page Mill Road,Bldg. 2         10 Commerce Drive
      Palo Alto, CA  94304                Cranford, New Jersey  07016
                                          (908) 497-2300


Our  Annual Report for the year ended September 30, 2000 on Form 10-KSB  is
available without charge upon written request.  For a copy of the Form  10-
KSB  or  any other investor information, please write Mr. Melvin E.  Plair,
President  and Chief Executive Officer.  The Annual Meeting of Stockholders
will  be  held on January 23, 2001 at 4:30 p.m. at 602 East Screven Street,
Quitman, Georgia.