EXHIBIT 13




<PAGE>
                              QUITMAN BANCORP, INC.

                                  ANNUAL REPORT
                               For the Year Ended
                               September 30, 1998





<PAGE>





                              QUITMAN BANCORP, INC.
                                  ANNUAL REPORT



                                TABLE OF CONTENTS



Letter to Stockholders......................................................   1


Company Information.........................................................   2


Common Stock Information....................................................   2


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


Independent Auditors' Report................................................  16


Consolidated Financial Statements...........................................  17


Notes to Consolidated Financial Statements..................................  21


Office Locations and Other Corporate Information............................  40



<PAGE>

                             QUITMAN BANCORP, INC.
                            100 West Screven Street
                                  P.O. Box 592
                             Quitman, Georgia 31643

                            Telephone (912) 263-7538



December 15, 1998

Dear Fellow Stockholders:

This is the first 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, of which $3.1 million was
contributed to the bank, whose capital ratios already significantly exceeded all
minimum federal  regulatory  requirements.  The remainder of the new capital was
retained by the company. The bank's financial safety and soundness is the result
of many years of conservative management.

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. Our new main office is under construction and should be
completed in April 1999.  With this new office we will provide even more service
to the communities we serve. We 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 60 years and will continue to
shape our future.

While we are pleased  with the  response to our stock  offering,  the  resulting
consolidated  equity in the Company is  approximately  20.2% of total  assets at
September 30, 1998. Consequently,  in the years ahead capital management will be
one of our greatest challenges.  We are also aware of the recent declines in the
stock  market  and how it has  affected  the price of company  stock.  As fellow
stockholders,  we, like you, are not pleased with the current stock price. While
we can't  control the stock  market,  we can  continue to run the bank and trust
that our stock price will increase in the future  because of the actions we take
now. Our construction of a new office and our increased construction lending are
some examples of this.

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.

Sincerely,

/s/Melvin E. Plair                                         /s/Claude R. Butler
Melvin E. Plair                                            Claude R. Butler
President and CEO                                          Chairman of the Board


<PAGE>

                              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  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 and 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.

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.

                                        2

<PAGE>


     Date                                          High                Low
     ----                                         -------            -------



     April 2, 1998 to June 30, 1998               $15.125            $12.000

     July 1, 1998 to September 30, 1998            13.250              9.000



The number of  shareholders  of record of Common Stock as of September 30, 1998,
was approximately  185,  exclusive of the number of persons or entities who held
stock in nominee or "street" name through various  brokerage firms. At September
30, 1998, there were 661,250 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 have not paid any dividends on the Common Stock.



                                        3

<PAGE>

                      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."


                                        4

<PAGE>

         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 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,
1998, our liquid asset ratio was 13.98%.

         We originate fixed rate real estate loans which  approximated  90.2% of
our loan  portfolio at September  30, 1998.  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, 1998,  these liquid  assets  totalled $6.0
million, which was more than 16.9% of our total liabilities of $35.5 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, 1998,  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.


                                        5

<PAGE>
<TABLE>
<CAPTION>


                             Board Limit of a
                           Percentage Change In                     Change in NPV
                           --------------------           --------------------------------
                                                             Dollars
                              NII         NPV             (in thousands)       Percentages
         Changes           --------     -------           --------------       -----------
        in Market
    Interest Rates(1)
    -----------------
     (basis points)

           <S>              <C>         <C>                <C>                 <C>         
            +400              -60%       -65%               -$1,569             -25.77%

            +300              -60%       -60%               -$1,200             -19.71%

            +200              -40%       -40%               -$  816             -13.40%

            +100              -20%       -25%               -$  416              -6.83%

            -100              -25%       -25%                $  428               7.03%

            -200              -40%       -40%                $  952              15.63%

            -300              -50%       -50%                $1,564              25.69%

            -400              -60%       -60%                $2,204              36.20%

</TABLE>

--------------------
(1)      100 basis points equals 1%.

         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.  Specifically,  the  computation  of an  instantaneous  and
permanent  200 basis  point  decrease  in market  interest  rates  indicated  an
approximately  20% increase in estimated  pre-tax income.  The computation of an
instantaneous  and permanent 200 basis point  increase in market  interest rates
indicated an  approximately  10% decrease in estimated  pre-tax income.  Both of
these  computations  (1) were based on financial  information  at September  30,
1998, (2) assumed net income over the 12 months following September 30, 1998 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 5.25% and our consumer  loans and fixed rate mortgage loans were assumed to
yield 9.25% 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  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


                                        6

<PAGE>


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. We expect that our asset and liability
policies and strategies  will continue as described so long as  competitive  and
regulatory  conditions in the financial institution industry and market interest
rates continue as they have in recent years.

Financial Condition

         Total  consolidated  assets  increased $5.3 million,  or 13.5% to $44.5
million at September 30, 1998,  from $39.2  million at September  30, 1997.  The
increase in total assets reflects a $3.1 million increase in loans receivable, a
$1,990,000  increase in investment  securities,  and a $120,000  increase in the
cash value of life insurance.  Our increase in loans receivable is mainly due to
increased demand for loans in our market area.

         Deposits  increased  $.5 million or 1.5% to $35.0  million at September
30, 1998 from $34.5 million at September  30, 1997.  The increase in fiscal 1998
was a result of  competitive  pricing  to fund loan  demand.  Advances  from the
Federal Home Loan Bank ("FHLB") of Atlanta decreased $1.3 million to $-0-. Other
liabilities  increased by $69,000  primarily due to the accrual of contributions
to our employee stock ownership plan of $60,000.  As a result of the conversion,
our equity  increased  $5.7 million.  This has resulted in greater liquid assets
and in reduced interest rate risk.

                                        7

<PAGE>


Average Balance Sheet

         The  following  table sets forth  certain  information  relating to the
Savings  Bank'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,
                                                   --------------------------------------------------------------------------------
                                                                   1998                                       1997
                                                   ---------------------------------------    -------------------------------------
                                                   Average                       Average      Average                     Average
                                                   Balance        Interest      Yield/Cost    Balance       Interest     Yield/Cost
                                                   -------        --------      ----------    -------       --------     ----------
                                                                               (Dollars in thousands)
Interest-earning assets:
<S>                                               <C>              <C>           <C>         <C>            <C>            <C>     
  Loans receivable(1)..........................    $34,577         $3,156         9.13%       $32,065        $2,942         9.18%
  Mortgage-backed securities...................        524             30          5.73           140             8          5.71
  Investment securities........................      3,490            230          6.59         3,617           226          6.25
  Other interest-earning assets................      1,563             99          6.33           345            22          6.38
                                                   -------         ------                      ------        ------
    Total interest-earning assets..............     40,154          3,515          8.75        36,167         3,198          8.84
Non-interest-earning assets....................      1,767             --                       1,515            --
                                                   -------         ------                      ------        ------
    Total assets...............................    $41,921         $3,515                     $37,682        $3,198
                                                    ======          =====                      ======         =====
                                                              
Interest-bearing liabilities:                                 
  NOW Accounts.................................    $ 1,464         $   52          3.55       $ 1,488        $   49          3.29
  Savings accounts.............................      2,240             87          3.88         2,185            82          3.75
  Money market accounts........................         --             --            --            --            --            --
  Certificates of deposit......................     31,783          1,929          6.07        29,427         1,782          6.06
  Other liabilities............................        615             36          5.85         1,175            65          5.53
                                                   -------         ------                      ------        ------
    Total interest-bearing liabilities.........     36,102          2,104          5.83        34,275         1,978          5.77
Non-interest bearing liabilities...............      1,537             --                         519            --
                                                   -------         ------                      ------        ------
    Total liabilities..........................     37,639         $2,104                      34,794        $1,978
                                                                    =====                                     =====
Equity.........................................      4,282                                      2,888
                                                    ------                                     ------
    Total liabilities and retained earnings....    $41,921                                    $37,682
                                                    ======                                     ======
Net interest income............................                    $1,411                                    $1,220
Interest rate spread(2)........................                                   2.92%                                     3.07%
Net yield on interest-earning assets(3)........                                   3.51%                                     3.37%
Ratio of average interest-earning assets                      
 to average interest-bearing liabilities.......                                 111.22%                                   105.52%

</TABLE>
                                                           
---------------------------------

(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.
(4)  Annualized (where  appropriate) for purposes of comparability with year-end
     data.

                                        8

<PAGE>


         The table below sets forth  certain  information  regarding  changes in
interest  income  and  interest  expense  of the  Savings  Bank 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,
                                        --------------------------------------------------------------------------------------
                                                 1998     vs.     1997                        1997     vs.     1996
                                        ----------------------------------------     -----------------------------------------
                                                  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...................   $231       $(15)       $ (1)       $ 215      $ 250      $  35       $   3       $ 288
  Investment securities..............     16          9           1           26         (6)        17           7          18
  Other interest-earning assets......     78         --          (1)          77        (18)         6          (3)        (15)
                                         ---        ---         ---         ----       ----       ----        ----        ----
    Total interest-earning assets....   $325       $ (6)       $ (1)       $ 318      $ 226      $  58       $   7       $ 291
                                         ===        ===         ===         ====       ====       ====        ====        ====

Interest expense:
  NOW accounts.......................   $ (1)      $  4        $ --        $   3      $   1      $   1       $  --        $  2
  Savings accounts...................      2          3          --            5          3          1          --           4
  Money market accounts..............     --         --          --           --         --         --          --          --
  Certificate of deposit                 143          3           1          147        139        (55)         (5)         79
  Other liabilities..................    (31)         4          (2)         (29)        43          2           5          50
                                         ---        ---         ---         ----       ----       ----        ----        ----
    Total interest-bearing
      liabilities....................   $113       $ 14        $ (1)        $126      $ 186      $ (51)      $  --       $ 135
                                         ===       ====         ===          ===       ====       ====        ====        ====

Net change in interest income........   $212       $(20)       $ --         $192      $  40      $ 109       $   7       $ 156
                                         ===        ===         ===          ===       ====       ====        ====        ====
</TABLE>


                                        9

<PAGE>


Results of Operations for the Years Ended September 30, 1998 and 1997

         Net Income.  Net income  increased  $40,738 or 15.5% from  $262,799 for
fiscal 1997 to $303,537 for fiscal 1998.  The increase was  primarily the result
of an increase in interest on loans receivable due to an increase in the average
balance  of $2.5  million  and an  increase  in other  interest  income on other
interest  earning  assets  due to an  increase  in the  average  balance of $1.5
million  partially offset by an increase  interest expense due to an increase in
the average balance of interest-bearing liabilities of $1.8 million and increase
in non-interest expenses of $257,000.

         Net Interest  Income.  Our net interest  income  increased  $234,717 or
19.3% to $1,454,198  in fiscal 1998  compared to $1,219,481 in fiscal 1997.  The
increase was due primarily to the growth of average interest-earning assets from
$36.2 million in fiscal 1997 to $40.2 million in fiscal 1998.

         The  increase in our average  interest-earning  assets of $4.0  million
reflects an increase of $2.5 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 and net interest margin increased in
fiscal 1998  compared to fiscal 1997.  This was due to the decrease in the yield
on interest-earning assets from 8.84% in fiscal 1997 to 8.75% in fiscal 1998 and
the increase in the interest cost of average  interest-bearing  liabilities from
5.77% in fiscal 1997 to 5.83% in fiscal 1998.

         The yield on our average  interest-earning  assets  decreased in fiscal
1998 primarily due to a decrease in the yield on loans receivable. This decrease
in yield on our loans receivable  primarily  reflected a decrease in the average
interest rates and, to a lesser degree, the payoff of higher yielding loans.

         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 $29.4 million in fiscal 1997 to $31.8  million in fiscal 1998.  The
$2.4 million  increase in the average  balance of  certificates  of deposits was
attributable  primarily to our increased  efforts to market our  certificates of
deposit by offering competitive rates to fund our loan demand.

         As a result of the  conversion,  the interest we earned on the proceeds
has  contributed  to the increase in our net  interest  income.  Initially,  the
proceeds were invested in shorter term  investments  that  generally  have lower
yields than  residential  mortgage loans. To the extent we are able through time
to find  higher  yielding  uses for these  funds,  our net  interest  income may
further increase.

         Provision  for Loan Losses.  Our  provision  for loan losses  decreased
$112,000 from $136,000 for fiscal 1997 to $24,000 for fiscal 1998.  The decrease
in the  provision for fiscal 1998 was the result of  management's  review of our
loan  portfolio,  the potential  losses in our loan portfolio and our history of
experiencing no losses on loans in recent years.

         Noninterest  Income.  Our non-interest  income decreased  approximately
$10,000 in fiscal 1998 as compared to fiscal 1997.  This was  attributable  to a
gain on the sale of foreclosed real estate and an increase in other income.


                                       10

<PAGE>


         Noninterest  Expense. Our non-interest expense increased by $257,161 or
34.4% from $746,874 for fiscal 1997 to $1,004,035  for fiscal 1998. The increase
was primarily attributable to increases in compensation expense, other personnel
expense and depreciation expense on equipment additions.

         As a result of the conversion,  our expenses have increased  because of
the costs  associated  with our employee stock  ownership plan, and the costs of
being a public company.  We also expect to offer checking accounts and may offer
the use of an automated  teller machine (an "ATM") to our customers during 1998.
Our  preparation  costs for these products and the costs of soliciting  checking
account  funds  has  also  increased  our  expenses.  We have  not yet  received
sufficient  checking  account  funds or other income to offset these  additional
costs.

         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.

         We expect noninterest expense will increase as a result of the opening,
staffing  and  equipping of the new bank  building  under  construction  that is
expected to open in April 1999.  Our current lack of space limits our ability to
process loan  applications  and provide  other  services in our market area.  We
expect a reduction in net income (and possibly losses) compared to prior periods
as a result of these expenses  until the new building  results in higher overall
levels of loan and  deposit  activity  to offset  the  additional  expenses.  We
believe that this expansion should enhance  shareholder  value and hope that the
decrease in earnings will not be as great  following  the end of year 2000.  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 past the end of year 2000. Our noninterest  expense
would  further  increase  if we build  the new  branch  discussed  in the  prior
paragraph.

         Income Tax  Expense.  Our income tax  expense  increased  $40,739  from
$119,211 in fiscal 1997 to $177,815 in fiscal 1998 due to the increase in income
before taxes.

         Return on Equity and Assets:

                                      YEAR ENDED SEPTEMBER 30,  
                                    ----------------------------  
                                    1998                    1997   
                                    ----                    ----   
  Return on Assets                   .70%                    .70%
  Return on Equity                  5.08%                   9.11%
  Dividend Payout Ratio              --                      --
  Equity to Assets Ratio           13.80%                   7.66%


                                       11

<PAGE>

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 14% and 12% at September 30, 1998 and 1997, respectively.  The
proceeds we received from the conversion has increased our liquidity and capital
resources.

  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, 1998 was $402,899 as compared to $328,902 for the year ended
September 30, 1997.

  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, 1998  totalled  $6.1  million,  an
increase of $2.8 million from  September  30, 1997.  The increase was  primarily
attributable  to our  use of $3.6  million  in cash  to  fund  the  purchase  of
available-for-sale  investment securities and the use of $3.3 million in cash to
fund the net  increase in loan  originations,  partially  offset by the proceeds
from the maturity and sale of investment securities.

  Net cash provided by our financing  activities (i.e., cash receipts  primarily
from net  increases in deposits and net FHLB  advances) for fiscal 1998 totalled
$5.4 million compared to $2.8 million for fiscal 1997. This is a result of a net
increase in deposits of $.5 million in fiscal 1998 as compared to an increase of
$2.7 million in fiscal 1997 and proceeds of $6.2 million from the commission and
repayment of $1.3 million in FHLB advances.

  We are taking necessary steps to be certain our data processing  equipment and
software  will  properly  function  on January 1, 2000,  the date that  computer
problems are expected to develop  worldwide on computer systems that incorrectly
identify the year 2000 and incorrectly compute interest, payment or delinquency.
Accurate data processing is essential to our operations.

  We have  examined  our  computers  to  determine  whether  they will  properly
function on January 1, 2000 and do not believe that we will experience  material
costs to upgrade our computers.  We have ordered and installed an upgrade to our
computer system that is intended to solve the Year 2000 Computer software issue.
We installed this upgrade during the first calendar quarter of 1998 with testing
of this software in progress.  We anticipate  completion of the testing phase by
year end.

                                       12

<PAGE>


  If there is a malfunction of the software during testing, we plan to implement
"manual  processing"  until our software becomes Y2K compliant.  We have ordered
packages  of all  forms  required  to handle  loans,  deposits  and  operations.
Detailed plans for the manual  operation of Quitman  Federal Savings Bank are in
progress.

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

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

  During the fiscal year ended September 30, 1998,  approximately  $27.5 million
of  certificates  of  deposit  (approximately  79% 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 is currently under construction, the estimated cost of the
new facility and land is $960,000. We are exploring whether to purchase land and
construct a branch.  Although no definite  plans have been made, if a new branch
is built, the land and construction costs could total approximately $600,000. We
have  sufficient  liquid  assets to pay for these  costs.  These  costs  will be
partially  offset by the sale of our existing  office.  We also have  sufficient
capital resources to install an ATM machine,  if we decide to offer that service
in the future.

Recent Accounting Pronouncements

  FASB Statement on Earnings Per Share. In March 1997, the Financial  Accounting
Standards  Board ("FASB")  issued  Statement of Financial  Accounting  Standards
("SFAS)  No.  128.  The  Statement   establishes  standards  for  computing  and
presenting  earnings per share and applies to entities with publicly held common
stock or potential  common stock.  This  Statement  simplifies the standards for
computing  earnings per share  previously  found in Accounting  Principles Board
("APB") Opinion No. 15, Earnings per Share ("EPS"), and makes them comparable to
international EPS standards.  It replaces the presentation of primary EPS with a
presentation  of basic EPS.  It also  requires  dual  presentation  of basic and
diluted EPS on the face of the income  statement  for all entities  with complex
capital  structures  and  requires a  reconciliation  of the  numerator  and the
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation. Basic EPS excludes dilution and is computed by dividing
income available to common stockholders by the weighted-average number of common
shares  outstanding for the period.  Diluted EPS reflects the potential dilution
that could occur if  securities  or other  contracts  to issue common stock were
exercised or  converted  into common stock or resulted in the issuance of common
stock that then shared in the  earnings  of the entity.  Diluted EPS is computed
similarly to fully  diluted EPS  pursuant to APB Opinion No. 15. This  statement
supersedes Opinion 15 and AICPA Accounting  Interpretation  1-102 of Opinion 15.
This statement is effective for financial  statements  issued for periods ending
after  December  15,  1997,  including  interim  periods.  SFAS No. 128 has been
adopted by us for the year ended  September  30,  1998.  We do not  believe  the
impact of adopting SFAS No. 128 was material to our financial statements.

                                       13

<PAGE>


  FASB  Statement on  Disclosure of  Information  about  Capital  Structure.  In
February  1997,  the FASB issued SFAS No. 129. The  Statement  incorporates  the
disclosure  requirements  of APB Opinion No. 15,  Earnings per Share,  and makes
them applicable to all public and nonpublic entities that have issued securities
addressed  by  the  Statement.   APB  Opinion  No.  15  requires  disclosure  of
descriptive  information about securities that is not necessarily related to the
computation  of  earnings  per share.  This  statement  continues  the  previous
requirements to disclose certain information about an entity's capital structure
found in APB Opinions No. 10, Omnibus  Opinion-  1966, and No. 15,  Earnings per
Share,  and FASB  Statement  No. 47,  Disclosure of Long-Term  Obligations,  for
entities  that  were  subject  to the  requirements  of  those  standards.  This
Statement eliminates the exemption of nonpublic entities from certain disclosure
requirements  of Opinion 15 as provided by FASB Statement No. 21,  Suspension of
the  Reporting  of  Earnings  per Share and  Segment  Information  by  Nonpublic
Enterprises.  It supersedes specific disclosure  requirements of Opinions 10 and
15 and  Statement  47 and  consolidates  them  in  this  Statement  for  ease of
retrieval  and for greater  visibility to nonpublic  entities.  The Statement is
effective for financial  statements  for periods ending after December 15, 1997.
SFAS No. 129 has been adopted by us for the year ended September 30, 1998. We do
not believe the impact of adopting  SFAS No. 129 was  material to our  financial
statements.

  FASB Statement of Accounting for  Stock-Based  Compensation.  In October 1995,
the FASB issued SFAS No. 123.  SFAS No. 123 defines a "fair value based  method"
of accounting for an employee stock option whereby compensation cost is measured
at the grant  date  based on the value of the award and is  recognized  over the
service  period.  FASB has encouraged all entities to adopt the fair value based
method,  however,  it will allow  entities to continue the use of the "intrinsic
value based method"  prescribed by APB Opinion No. 25. Under the intrinsic value
based method,  compensation  cost is the excess of the market price of the stock
at the grant date over the  amount an  employee  must pay to acquire  the stock.
However,  most stock option plans have no intrinsic value at the grant date and,
as such, no compensation  cost is recognized  under APB Opinion No. 25. Entities
electing to continue use of the accounting  treatment of APB Opinion No. 25 must
make  certain pro forma  disclosures  as if the fair value based method had been
applied.  The  accounting  requirements  of  SFAS  No.  123  are  effective  for
transactions entered into in fiscal years beginning after December 15, 1995. Pro
forma disclosures must include the effects of all awards granted in fiscal years
beginning  after December 15, 1994. We expect to use the "intrinsic  value based
method" as prescribed by APB Opinion No. 25. Accordingly,  we do not believe the
impact of adopting  SFAS No. 123 will be material to our  financial  statements.
Currently, we do not have an approved employee stock option plan.

  FASB  Statement  on Reporting  Comprehensive  Income.  In June 1997,  the FASB
issued SFAS No. 130.  This  Statement  establishes  standards  for reporting and
display of comprehensive income and its components  (revenues,  expenses,  gains
and losses) in a full set of general-purpose financial statements. The statement
requires  that all items that are  required to be  recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  The  statement  requires  that  we  (a)  classify  items  of  other
comprehensive  income by their nature in a financial  statement  and (b) display
the accumulated balance of other  comprehensive  income separately from retained
earnings and additional  paid-in capital in the equity section of a statement of
financial position.  The statement is effective for our financial  statements as
of September  30, 1999. We do not  anticipate  that the  implementation  of this
Statement will have a material impact on our consolidated financial statements.

                                       14

<PAGE>


  FASB  Statement on  Disclosures  about  Segments of an Enterprise  and Related
Information.  In June  1997,  the  FASB  issued  SFAS  No.  131.  The  statement
establishes  standards  for the way  that  public  business  enterprises  report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim financial reports issued to shareholders.  It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers.  The  statement  is  effective  for our  financial  statements  as of
September  30,  1999.  We do not  anticipate  that  the  implementation  of this
statement will have a material impact on our consolidated financial statements.

  SOP 93-6 Employers'  Accounting for Employee Stock Ownership Plan. In November
1993, the American  Institute of Certified Public  Accountants  ("AICPA") issued
SOP 93-6  Employers'  Accounting  for Employee  Stock  Ownership  Plan. SOP 93-6
addresses  accounting  for shares of stock  issued to  employees  by an employee
stock ownership  plan. SOP 93-6 requires that the employer  record  compensation
expense in an amount equal to the fair value of shares  committed to be released
from the ESOP to  employees.  SOP 93-6 is effective  for fiscal years  beginning
after  December  15,  1993 and  relates  to shares  purchased  by an ESOP  after
December 31,  1992.  If the common stock  appreciates  over time,  SOP 93-6 will
increase  compensation  expense  relative to the ESOP,  as  compared  with prior
guidance that required  recognition of compensation expense based on the cost of
the  shares  acquired  by the ESOP.  The amount of any such  increase,  however,
cannot be  determined at this time because the expense will be based on the fair
value of the shares  committed to be released to employees,  which amount is not
determinable.

                                       15

<PAGE>

                          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, 1998 and 1997, and
the related  consolidated  statements of 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,  1998 and  1997,  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.
----------------------------------
STEWART, FOWLER & STALVEY, P.C.


Valdosta, Georgia
October 15, 1998


                                       16
<PAGE>



                      QUITMAN BANCORP, INC. AND SUBSIDIARY
                      ------------------------------------

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

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                                         SEPTEMBER 30,      
                                                             --------------------------------
                                                                 1998                1997    
                                                             ------------        ------------  
<S>                                                         <C>                 <C>       
Cash and Cash Equivalents, Notes 1 and 2:
   Cash and amounts due from depository
      institutions                                           $    168,404             108,650
   Interest-bearing deposits in other banks                       203,462             548,158
                                                             ------------        ------------
         Total Cash and Cash Equivalents                          371,866             656,808
Investment securities:
   Available-for-sale (fair value $5,640,709 in 1998
      and $3,046,109 in 1997), Notes 1 and 3                    5,640,709           3,046,109
   Held-to-maturity (fair value $199,936 in 1998 and
      $801,061 in 1997), Notes 1 and 3                            200,000             804,706
Loans receivable, Notes 1 and 4                                36,397,067          33,325,719
Office properties and equipment, at cost, net of
   accumulated depreciation, Notes 1 and 5                        681,453             322,527
Real estate and other property acquired in
   settlement of loans, Note 1                                        -0-              63,915
Accrued interest receivable, Note 6                               447,854             381,218
Investment required by law-stock in Federal
   Home Loan Bank, at cost, Note 13                               239,800             227,700
Cash value of life insurance, Note 11                             337,813             218,106
Other assets, Notes 1 and 9                                        45,182              87,446
                                                             ------------        ------------

         Total Assets                                        $ 44,361,744          39,134,254
                                                             ============        ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
Liabilities:
   Deposits, Note 7                                          $ 34,954,584          34,470,803
   Advances from Federal Home Loan Bank, Note 13                      -0-           1,300,000
   Accrued interest payable                                       275,028             272,346
   Income taxes payable, Note 9                                    24,660              56,856
   Other liabilities                                              143,719              75,696
                                                             ------------        ------------

      Total Liabilities                                        35,397,991          36,175,701
                                                             ------------        ------------

Stockholders' Equity:
   Common stock, $.10 par value, 4,000,000 shares
      authorized, 661,250 shares issued and
      outstanding                                                  66,125                 -0-
   Additional paid in capital                                   6,135,412                 -0-
   Retained Earnings, Note 8                                    3,256,097           2,952,560
   Unrealized gains (losses) on available-
      for-sale securities, net of applicable deferred
      income taxes                                                 35,119               5,993
   Receivable from ESOP, Note 11                                 (529,000)                -0-
                                                             ------------        ------------

      Total Stockholders' Equity                                8,963,753           2,958,553
                                                             ------------        ------------

         Total Liabilities and Stockholders' Equity          $ 44,361,744          39,134,254
                                                             ============        ============
</TABLE>

Note:   The  accompanying  notes to financial statements are an integral part of
        this statement.

                                       17


<PAGE>



                      QUITMAN BANCORP, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                                                     YEAR ENDED SEPTEMBER 30, 
                                                     ------------------------ 
                                                        1998           1997    
                                                    -----------    ----------- 
Interest Income:
   Loans receivable:
      First mortgage loans                          $ 3,029,927      2,833,489
      Consumer and other loans                          148,753        108,748
   Interest on FHLMC Pool                                   259            219
   Investment securities                                280,948        233,416
   Interest-bearing deposits                             98,115         21,552
   Federal funds sold                                       524            520
                                                    -----------    -----------

         Total Interest Income                        3,558,526      3,197,944
                                                    -----------    -----------

Interest Expense:
   Deposits, Note 7                                   2,067,707      1,913,045
   Interest on Federal Home Loan
      Bank advances                                      36,621         65,418
                                                    -----------    -----------

         Total Interest Expense                       2,104,328      1,978,463
                                                    -----------    -----------

Net Interest Income                                   1,454,198      1,219,481

Provision for loan losses, Notes 1 and 4                 24,000        136,000
                                                    -----------    -----------

Net Interest Income After Provision for Losses        1,430,198      1,083,481
                                                    -----------    -----------

Non-Interest Income:
   Gain (loss) on sale of securities                         18           (133)
   Gain (loss) on sale of other real estate               7,102            -0-
   Late charges on loans                                 32,811         34,247
   Insurance commissions                                  1,584          1,701
   Other income                                          13,674          9,588
                                                    -----------    -----------

         Total Non-Interest Income                       55,189         45,403
                                                    -----------    -----------

Non-Interest Expense:
   Compensation                                         317,778        255,966
   Other personnel expenses, Note 11                    231,509        150,382
   Occupancy expenses of premises                        22,048         22,900
   Furniture and equipment expenses                     121,847         69,892
   Advertising                                           41,529         31,279
   Federal deposit insurance                             22,419         29,553
   Other operating expenses                             246,905        186,902
                                                    -----------    -----------

         Total Non-Interest Expense                   1,004,035        746,874
                                                    -----------    -----------

Income Before Income Taxes                              481,352        382,010
Provision for Income Taxes, Note 9                      177,815        119,211
                                                    -----------    -----------
Net Income                                          $   303,537        262,799
                                                    ===========    ===========
Earnings Per Share (Basic and Diluted), Note 1      $       .46           N/A
                                                    ===========    ===========

Note:   The  accompanying  notes to financial statements are an integral part of
        this statement.

                                       18

<PAGE>



                      QUITMAN BANCORP, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                              UNREALIZED              
                                                                                                GAINS                 
                                                                                             (LOSSES) ON
                                                                                              AVAILABLE-
                                                                                               FOR-SALE
                                                                                              SECURITIES,
                                                                                                NET OF
                                                 ADDITIONAL                   RECEIVABLE      APPLICABLE
                                     COMMON       PAID IN         RETAINED       FROM          DEFERRED
                                     STOCK        CAPITAL         EARNINGS       ESOP        INCOME TAXES        TOTAL   
                                   ----------- -------------    -----------     ------       ------------      --------- 
<S>                               <C>                <C>        <C>         <C>             <C>             <C>      
Balances, September 30, 1996       $      -0-         -0-         2,689,761      -0-           (22,921)        2,666,840

Net Income                                -0-         -0-           262,799      -0-               -0-           262,799

Change in unrealized gains
   (losses) on available-
   for-sale securities, net
   of applicable deferred
   income taxes                           -0-         -0-               -0-      -0-            28,914            28,914
                                   ----------  ----------        ----------   ------        ----------        ----------

Balances, September 30, 1997              -0-         -0-         2,952,560      -0-             5,993         2,958,553

Net Income                                -0-         -0-           303,537      -0-               -0-           303,537

Issuance of 661,250 shares of
   common stock                        66,125   6,135,412               -0-      -0-               -0-         6,201,537

Change in loan receivable
   from employee stock
   ownership plan                         -0-         -0-               -0- (529,000)              -0-          (529,000)

Change in unrealized gains
   (losses) on available-
   for-sale securities, net
   of applicable deferred
   income taxes                           -0-         -0-               -0-      -0-            29,126            29,126
                                   ----------  ----------        ---------- --------        ----------        ----------

Balances, September 30, 1998       $   66,125   6,135,412         3,256,097 (529,000)           35,119         8,963,753
                                   ==========   ==========        ========= ========        ==========        ==========
</TABLE>

Note:The accompanying notes to financial statements are an integral part of this
     statement.

                                       19


<PAGE>



                      QUITMAN BANCORP, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30,
                                                                 -------------------------
                                                                     1998           1997 
                                                                 ----------    -----------
Cash Flows From Operating Activities:
-------------------------------------
<S>                                                           <C>            <C>        
   Net income                                                  $   303,537        262,799
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                                  79,081         41,067
      Provision for loan losses                                     24,000        136,000
      Increase (Decrease) in deferred income tax benefit             4,532        (51,972)
      Amortization (Accretion) of securities and loans               7,338         11,022
      Gain on sale of other real estate                             (7,102)           -0-
   Change in Assets and Liabilities:
      (Increase) Decrease in accrued interest receivable           (66,636)       (11,171)
      Increase (Decrease) in accrued interest payable                2,682         19,074
      Increase (Decrease) in other liabilities                      68,023       (188,262)
      Increase (Decrease) in income taxes payable                  (32,196)        60,483
      (Increase) Decrease in other assets                           19,640         49,862
                                                               -----------    -----------
         Net cash provided by operating activities                 402,899        328,902
                                                               -----------    -----------

Cash Flows From Investing Activities:
-------------------------------------
   Capital expenditures                                           (438,007)       (52,673)
   Purchase of available-for-sale securities                    (3,634,680)    (1,740,910)
   Loan to employee stock ownership plan                          (529,000)           -0-
   Proceeds from sale of foreclosed property                       296,710            -0-
   Proceeds from maturity of held-to-maturity securities           600,000        300,000
   Net (increase) decrease in loans                             (3,321,041)    (2,720,447)
   Purchase of stock in Federal Home Loan Bank                     (12,100)        (8,600)
   Principal collected on mortgage-backed securities                36,666          2,289
   Proceeds from sale of available-for-sale securities             498,000        400,063
   Proceeds from call of held-to-maturity securities                   -0-        549,781
   Proceeds from maturity of available-for-sale securities         550,000        100,000
   Increase in cash value of life insurance                       (119,707)      (108,687)
                                                               -----------    -----------
         Net cash provided (used) by investing activities       (6,073,159)    (3,279,184)
                                                               -----------    -----------

Cash Flows From Financing Activities:
-------------------------------------
   Net increase (decrease) in deposits                             483,781      2,741,840
   Proceeds from Federal Home Loan Bank advances                       -0-        100,000
   Payments on Federal Home Loan Bank advances                  (1,300,000)           -0-
   Issuance of 661,250 shares of common stock                    6,201,537            -0-
         Net cash provided (used) by financing activities        5,385,318      2,841,840
                                                               -----------    -----------

Net Increase (Decrease) in cash and cash equivalents              (284,942)      (108,442)

Cash and Cash Equivalents at Beginning of Period                   656,808        765,250
                                                               -----------    -----------

Cash and Cash Equivalents at End of Period                     $   371,866        656,808
                                                               ===========    ===========

Supplemental Disclosures of Cash Flow Information 
------------------------------------------------- 
Cash paid during the year for:
      Income taxes net of refunds                              $   205,479         60,000
                                                               ===========    ===========
      Interest                                                 $ 2,101,646      1,959,389
                                                               ===========    ===========

Schedule of Non-Cash Investing and Financing Activities
-------------------------------------------------------
   Total increase (decrease) in unrealized gains
      on securities available-for-sale                         $    47,218         28,914
                                                               ===========    ===========
   Loans transferred to foreclosed real estate                 $   225,693         63,915
                                                               ===========    ===========
</TABLE>

Note:The accompanying notes to financial statements are an integral part of this
     statement.

                                     20


<PAGE>



                  QUITMAN FEDERAL SAVINGS AND LOAN ASSOCIATION

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

Note 1 - Summary of Significant Accounting Policies
---------------------------------------------------

Business  Activities:  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 is being  depreciated  on the  straight-line  method and the furniture,
fixtures and equipment, with minor exceptions, by accelerated methods.

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.

                                       21

<PAGE>



Note 1 - Summary of Significant Accounting Policies (Continued)
---------------------------------------------------------------

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.

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 $26,906 and $49,530 at September 30,
1998 and 1997, 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.

                                     22

<PAGE>



Note 1 - Summary of Significant Accounting Policies (Continued)
---------------------------------------------------------------

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  $41,529 and $31,279 for the years
ended September 30, 1998 and 1997, respectively.

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 Bank.

The following  methods and  assumptions  were used by the Bank 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.

                                       23

<PAGE>



Note 1 - Summary of Significant Accounting Policies (Continued)
---------------------------------------------------------------

   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.

   Earnings per share:  Earnings per share are computed on the weighted  average
   number of shares outstanding. Weighted average shares used in the computation
   of earnings per share at September 30, 1998 were 661,250 shares.


Note 2 - Cash
-------------

As of September 30, 1998,  the Bank had cash on deposit with certain  commercial
banks in excess of federal depository insurance as follows:
                                                             FEDERAL
                           BOOK             BANK           DEPOSITORY
                          BALANCE          BALANCE          INSURANCE 
                        ----------       ----------        ----------- 
         Total          $  254,580          389,271            214,982
                        ==========       ==========         ==========

As of  September  30,  1997,  the  Association  had cash on deposit with certain
commercial banks in excess of federal depository insurance as follows:
                                                              FEDERAL
                            BOOK             BANK           DEPOSITORY
                           BALANCE          BALANCE          INSURANCE 
                        ----------       ----------        ----------- 
         Total          $  635,611          762,746            187,453
                        ==========       ==========         ==========


                                     24

<PAGE>



Note 3 - Investment Securities
------------------------------

Investment securities are carried in the accompanying balance sheets as follows:

Securities available-for-sale consist of the following:
-------------------------------------------------------
<TABLE>
<CAPTION>
As of September 30, 1998:

                                                  GROSS             GROSS
                               AMORTIZED        UNREALIZED        UNREALIZED          MARKET
                                 COST             GAINS             LOSSES            VALUE   
<S>                         <C>                   <C>               <C>          <C>      
U.S. Treasury Obligations     $   697,263           16,284            -0-            713,547
Obligations of other U.S.
   Government agencies          4,383,021           25,728            145          4,408,604
Mortgage-backed securities        507,214           11,344            -0-            518,558
                              -----------      -----------       --------        -----------
                              $ 5,587,498           53,356            145          5,640,709
                              ===========      ===========       ========        ===========

As of September 30, 1997:

                                                  GROSS             GROSS
                               AMORTIZED        UNREALIZED        UNREALIZED          MARKET
                                  COST             GAINS            LOSSES            VALUE   
                                  ----             -----            ------            -----   
<S>                         <C>                   <C>               <C>          <C>      
U.S. Treasury Obligations     $   897,299            6,763            -0-            904,062
Obligations of other U.S.
   Government agencies          1,601,903            3,120          5,108          1,599,915
Mortgage-backed securities        540,914            2,168            950            542,132
                              -----------      -----------       --------        -----------

                              $ 3,040,116           12,051          6,058          3,046,109
                              ===========      ===========       ========        ===========
</TABLE>

Securities held-to-maturity consist of the following:
-----------------------------------------------------
<TABLE>
<CAPTION>
As of September 30, 1998:

                                                   GROSS             GROSS
                               AMORTIZED        UNREALIZED        UNREALIZED          MARKET
                                 COST              GAINS             LOSSES            VALUE   
                              -----------      -----------       -----------     -----------   
<S>                           <C>              <C>               <C>             <C>      
Obligations of other U.S.
   Government agencies            200,000              -0-            64             199,936
                              ===========      ===========       ========        ===========
</TABLE>
<TABLE>
<CAPTION>

As of September 30, 1997:

                                                   GROSS             GROSS
                               AMORTIZED        UNREALIZED        UNREALIZED          MARKET
                                 COST              GAINS             LOSSES            VALUE   
                                 ----              -----             ------            -----   
<S>                         <C>                <C>            <C>                <C>      

U.S. Treasury Obligations     $   100,077              -0-            31             100,046
Obligations of other U.S.
   Government agencies            704,629              -0-         3,614             701,015
                              -----------      -----------     ---------         -----------

                              $   804,706              -0-         3,645             801,061
                              ===========      ===========     =========         ===========
</TABLE>

The amortized  cost and estimated  market value of debt  securities at September
30, 1998, 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.

                                     25

<PAGE>



Note 3 - Investment Securities (Continued)

                                        SECURITIES             SECURITIES
                                    AVAILABLE-FOR-SALE       HELD-TO-MATURITY  
                               --------------------------  ---------------------
                                 AMORTIZED     MARKET    AMORTIZED     MARKET
                                   COST        VALUE         COST       VALUE 
                               -----------  -----------  ---------- ------------
Due in one year or less         $1,054,478    1,055,444    200,000     199,936
Due after one year through
   five years                    4,028,806    4,066,708        -0-         -0-
Due after five years through
   ten years                       507,214      518,557        -0-         -0-
                               -----------  -----------  ---------   ---------
                               $ 5,587,498    5,640,709    200,000     199,936
                               ===========  ===========  =========   =========

Proceeds  from sales of  available-for-sale  securities  during the years  ended
September  30, 1998 and 1997 were  $498,000 and $400,063 with gross gains of $18
and gross losses of $2 being realized, respectively. Proceeds from maturities of
available-for-sale securities during the years ended September 30, 1998 and 1997
were $550,000 and $100,000,  respectively.  Proceeds from maturities of held-to-
maturity  securities  during the years  ended  September  30, 1998 and 1997 were
$600,000 and $300,000, respectively.

Securities with a book value of $375,000  (market value $382,148) and $1,104,767
(market value  $1,104,249)  at September 30, 1998 and 1997,  respectively,  were
pledged to secure public monies as required by law.


Note 4 - Loans Receivable
-------------------------

A summary of loans receivable is presented below:

                                          SEPTEMBER 30,     
                                 -----------------------------
                                      1998               1997    
                                 -----------       -----------
First mortgage loans             $33,221,746        29,748,471
Construction loans                 3,433,262         3,654,458
FHLMC pool                             2,850             4,203
Share loans                          556,740           470,366
Consumer loans                     1,089,165           867,450
                                 -----------       -----------

                                  38,303,763        34,744,948

Loans in process                  (1,488,548)       (1,022,930)
Allowance for loan losses           (370,000)         (346,000)
Deferred loan origination fees       (48,148)          (50,299)
                                 -----------       -----------

                                 $36,397,067        33,325,719
                                 ===========       ===========

                                       26

<PAGE>



Note 4 - Loans Receivable (Continued)
-------------------------------------

An analysis of changes in the allowance for loan losses is as follows:

                                                 YEAR ENDED SEPTEMBER 30, 
                                               ---------------------------
                                                   1998              1997    
                                               -----------     -----------
        Balance at beginning of period         $   346,000         210,000
        Provision charged to income                 24,000         136,000
        Recoveries                                     -0-             -0-
        Losses charged to allowance                    -0-             -0-
                                               -----------     -----------

        Balance at end of period               $   370,000         346,000
                                               ===========     ===========

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:

                                           SEPTEMBER 30,     
                                    ----------------------------
                                          1998           1997    
                                    ------------    ------------
First Mortgage Loans:
      Secured by 1 to 4 family
         residences                 $ 27,072,746      23,655,471
      Secured by over 4 family
         residences                      810,000         699,000
      Other real estate                5,339,000       5,394,000
Construction loans                     3,433,262       3,654,458
FHLMC pools                                2,850           4,203
Share loans                              556,740         470,366
Consumer loans                         1,089,165         867,450
                                    ------------    ------------

                                      38,303,763      34,744,948

Loans in Process                      (1,488,548)     (1,022,930)
Allowance for loan losses               (370,000)       (346,000)
Deferred loan origination fees           (48,148)        (50,299)
                                    ------------    ------------

         Total                      $ 36,397,067      33,325,719
                                    ============    ============

Loans on which  the  accrual  of  interest  has been  discontinued  amounted  to
$103,213 and $124,002 at September 30, 1998 and 1997, respectively.  If interest
on those loans had been accrued,  such income would have approximated $7,146 and
$11,072 for the years ended September 30, 1998 and 1997, respectively.  Interest
income on those loans, which is recorded only when received,  amounted to $3,372
and $5,156 for the years ended  September  30, 1998 and 1997,  respectively.  No
contractual  modifications  have been made to these loans that would  affect the
interest ultimately due.

There were no loans at September 30, 1998 or 1997,  which the Bank's  management
considered to be impaired.

                                     27

<PAGE>



Note 4 - Loans Receivable (Continued)
-------------------------------------

Loans receivable  includes loans to officers and directors of the Bank totalling
approximately   $720,735  and   $674,614  at   September   30,  1998  and  1997,
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:

                                           SEPTEMBER 30,            
                                    --------------------------      ESTIMATED
                                       1998              1997      USEFUL LIVES
                                    ----------        --------     ------------
   Land                             $  252,061          39,561
   Buildings                           234,087         234,087      20-31 years
   Construction in progress             35,724             -0-
   Furniture and fixtures              458,897         293,912      5-10 years
   Automobile                           31,337          15,513      5 years
                                    ----------      ----------
                                     1,012,106         583,073
   Less accumulated depreciation       330,653         260,546
                                    ----------      ----------

                                    $  681,453         322,527
                                    ==========      ==========

Depreciation expense for the years ended September 30, 1998 and 1997 was $79,081
and $41,067 respectively.

At September 30, 1998,  the Bank had  construction  of a new office  building in
progress. The estimated cost to complete is approximately $715,000.


Note 6 - Accrued Interest Receivable
------------------------------------

Accrued interest receivable is summarized as follows:

                                          SEPTEMBER 30,     
                                    ------------------------
                                        1998         1997   
                                    ----------    ----------
   Investment securities            $   97,290        54,267
   Loans receivable                    350,564       326,951
                                    ----------    ----------

                                    $  447,854       381,218
                                    ==========    ==========





                                     28

<PAGE>



Note 7 - Deposit Account Analysis
---------------------------------

An analysis of deposit  accounts and the weighted  average  interest rates as of
the dates indicated is presented below:
                                                 SEPTEMBER 30,                
                              ------------------------------------------------
                                         1998                     1997   
                              -------------------------  ---------------------
                                BOOK VALUE         %      BOOK VALUE       %   
                              ------------    ---------  ------------  -------
Type of Account:
   Checking Accounts          $    220,800       4.63            -0-     .00
   N.O.W. Accounts - 3.42%
      (1997 - 3.39%)             1,523,871       4.36      1,439,374     4.18
   Passbook - 3.15%
      (1997 - 4.11%)             1,507,207       4.31      1,944,865     5.64
   Certificates - 6.07%
      (1997 - 6.00%)            31,702,706      90.70     31,086,564    90.18
                              ------------   --------    -----------  -------

                              $ 34,954,584     100.00%    34,470,803   100.00%
                              ============   ========   ============ ========

The aggregate  amount of certificates of deposit in denominations of $100,000 or
more was $6,749,622 and $6,333,000 at September 30, 1998 and 1997, respectively.

At September 30, 1998,  scheduled  maturities of certificates of deposit were as
follows:

       YEAR ENDING
      SEPTEMBER 30,
     --------------
          1999                $27,575,771
          2000                  2,733,210
          2001                    802,172
          2002                    591,553
                              -----------

                              $31,702,706
                              ===========

The Bank held deposits of $381,331 and $556,252 for related parties at September
30, 1998 and 1997, respectively.

Interest expense on deposits is summarized as follows:
                                           YEAR ENDED SEPTEMBER 30,
                                           -----------------------
                                               1998         1997   
                                           ----------  ----------
   Passbook savings                        $   86,717      88,675
   NOW                                         51,765      50,072
   Certificates of deposit                  1,929,225   1,774,298
                                           ----------  ----------
                                           $2,067,707   1,913,045
                                           ==========  ==========


                                     29

<PAGE>



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:

   661,250 shares of  common stock issued
      @ $10 per share                               $6,612,500
   Cost of conversion                                  410,963
                                                    ----------
   Net Proceeds                                     $6,201,537
                                                    ==========

The  stockholders  of the  holding  company  will be asked to approve a proposed
stock  option  plan and a  proposed  restricted  stock  plan at a meeting of the
stockholders after the conversion.  Shares issued to the directors and employees
under these plans may be from  authorized but unissued shares of common stock or
they may be purchased  in the open  market.  In the event that options or shares
are issued under these plans,  such  issuances  will be included in the earnings
per share  calculation;  thus, the interests of existing  stockholders  would be
diluted. These plans have not been approved as of September 30, 1998.

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.

                                       30

<PAGE>



Note 8 - Stockholders' Equity and Regulatory Matters (Continued)
----------------------------------------------------------------

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, 1998 and 1997, that the Bank meets all
capital adequacy requirements to which it is subject.

As of June 30, 1997, 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).

                                         TANGIBLE     CORE       RISK-BASED
                                          CAPITAL    CAPITAL       CAPITAL 
                                       ----------   ----------   ----------
 At September 30, 1998:
    Total equity                        $    5,839      5,839         5,839
    Unrealized gains on securities             (29)       (29)          (29)
    General valuation allowance                -0-        -0-           370
                                        ----------   --------    ----------

    Regulatory Capital                  $    5,810      5,810         6,180
                                        ==========  =========    ==========

At September 30, 1997:
    Total equity                        $    2,959      2,959         2,959
    Unrealized gains on securities              (6)        (6)           (6)
    General valuation allowance                -0-        -0-           346
                                        ---------- ----------    ----------

    Regulatory Capital                  $    2,953      2,953         3,299
                                        ========== ==========    ==========

The  Bank's  actual  capital  amounts  and  ratios  are  presented  (dollars  in
thousands) as follows:
<TABLE>
<CAPTION>
                                                                                                   TO BE WELL
                                                                                               CAPITALIZED UNDER
                                                                          FOR CAPITAL           PROMPT CORRECTIVE
                                                   ACTUAL              ADEQUACY PURPOSES:      ACTION PROVISIONS:      
                                              ----------------       ---------------------     ------------------      
                                              AMOUNT     RATIO       AMOUNT         RATIO       AMOUNT     RATIO  
                                              ------     -----       ------         -----       ------     -----  
<S>                                          <C>          <C>           <C>         <C>        <C>         <C> 
As of September 30, 1998:
   Tangible Capital
      (to adjusted total assets)              $5,810      13.4%          650         1.5%       2,168       5.0%
   Core Capital
      (to adjusted total assets)               5,810      13.4%        1,301         3.0%       2,168       5.0%
   Risk-Based Capital
      (to risk-weighted assets)                6,180      21.3%        2,321         8.0%       2,901      10.0%

As of September 30, 1997:
   Tangible Capital
      (to adjusted total assets)              $2,953       7.5%          588         1.5%       1,959       5.0%
   Core Capital
      (to adjusted total assets)               2,953       7.5%        1,176         3.0%       1,959       5.0%
   Risk-Based Capital 
      (to risk-weighted assets)                3,299      14.3%        1,852         8.0%       2,316      10.0%
</TABLE>


                                       31

<PAGE>



Note 9 - Provision For Income Taxes
-----------------------------------

The income tax provision is as follows:
                                            YEAR ENDED SEPTEMBER 30,
                                          ----------------------------
                                             1998               1997   
                                          ----------        ----------
   Taxes payable currently                $  173,283           171,183
   Deferred taxes (benefit)                    4,532           (51,972)
                                          ----------        ----------
   Total tax provision                    $  177,815           119,211
                                          ==========        ==========

The provision for income taxes  represents the portion of estimated income taxes
relating to the years ended September 30, 1998 and 1997.

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, 1998 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.

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:

                                                            SEPTEMBER 30,      
                                                        ---------------------
                                                            1998        1997   
                                                        ----------  ---------
Deferred Tax Assets:
   Allowance for loan losses                            $  115,600    107,440
                                                        ----------  ---------
         Total                                             115,600    107,440
                                                        ----------  ---------

Deferred Tax Liabilities:
   Bad debt deduction recapture                             42,419     48,480
   Unrealized gains on available-for-sale securities        18,092        -0-
   Depreciation                                             28,183      9,430
                                                        ----------  ---------
      Total                                                 88,694     57,910
                                                        ----------  ---------

   Net Deferred Tax Assets (Liabilities)                $   26,906     49,530
                                                        ==========  =========

                                     32

<PAGE>



Note 9 - Provision For Income Taxes (Continued)
-----------------------------------------------

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:

                                                   YEAR ENDED SEPTEMBER 30,
                                                  ------------------------
                                                      1998        1997   
                                                   ----------  ----------
   Expected income tax                             $  163,660     129,883
   Increase (decrease) in tax resulting from:
      State and local taxes                            12,459      (2,440)
      Other, net                                        1,696      (8,232)
                                                   ----------  ----------
   Actual income tax expense                       $  177,815     119,211
                                                   ==========  ==========


Note 10 - Commitments and Contingencies
---------------------------------------

The Bank had  outstanding  mortgage loan  commitments  at September 30, 1998 and
1997 of $1,488,548 and $1,022,930,  respectively.  These  commitments  represent
financial  instruments  with  off-balance  sheet  risk in the  normal  course of
business to meet the financing needs of the Bank's customers.  These commitments
involve  elements  of credit  and  interest-rate  risk in  excess of the  amount
recognized in the statement of financial condition. Outstanding loan commitments
are  agreements  to lend to a customer as long as there is no  violation  of any
condition  established  in  the  contract.   Commitments  generally  have  fixed
expiration  dates.  Since many of the commitments are expected to expire without
being drawn upon,  the total  commitment  amounts do not  necessarily  represent
future cash  requirements.  The Bank evaluates each customer's credit worthiness
on a case-by-case  basis. The amount of collateral  obtained varies but includes
primarily real estate.


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  $12,000  and
$10,000 for the years ended September 30, 1998 and 1997, 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, 1998 and 1997,  the cash values of those
policies  were  $337,813  and $218,106  and the  liability  accrued for benefits
payable under the plan was $-0- 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.

                                       33

<PAGE>



Note 11 - Retirement Plans (Continued)
--------------------------------------

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.
Since the first  valuation date for the purpose of allocating the shares has not
yet occurred, cost is estimated to approximate fair value.

As of September 30, 1998,  the ESOP held 52,900  shares of the Company's  common
stock as follows:

                                                    SEPTEMBER 30,
                                                        1998   
                                                    ------------ 
Number of Shares:
   Released and allocated                           $       -0-
   Suspense                                              52,900

Fair Value:
   Released and allocated                           $       -0-
   Suspense                                             529,000

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:

                                                     YEAR ENDED
                                                    SEPTEMBER 30,
                                                        1998   
                                                   -------------  

Compensation                                         $   37,698
Interest                                                 22,302
                                                     ----------

                                                     $   60,000
                                                     ==========

Note 12 - Reconciliation of Regulatory Reports
----------------------------------------------

Net  income  and net  worth of the Bank  reported  in  these  audited  financial
statements  differs  from  amounts  in  reports  filed with the Office of Thrift
Supervision (OTS) as follows (In Thousands):

Net Income:
-----------
                                               YEAR ENDED SEPTEMBER 30,
                                                   1998        1997    
                                                  ------      ------    

Net Income reported to OTS                       $   334         193

Reconciling Items                                    (48)         68
                                                  ------      ------

Net Income for the twelve months ended
   September 30 per audited financial statement  $   286         263
                                                  ======      ======
                                                                  

                                       34

<PAGE>



Note 12 - Reconciliation of Regulatory Reports (Continued)
----------------------------------------------------------

Net Worth:
----------
                                                          SEPTEMBER 30,
                                                   -------------------------   
                                                       1998             1997    
                                                   -----------    ----------

Net Worth reported to OTS                          $     5,839         2,910

Reconciling Items                                          -0-            48

Total Net Worth on September 30, per audited
   financial statement                             $     5,839         2,958
                                                   ===========    ==========


Note 13 - Advances From Federal Home Loan Bank

Advances consist of the following:

                                                          SEPTEMBER 30,      
                                                   -------------------------
                                                        1998         1997    
                                                   -----------    ----------
Advances  payable -  Federal  Home Loan Bank of  
 Atlanta,  bearing  interest  at variable rate, 
 due July 16, 1998,  collateralized  by all 
 stock in the Federal Home Loan Bank and
 qualifying first mortgage loans.                  $       -0-     1,300,000
                                                    ===========   ==========


Note 14 - Fair Values of Financial Instruments
----------------------------------------------

The estimated fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
                                             SEPTEMBER 30, 1998             SEPTEMBER 30, 1997    
                                       ---------------------------      ------------------------- 
                                         CARRYING           FAIR          CARRYING         FAIR
                                          AMOUNT           VALUE           AMOUNT          VALUE   
                                       -----------      ----------      ----------     ----------  
<S>                                   <C>             <C>             <C>            <C>       
Financial assets:
   Cash and cash equivalents           $   371,866         371,866         656,808        656,808
   Investment securities                 5,840,709       5,840,645       3,850,815      3,847,170
   Loans, net of allowance
      for loan losses                   36,397,067      36,447,000      33,325,719     33,322,000
   Accrued interest receivable             447,854         447,854         381,218        381,218
   Investment in Federal Home
      Loan Bank stock                      239,800         239,800         227,700        227,700

Financial liabilities:
   Deposits                             34,954,584      35,084,000      34,470,803     34,598,000
   Advances from Federal Home
      Loan Bank                                -0-             -0-       1,300,000      1,300,000
   Accrued interest payable                275,028         275,028         272,346        272,346
</TABLE>


                                     35

<PAGE>



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.


                            SEPTEMBER 30, 1998          SEPTEMBER 30, 1997   
                         -------------------------    -----------------------
                         NOTIONAL           FAIR        NOTIONAL       FAIR
                         AMOUNT            VALUE        AMOUNT        VALUE   
                         -----------     ---------    ---------     --------- 

Other:
   Loan commitments      $ 1,488,548     1,488,548    1,022,930     1,022,930


Note 15 - Related Party Transactions
------------------------------------

Related  parties to the Company are  identified  as its officers and  directors.
During  the years  ended  September  30,  1998 and  1997,  the  Company  had the
following related party transactions:

                                                          SEPTEMBER 30,      
                                                    ----------------------
                                                      1998          1997    
                                                    ---------     --------
Loans to officers and directors (balance at
   September 30), Note 4                            $ 720,735      674,614
Deposits held for officers and directors (balance
   at September 30),Note 7                            381,331      556,252
Insurance premiums paid - director                     17,353       22,314
Legal fees paid - director                              8,146        3,000
Supplies purchased - officers and directors               321        8,218


Note 16 - Year 2000 Issue
-------------------------

The Bank is aware of the issues associated with the programming code in existing
computer  systems as the  Millennium  (Year  2000)  approaches.  The "year 2000"
problem is pervasive and complex as virtually  every computer  operation will be
affected  in some way by the  rollover  of the two digit  year  value to 00. The
issue is  whether  computer  systems  will  properly  recognize  date  sensitive
information  when  the  year  changes  to  2000.  Systems  that do not  properly
recognize such  information  could generate  erroneous data or cause a system to
fail.

The Bank is utilizing external  resources to identify,  correct or reprogram and
test  the  systems  for the  year  2000  compliance.  It is  believed  that  all
reprogramming  efforts have been completed,  allowing adequate time for testing.
Management estimates the cost of the year 2000 compliance will be $10,000.

                                       36

<PAGE>



Note 17 - Financial Information of Quitman Bancorp, Inc. (Parent Only)
----------------------------------------------------------------------

                        STATEMENT OF FINANCIAL CONDITION

                               SEPTEMBER 30, 1998
                               ------------------


                                     Assets
                                     ------

Cash on deposit                                   $1,553,906
Investment in Quitman Federal Savings Bank         5,839,420
Investment securities available-for-sale           1,010,200
Loans receivable - subsidiary ESOP                   529,000
Accrued interest receivable                           43,702
                                                  ----------

         Total Assets                             $8,976,228
                                                  ==========

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

Liabilities:
   Income taxes payable                                            $    9,417
   Deferred income taxes payable                                        3,058
                                                                   ----------
                                                                       12,475
                                                                   ----------
Stockholders' Equity:
   Capital stock                                                       66,125
   Additional paid in capital                                       6,135,412
   Retained earnings                                                3,256,097
   Unrealized gains (losses) on available-for-sale securities          35,119
   Esop loan guaranty of subsidiary                                  (529,000)
                                                                   ----------
                                                                    8,963,753
                                                                   ----------

         Total Liabilities and Stockholders' Equity                $8,976,228
                                                                   ==========

                                     37

<PAGE>



Note 17 - Financial Information of Quitman Bancorp, Inc.(Parent Only)(Continued)
--------------------------------------------------------------------------------

                               STATEMENT OF INCOME

                          YEAR ENDED SEPTEMBER 30, 1998
                          -----------------------------


Income:
   Equity in income of subsidiary             $  238,388
   Interest income                                43,424
                                              ----------
                                                 281,812

Expenses                                          16,378
                                              ----------

Income before taxes                              265,434
Income taxes                                       9,417
                                              ----------

Net Income                                    $  256,017
                                              ==========

                                     38

<PAGE>



Note 17 - Financial Information of Quitman Bancorp, Inc.(Parent Only) Continued)
--------------------------------------------------------------------------------

                             STATEMENT OF CASH FLOWS

                          YEAR ENDED SEPTEMBER 30, 1998
                          -----------------------------


Cash Flows From Operating Activities:
   Net income                                                  $  256,017
   Adjustments:
      Equity in income of subsidiary                             (238,388)
      Amortization of premium on securities                           278
      (Increase) decrease in accrued interest receivable          (43,702)
      Increase (decrease) in income taxes payable                   9,417
                                                               ----------

Net Cash Provided (Used) By Operating Activities                  (16,378)
                                                               ----------

Cash Flows From Investing Activities:
   Purchase of available-for-sale securities                   (1,001,484)
   Loan to subsidiary ESOP                                       (529,000)
   Investment in subsidiary                                    (3,100,769)
                                                               ----------

Net Cash Provided (Used) By Investing Activities               (4,631,253)
                                                               ----------

Cash Flows From Financing Activities:
   Issuance of 661,250 shares of common stock                   6,201,537
                                                               ----------

Net Cash Provided By Financing Activities                       6,201,537
                                                               ----------
 
Net Increase In Cash                                            1,553,906

Cash And Cash Equivalents At Beginning Of Period                      -0-

Cash And Cash Equivalents At End Of Period                     $1,553,906
                                                               ==========

Supplemental Disclosure of Cash Flow Information:
-------------------------------------------------
   Cash Paid During The Period For:
      Interest                                                 $      -0-
                                                               ==========
      Income taxes                                             $      -0-
                                                               ==========

Schedule Of Non-Cash Investing And Financing Activities:
--------------------------------------------------------
   Total increase in unrealized gains on securities
      available-for-sale                                       $    8,994
                                                               ==========

                                     39



<PAGE>


                              QUITMAN BANCORP, INC.
                             100 West 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
President and owner                        Quitman Bancorp, Inc. and Quitman
Holwell & Holwell, Inc.                    Federal Savings Bank
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
Malizia, Spidi, Sloane & Fisch, P.C.       Registrar & Transfer Company
One Franklin Square                        10 Commerce Drive
1301 K Street, N.W., Suite 700 East        Cranford, New Jersey  07016
Washington, D.C. 20005                     (908) 497-2300



Our Annual  Report  for the year  ended  September  30,  1998 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 27, 1999 at 11:00 a.m. at the Brooks County Library, Quitman, Georgia.




                                       40