SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)

[X]  Annual report  pursuant to section 13 or 15 (d) of the Securities  Exchange
     Act of 1934

     For  the fiscal year ended September 30, 1998
                                ------------------

[ ]  Transition  report   pursuant  to  section  13  or 15(d) of the  Securities
     Exchange Act of 1934 For the transition period from           to          .
                                                         ---------    ----------

                           Commission File No. 0-23763

                              Quitman Bancorp, Inc.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

     Georgia                                                58-2365866   
---------------------------------------------               ------------------ 
(State or Other Jurisdiction of Incorporation               (I.R.S. Employer
     or Organization)                                       Identification No.)

100 West Screven Street, Quitman, Georgia                       31643      
-----------------------------------------                   --------------
(Address of Principal Executive Offices)                      (Zip Code)

Issuer's Telephone Number, Including Area Code:             (912) 263-7538 
                                                            ----------------

Securities registered under Section 12(b) of the Exchange Act:          None 
                                                                       ------

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
YES  X  NO   .
    ---   ---
     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year: $3,613,715

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  registrant,  based on the average  bid and asked price of the  registrant's
Common Stock on December 16, 1998, was $6.2 million.

     As of December 16, 1998,  there were issued and outstanding  661,250 shares
of the registrant's Common Stock.

     Transitional Small Business Disclosure Format (check one): YES    NO  X
                                                                   ---    ---

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal Year ended
     September 30, 1998. (Part II)

2.   Portions of the Proxy Statement for the Annual Meeting of Stockholders  for
     the Fiscal Year ended September 30, 1998. (Parts II and III)


<PAGE>



                                     PART I

         Quitman Bancorp,  Inc. (the "Company" or "Registrant") may from time to
time make written or oral  "forward-looking  statements",  including  statements
contained in the Company's  filings with the Securities and Exchange  Commission
(including this annual report on Form 10-KSB and the exhibits  thereto),  in its
reports to stockholders and in other  communications  by the Company,  which are
made in good faith by the Company  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 the Company's plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  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  rates,  market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the Company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes,  acquisitions;  changes in consumer spending
and  saving  habits;  and the  success  of the  Company  at  managing  the risks
resulting from these factors.

         The Company  cautions that the listed  factors are not  exclusive.  The
Company does not  undertake  to update any  forward-looking  statement,  whether
written  or oral,  that may be made  from  time to time by or on  behalf  of the
Company.

Item 1.  Description of Business

General

         The Company is a  Georgia-chartered  corporation  organized in December
1997 at the  direction of Quitman  Federal  Savings Bank (the "Bank") to acquire
all of the capital stock that the Bank issued in its conversion  from the mutual
to stock  form of  ownership  (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 that the Bank retains a specified amount of its assets in
housing-related  investments.  The Company  conducts no significant  business or
operations  of its own other than  holding all of the  outstanding  stock of the
Bank and  investing the  Company's  portion of the net proceeds  obtained in the
Conversion.

         The Bank,  which was  founded  in 1936 under the name  Quitman  Federal
Savings  and Loan  Association,  is a federally  chartered  stock  savings  bank
headquartered  in  Quitman,  Georgia.  The Bank  obtained  its  current  name in
November 1997. The Bank is subject to examination and  comprehensive  regulation
by the Office of Thrift  Supervision  ("OTS")  and its  deposits  are  federally
insured by the

                                        1

<PAGE>



Savings  Association  Insurance Fund ("SAIF").  The Bank is a member of and owns
capital  stock in the Federal Home Loan Bank (the  "FHLB") of Atlanta,  which is
one of the 12 regional banks in the FHLB System.

         The  Bank  attracts   deposits  from  the  general  public   (primarily
certificates  of deposit) and uses those  deposits,  together  with other funds,
primarily  to  originate  and  invest in loans  secured  by one- to  four-family
residential  real estate.  The Bank also  originates  consumer,  commercial  and
construction loans and uses borrowings to fund loans.

Competition

         The Bank is one of many financial  institutions serving its market area
of Brooks  County and parts of Lowdnes  County,  Georgia.  The  competition  for
deposits  comes from other  insured  financial  institutions  such as commercial
banks, thrift institutions,  credit unions,  finance companies,  and multi-state
regional banks in the Bank's market area.  Deposit  competition  also includes a
number of insurance  products sold by local agents and investment  products such
as mutual funds and other  securities sold by local and regional  brokers.  Loan
competition varies depending upon market conditions and comes from other insured
financial  institutions such as commercial banks,  thrift  institutions,  credit
unions, multi-state regional banks, and mortgage bankers.

Lending Activities

         Loan  Portfolio  Data. Set forth below is selected data relating to the
composition of the Company's loan portfolio by type of loan and type of security
on the dates indicated:


                                                     At September 30,
                                           ------------------------------------
                                                 1998               1997
                                           ----------------   -----------------
                                           Amount   Percent   Amount    Percent
                                           ------   -------   ------    -------
                                                 (Dollars in thousands)
Type of Loans:
Real estate loans:
  One-to-four family residential.......    $27,073    70.69%  $23,656    68.09%
  Multi-family (5 or more) dwelling....        810     2.11       699     2.01
  Non residential......................      5,339    13.94     5,394    15.52
  Construction.........................      3,433     8.96     3,655    10.52
  FHLMC pools..........................          3     0.01         4     0.01
Share loans............................        557     1.45       470     1.35
Consumer ..............................      1,089     2.84       867     2.50
                                            ------    -----    ------    -----
                                            38,304   100.00%   34,745   100.00%
                                            ------   ======    ------   ======
Less:
  Loans in process.....................      1,489              1,023
  Allowance for loan losses............        370                346
  Deferred loan origination fees
   and costs...........................         48                 50
                                            ------             ------
Total loans, net.......................    $36,397            $33,326
                                            ======             ======




                                        2

<PAGE>



Loan Maturity Tables

         The following table sets forth the estimated  maturity of the Company's
loan  portfolio at September 30, 1998. The table does not include the effects of
possible prepayments or scheduled principal  repayments.  All mortgage loans are
shown as  maturing  based on the date of the last  payment  required by the loan
agreement.

                                           Non
                           Residential Residential Construction  Other   Total
                           ----------- ----------- ------------  -----   -----
                                           (In thousands)
Amounts due:
Within 1 year...............  $ 3,594    $1,917      $3,410     $  903  $ 9,824
Over 1 to 5 years...........   15,167     1,760          79        671   17,677
Over 5 years................    8,986     1,475          74        268   10,803
                               ------     -----      ------      -----   ------
  Total amount due..........  $27,747    $5,152      $3,563     $1,842   38,304
                               ======     =====       =====      =====   ------

Less:
Allowance for loan losses...                                                370
Loans in process............                                              1,489
Deferred loan fees..........                                                 48
                                                                        -------
  Loans receivable, net.....                                            $36,397
                                                                         ======


         The following table sets forth the dollar amount of all loans due after
September  30, 1999,  which have  pre-determined  interest  rates and which have
floating or adjustable interest rates.

                                                      Floating or
                                       Fixed Rates  Adjustable Rates    Total
                                       -----------  ----------------    -----
                                                     (In thousands)
Real estate:
  Residential.........................   $23,863         $290         $24,153
  Non-residential.....................     3,235           --           3,235
                                          ------        -----          ------


Non real estate:
  Share loans.........................        78           --              78
  Consumer............................       778           --             778
                                         -------        -----         -------
                                         $27,954         $290         $28,244
                                          ======          ===          ======



         One- Four-Family Residential Loans. The Bank's primary lending activity
consists of the  origination of one- to four-family  residential  mortgage loans
secured by  property  located in its primary  market  area.  The Bank  generally
originates one- to four-family  residential  mortgage loans in amounts up to 85%
of the appraised market value or purchase price. The maximum loan-to-value ratio
on mortgage loans secured by non-owner occupied properties  generally is limited
to 80%. The Bank  primarily  originates  and retains  fixed-rate  balloon  loans
having terms of 3 or 5 years,  with principal and interest  payments  calculated
using up to a 25-year amortization period. Because of the amortization

                                        3

<PAGE>



period,  relatively  short  term and  renewability  of there  loans,  there  are
similarities  between  these  loans  and  ARMs,  particularly  from  the  Bank's
asset/liability management perspective. The Bank occasionally originates 15 year
fixed-rate loans.

         The  interest  rate on the Bank's ARM loans is based on an index plus a
stated margin. The Bank may offer discounted initial interest rates on ARM loans
but it requires that the borrower  qualify for the ARM loan at the fully indexed
rate (the index rate plus the margin).  ARM loans provide for periodic  interest
rate adjustments upward or downward.

         ARM loans decrease the risk  associated  with changes in interest rates
by  periodically  repricing,  but involve other risks because as interest  rates
increase, the underlying payments by the borrower increase,  thus increasing the
potential for default by the borrower.  At the same time, the  marketability  of
the underlying  collateral may be adversely  affected by higher  interest rates.
Upward  adjustment  of the  contractual  interest  rate is also  limited  by the
maximum  periodic and lifetime  interest rate  adjustment  permitted by the loan
documents, and, therefore is potentially limited in effectiveness during periods
of rapidly rising  interest  rates.  At September 30, 1998, less than 10% of the
one- to four-family residential loans that the Bank held had adjustable rates of
interest.

         All of the Bank's loans are  originated for the Bank's  portfolio.  The
Bank does not conform its loans to the  standards  that are used in the mortgage
industry that would allow its loans to be readily sold into the secondary market
since it does not  expect to sell its loans.  For  example,  the Bank's  lending
policy does not require its borrowers to obtain  private  mortgage  insurance on
the amount of a loan that  exceeds the typical  loan to value ratios used in the
mortgage loan industry and the Bank may lend money to  individuals  based on its
review of personal circumstances that other lenders might not consider.

         Mortgage  loans  originated  and  held by the  Bank  generally  include
due-on-sale clauses.  This gives the Bank the right to deem the loan immediately
due and payable in the event the  borrower  transfers  ownership of the property
securing the mortgage loan without the Bank's consent.

         Residential Construction Loans. The Bank makes residential construction
loans on one- to four-family residential property to the individuals who will be
the owners and occupants upon completion of construction.  No principal payments
are required  during  construction.  After that time, the payments are set at an
amount  that  will  repay  the  loan  over  the term of the  loan.  The  maximum
loan-to-value  ratio is 85%.  Because  residential  construction  loans  are not
rewritten if permanent financing is obtained from the Bank, these loans are made
on terms similar to those of the Bank's single family  residential loans and may
be paid off over terms of 3 to 5 years with an amortization period of 25 years.

         The Bank also originates  speculative loans to residential builders who
have established  business  relationships with the Bank. These speculative loans
typically  are made for a term of six  months  after  which the Bank  allows one
extension  of six  months.  If after one year a unit  remains  unsold,  the Bank
requires  that the builder make a 10% principal  reduction  payment and the Bank
either then allows the builder to make  interest  payments for 90 days before he
is required to make  another  principal  reduction  payment,  or the builder may
choose that the Bank treat the loan as a regular loan, pursuant to which he will
make monthly payments for the full term of the loan. In underwriting such loans,
the Bank considers the number of units that the builder has on a speculative bid
basis that remain unsold.  The Bank's  experience has been that most speculative
loans are repaid  well within the twelve  month  period.  Speculative  loans are
generally  originated  with a loan to value  ratio that does not exceed  75%. At
September 30, 1998 the Bank's largest  speculative loan was $65,000,  drawn on a
line of credit, and was performing in accordance with its terms.


                                        4

<PAGE>



     Construction  lending is generally considered to involve a higher degree of
credit risk than long-term financing of residential properties.  The Bank's risk
of loss on a  construction  loan is  dependent  largely upon the accuracy of the
initial  estimate of the property's  value at completion of construction and the
estimated cost of  construction.  If the estimate of  construction  cost and the
marketability  of the  property  upon  completion  of the  project  prove  to be
inaccurate,  the Bank may be compelled to advance  additional  funds to complete
the construction.  Furthermore,  if the final value of the completed property is
less  than  the  estimated  amount,  the  value  of the  property  might  not be
sufficient to assure the repayment of the loan. For  speculative  loans that the
Bank  originates  to  builders,  the  ability of the  builder to sell  completed
dwelling  units  will  depend,  among  other  things,  on  demand,  pricing  and
availability of comparable properties, and general economic conditions.

     Non-Residential  Real Estate Loans. The Bank's  non-residential real estate
loans  consist  of  commercial  business  loans  and  farm  real  estate  loans.
Commercial  real estate loans are secured by  churches,  office  buildings,  and
other  commercial  properties.  Farm loans are  secured by the farm land.  These
loans generally have not exceeded $500,000 or had terms greater than 25 years.

     Commercial  and farm real estate  lending  entails  significant  additional
risks compared to residential  property  lending.  These loans typically involve
large loan  balances to single  borrowers  or groups of related  borrowers.  The
repayment of these loans  typically is dependent on the successful  operation of
the real estate  project  securing the loan.  For  commercial  real estate these
risks can be  significantly  affected  by supply  and demand  conditions  in the
market for office retail space and may also be subject to adverse  conditions in
the economy. For loans secured by farm real estate, repayment may be affected by
weather conditions,  government  policies,  and subsidies concerning farming. To
minimize  these  risks,  the Bank  generally  limits this type of lending to its
market  area and to  borrowers  who are  otherwise  well known to the Bank,  and
generally limits the loan to value ratio to 80%.

     Consumer Loans.  The Bank offers consumer loans in order to provide a wider
range of financial  services to its  customers  and because  these loans provide
higher interest rates and shorter terms than many of the Bank's other loans. The
Bank's consumer loans consist of home equity,  automobile, and mobile home loans
and are generally in smaller dollar amounts than the Bank's other loans.

     Consumer loans may entail  greater risk than  residential  mortgage  loans,
particularly  in the case of  consumer  loans that are  unsecured  or secured by
assets that depreciate rapidly.  Repossessed collateral for a defaulted consumer
loan may not be  sufficient  for  repayment  of the  outstanding  loan,  and the
remaining deficiency may not be collectible.

     Loan Approval Authority and Underwriting.  The Bank's loan committee, which
is comprised of all 5 directors on the board, approves all loans. Mr. Plair, the
Bank's President, has loan authority to approve consumer loans of up to $5,000.

     Loan Commitments.  At September 30, 1998, commitments to cover originations
of mortgage loans totalled $1.5 million. The Bank believes that virtually all of
its commitments will be funded.

     Loans to One Borrower.  The maximum amount of loans which the Bank may make
to any one  borrower may not exceed the greater of $500,000 or 15% of the Bank's
unimpaired capital and unimpaired  surplus.  The Bank may lend an additional 10%
of the Bank's  unimpaired  capital and  unimpaired  surplus if the loan is fully
secured by readily marketable  collateral.  At September 30, 1998, the aggregate
loans outstanding of the Bank's five largest borrowers have outstanding balances
of between $399,000 and $592,000.


                                        5

<PAGE>



Nonperforming and Problem Assets

         Loan  Delinquencies.  Loans are  reviewed  on a  monthly  basis and are
placed on a non-accrual  status when, in the Bank's  opinion,  the collection of
additional interest is doubtful.  Interest accrued and unpaid at the time a loan
is placed on nonaccrual  status is charged against interest  income.  Subsequent
interest  payments,  if any,  are either  applied to the  outstanding  principal
balance or recorded as  interest  income,  depending  on the  assessment  of the
ultimate collectibility of the loan.

         Nonperforming  Assets.  The  following  table  sets  forth  information
regarding nonaccrual loans and real estate owned, as of the dates indicated. The
Bank has no loans categorized as troubled debt restructurings within the meaning
of SFAS 15. For the year ended September 30, 1998,  there was $7,146 in interest
income that would have been  recorded  on loans  accounted  for on a  nonaccrual
basis under the original terms of such loans; however,  interest income on these
loans, which is recorded only when received, was $3,372.
                                                        At September 30,
                                                    1998          1997
                                 (In thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
  Construction loans............................   $    15       $   --
  One- to four-family residential...............        88           73
  All other mortgage loans......................        --           51
Non-mortgage loans:
  Commercial....................................        --           --
  Consumer......................................        --           --
                                                    ------        ----- 
Total...........................................   $   103       $  124
                                                    ======        ===== 
Accruing loans which are contractually past
due 90 days or more:
Mortgage loans:
  Construction loans............................   $    15       $   58
  One- to four-family residential...............       185          249
  All other mortgage loans......................        --           25
Non-mortgage loans:
  Commercial....................................        --           --
  Consumer......................................        10           21
                                                    ------        ----- 
Total...........................................   $   210       $  353
                                                    ======        ===== 
Total non-accrual and accrual loans.............   $   313       $  477
                                                    ======        ===== 
Real estate owned...............................   $    --       $   64
                                                    ======        ===== 
Other non-performing assets.....................   $    --       $   --
                                                    ======        =====  
Total non-performing assets.....................   $   313       $  541
                                                      ====        ===== 
Total non-performing loans to total loans, net..       .86%        1.43%
                                                      ====        =====
Total non-performing loans to total assets......       .72%        1.22%
                                                      ====        =====
Total non-performing assets to total assets.....       .72%        1.38%
                                                      ====        =====



         Classified Assets. OTS regulations provide for a classification  system
for problem  assets of savings  associations  which  covers all problem  assets.
Under this classification system, problem assets of savings institutions such as
the Bank are  classified as  "substandard,"  "doubtful,"  or "loss." An asset is
considered  substandard if it is inadequately protected by the current net worth
and paying capacity of

                                        6

<PAGE>



the borrower or of the collateral  pledged,  if any.  Substandard assets include
those  characterized by the "distinct  possibility" that the savings institution
will  sustain  "some  loss"  if  the  deficiencies  are  not  corrected.  Assets
classified as doubtful have all of the weaknesses  inherent in those  classified
substandard,  with the added  characteristic  that the  weaknesses  present make
"collection or liquidation in full," on the basis of currently  existing  facts,
conditions,  and values, "highly questionable and improbable." Assets classified
as loss are those considered "uncollectible" and of such little value that their
continuance  as assets without the  establishment  of a specific loss reserve is
not warranted.  Assets may be designated  "special mention" because of potential
weakness  that  do  not  currently   warrant   classification   in  one  of  the
aforementioned categories.

         When  a  savings  association   classifies  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets.  When a savings  association  classifies
problem assets as loss, it is required either to establish a specific  allowance
for losses equal to 100% of that portion of the asset so classified or to charge
off such amount. A savings association's  determination as to the classification
of its assets and the amount of its valuation allowances is subject to review by
the OTS,  which may order the  establishment  of additional  general or specific
loss  allowances.  A portion of general  loss  allowances  established  to cover
possible  losses related to assets  classified as substandard or doubtful may be
included in determining a savings  association's  regulatory  capital.  Specific
valuation  allowances  for loan losses  generally  do not qualify as  regulatory
capital.  At September 30, 1998, the Bank had $99,000,  $551,000,  $0, and $0 of
loans   classified  as  special   mention,   substandard,   doubtful  and  loss,
respectively.

         Allowances  for Loan Losses.  A provision for loan losses is charged to
operations  based on management's  evaluation of the losses that may be incurred
in the Bank's loan portfolio. The evaluation, including a review of all loans on
which full  collectibility  of  interest  and  principal  may not be  reasonably
assured,  considers:  (i) the Bank's past loan loss  experience,  (ii) known and
inherent risks in the Bank's portfolio, (iii) adverse situations that may affect
the  borrower's  ability to repay,  (iv) the estimated  value of any  underlying
collateral, and (v) current economic conditions.

         The Bank monitors its  allowance for loan losses and make  additions to
the allowance as economic  conditions  dictate.  Although the Bank maintains the
Bank's  allowance for loan losses at a level that it considers  adequate for the
inherent  risk  of  loss in its  loan  portfolio,  future  losses  could  exceed
estimated  amounts and additional  provisions for loan losses could be required.
In addition,  the Bank's  determination  as to the amount of allowance  for loan
losses is  subject  to review by the OTS,  as part of its  examination  process.
After  a  review  of the  information  available,  the  OTS  might  require  the
establishment of an additional allowance.

         The following  table  illustrates  the  allocation of the allowance for
loan losses for each category of loans.  The allocation of the allowance to each
category is not necessarily indicative of future loss in any particular category
and does not restrict the Bank's use of the  allowance to absorb losses in other
loan categories.



                                        7

<PAGE>




                                                At September 30
                                  --------------------------------------------
                                            1998                  1997
                                  -----------------------  -------------------
                                               Percent of          Percent of
                                                Loans in            Loans in
                                                  Each                Each
                                                Category            Category
                                                to Total            to Total
                                   Amount        Loans       Amount  Loans    
                                   ------        -----       ------  -----     
                                              (Dollars in thousands)
At end of period allocated to:
  One- to four-family...........   $ 262         70.7%       $ 231      68.1%
  Multi-family..................       7          2.0            7       2.0
  Other real estate.............      85         22.9           90      26.1
  Consumer......................      16          4.4           18       3.8
                                   -----        -----        -----     -----
     Total allowance............   $ 370        100.0%       $ 346     100.0%
                                    ====        =====         ====     =====
                                                            
                                                         



         The following table sets forth  information  with respect to the Bank's
allowance for loan losses at the dates and for the periods indicated:
                                                     At September 30,
                                                 ----------------------
                                                    1998         1997
                                                 --------       -------
                                                 (Dollars in thousands)

Total loans, net.............................     $36,397       $33,326
                                                   ======        ======
Average loans outstanding....................     $34,862       $32,065
                                                   ======        ======

Allowance balances (at beginning of period)..     $   346       $   210
Provision:
  Residential................................          17            94
  Non-residential............................           6            35
  Consumer...................................           1             7
Net charge-offs (recoveries):
  Residential................................          --            --
  Non-residential............................          --            --
  Consumer...................................          --            --
                                                   ------        ------
Allowance balance (at end of period).........     $   370       $   346
                                                   ======        ======
Allowance for loan losses as a percent
  of total loans outstanding.................        1.01%         1.03%
Net loans charged off as a percent of
  average loans outstanding..................          --           --



                                        8

<PAGE>



Investment Activities

         Investment  Securities.  The Bank is required under federal regulations
to maintain a minimum amount of liquid assets which may be invested in specified
short-term securities and certain other investments.  The Company classifies its
investment  securities  as   "available-for-sale"   or  "held-to-  maturity"  in
accordance with SFAS No. 115.

         The   Company's   investment   securities    "available-for-sale"   and
"held-to-maturity"  portfolios at September 30, 1998 did not contain  securities
of any issuer  with an  aggregate  book value in excess of 10% of the  Company's
equity, excluding those issued by the United States government agencies.

         Mortgage-Backed  Securities.  To  supplement  lending  activities,  the
Company has invested in residential mortgage-backed securities.  Mortgage-backed
securities can serve as collateral for borrowings and, through repayments,  as a
source  of  liquidity.  Mortgage-backed  securities  represent  a  participation
interest in a pool of  single-family  or other type of mortgages.  Principal and
interest   payments   are  passed  from  the   mortgage   originators,   through
intermediaries (generally  quasi-governmental  agencies) that pool and repackage
the participation interests in the form of securities,  to investors such as the
Company. The quasi-governmental  agencies guarantee the payment of principal and
interest  to  investors  and  include the  Federal  Home Loan  Mortgage  Company
("FHLMC"),  the  Government  National  Mortgage  Association  ("GNMA"),  and the
Federal National Mortgage Association ("FNMA").  Expected maturities will differ
from contractual  maturities due to scheduled  repayments and because  borrowers
may have the  right to call or prepay  obligations  with or  without  prepayment
penalties.

         Investment Portfolio. The following table sets forth the carrying value
of the Company's investment securities  available-for-sale  and held-to-maturity
portfolios, and FHLB stock at the dates indicated.
                                                         At September 30,
                                                       --------------------
                                                        1998          1997
                                                       ------       -------
                                                          (In thousands)

Investment securities:                                          
 U.S. Government securities available-for-sale..      $  714        $  904
 U.S. Government securities held-to-maturity....          --           100
 U.S. Agency securities available-for-sale......       4,409         1,600
 U.S. Agency securities held-to-maturity........         200           705
   Total investment securities..................       5,323         3,309
Interest-bearing deposits.......................         203           548
FHLB stock......................................         240           228
Mortgage-backed securities available-for-sale...         518           542
Mortgage-backed securities held-to-maturity.....          --            --
                                                       -----         -----
   Total investments............................      $6,284        $4,627
                                                       =====         =====




                                        9

<PAGE>




         The following table sets forth certain information  regarding scheduled
maturities,  carrying  values,  approximate  fair values,  and weighted  average
yields for the  Company's  investments  at  September  30,  1998 by  contractual
maturity.  The following table does not take into  consideration  the effects of
scheduled repayments or the effects of possible prepayments.
<TABLE>
<CAPTION>
                             One Year or Less   One to Five Years Five to Ten Years  More than Ten Years Total Investment Securities
                             -----------------  ----------------- -----------------  ------------------- ---------------------------
                             Carrying Average   Carrying Average  Carrying   Average  Carrying  Average   Carrying  Average  Market
                               Value   Yield      Value   Yield     Value     Yield     Value    Yield      Value    Yield    Value
                              ------- -------    ------- -------   -------   -------   -------  -------    -------  -------  ------
                                                        (Dollars in thousands)
<S>                          <C>      <C>       <C>      <C>     <C>          <C>      <C>       <C>      <C>       <C>     <C>  
Investment securities:
  U.S. Government securities.$   --      --%    $  714    6.23%   $   --        --%     $ --      --%      $  714    6.23%   $  714
  U. S. Agency securities.... 1,255    6.12      3,353    6.10        --        --        --       --       4,608     6.11    4,608
  Corporate notes and bonds..    --      --         --      --        --        --        --       --          --       --       --
  Other securities(1)........    --      --         --      --        --        --        --       --          --       --       --
                              -----              -----             -----                 ---               ------            ------
 Total investment securities  1,255    6.12      4,067    6.12        --        --        --       --       5,322     6.13    5,322
Interest-bearing deposits....   203    6.33         --      --        --        --        --       --         203     6.33      203
Federal funds sold...........    --      --         --      --        --        --        --       --          --       --       --
FHLB stock...................   240    7.37         --      --        --        --        --       --         240     7.37      240
Mortgage-backed securities...    --      --         --      --        --        --       519     5.75         519     5.75      519
                              -----              -----             -----                 ---                -----             -----
 Total investments...........$1,698    6.32     $4,067    6.12    $   --        --      $519     5.75      $6,284     6.15   $6,284
                              =====              =====             =====                 ===                =====             =====

</TABLE>




                                       10

<PAGE>



Sources of Funds

     General. Deposits are the Bank's major external source of funds for lending
and other  investment  purposes.  Funds are also  derived  from the  receipt  of
payments  on  loans  and  prepayment  of  loans  and  maturities  of  investment
securities  and  mortgage-backed  securities  and,  to  a  much  lesser  extent,
borrowings and operations.  Scheduled loan principal repayments are a relatively
stable source of funds,  while deposit inflows and outflows and loan prepayments
are significantly influenced by general interest rates and market conditions.

     Consumer and commercial deposits are attracted  principally from within the
Bank's  primary  market  area  through the  offering  of a selection  of deposit
instruments including checking accounts,  regular savings accounts, money market
accounts, and term certificate accounts. IRA accounts are also offered.

     Certificates  of Deposit.  The following  table indicates the amount of the
Bank's  certificates  of deposit of  $100,000  or more by time  remaining  until
maturity as of September 30, 1998.

                                        Certificates
Maturity Period                          of Deposit
---------------                          ----------
                                       (In thousands)

Within three months...............         $1,018
Three through six months..........          1,158
Six through twelve months.........          2,721
Over twelve months................          1,853
                                            -----
                                           $6,750


     Borrowings.  Advances (borrowings) may be obtained from the FHLB of Atlanta
to  supplement  the Bank's supply of lendable  funds.  Advances from the FHLB of
Atlanta  are  typically  secured by a pledge of the Bank's  stock in the FHLB of
Atlanta, a portion of the Bank's first mortgage loans, and other assets.

         The following table sets forth the terms of the Bank's  short-term FHLB
advances.

                                             During the Year ended September 30,
                                             -----------------------------------
                                                       1998        1997
                                                       ----        ----
                                                    (Dollars in thousands)

Balance at period end.............................. $   --       $1,300
Average balance outstanding during the period......    615        1,175
Maximum amount outstanding at any month-end
  during the period................................  1,600        1,300
Weighted average interest rate during the period...    5.5%         5.4%





                                       11

<PAGE>



Personnel

         At  September  30,  1998 the Bank had 10  full-time  employees  and one
part-time employee. None of the Bank's employees are represented by a collective
bargaining  group.  The Bank  believes  that its  relationship  with the  Bank's
employees is good.

Regulation

         Set forth below is a brief  description of certain laws which relate to
the Company and the Bank.  The  description  is not complete and is qualified in
its entirety by references to applicable laws and regulation.

Holding Company Regulation

         General. The Company is a unitary savings and loan holding company that
files reports with the OTS and is subject to regulation  and  examination by the
OTS. In addition,  the OTS has  enforcement  authority  over the Company and any
non-savings  institution  subsidiaries.  This  permits  the OTS to  restrict  or
prohibit  activities  that it determines to be a serious risk to the Bank.  This
regulation is intended primarily for the protection of the Bank's depositors and
not  for the  benefit  of  stockholders  of the  Company.  The  Company  is also
registered with the Georgia Department of Banking and Finance.

         Qualified  Thrift  Lender  ("QTL")  Test.  As the Company owns only one
savings institution,  it is able to diversify its operations into activities not
related to banking,  but only so long as the Bank satisfies the QTL test. If the
Company controlled more than one savings institution,  it would lose the ability
to diversify its operations  into  nonbanking  related  activities,  unless such
other savings  institutions  each also  qualified as a QTL or were acquired in a
supervised  acquisition.  See "-- Savings  Institution  Regulation  -- Qualified
Thrift Lender Test."

Savings Institution Regulation

         General. As a federally  chartered,  SAIF-insured  savings institution,
the Bank is subject to extensive  regulation by the OTS and the Federal  Deposit
Insurance  Corporation  ("FDIC").  Lending activities and other investments must
comply with various federal and state statutory and regulatory requirements. The
Bank is also subject to certain reserve requirements promulgated by the Board of
Governors of the Federal Reserve System ("Federal Reserve").

         Insurance of Deposit Accounts.  The Bank's deposit accounts are insured
by the SAIF to a maximum of $100,000 for each insured  member (as defined by law
and  regulation).  Insurance  of deposits may be  terminated  by the FDIC upon a
finding that the institution has engaged in unsafe or unsound  practices,  is in
an unsafe or unsound  condition  to  continue  operations  or has  violated  any
applicable law, regulation,  rule, order or condition imposed by the FDIC or the
institution's primary regulator.

         As a member of the  SAIF,  the Bank pays an  insurance  premium  to the
FDIC. The FDIC also maintains  another  insurance  fund, the Bank Insurance Fund
("BIF"), which primarily insures commercial bank deposits.

         The  deposit  insurance  assessment  for most SAIF  members is .064% of
deposits on an annual  basis  through the end of 1999.  During this same period,
BIF members will be assessed approximately .013%

                                       12

<PAGE>



of deposits.  After 1999,  assessments  for BIF and SAIF  members  should be the
same. It is expected  that these  continuing  assessments  for both SAIF and BIF
members  will  be  used  to  repay   outstanding   Financing   Corporation  bond
obligations.

         Regulatory  Capital  Requirements.   OTS  capital  regulations  require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted assets, (2) core capital equal to at least 3% of total
adjusted assets, and (3) risk-based  capital equal to 8% of total  risk-weighted
assets.

         Dividend and Other Capital  Distribution  Limitations.  OTS regulations
require  the  Bank  to  give  the OTS 30 days  advance  notice  of any  proposed
declaration of dividends to the Company, and the OTS has the authority under its
supervisory  powers to  prohibit  the  payment of  dividends  by the Bank to the
Company.  In  addition,  the Bank may not declare or pay a cash  dividend on its
capital  stock if the effect  would be to reduce the Bank's  regulatory  capital
below the amount required for the liquidation account established at the time of
the conversion from mutual to stock form.

         In the event the Bank's capital falls below the Bank's fully  phased-in
requirement  or the OTS notifies the Bank that it is in need of more than normal
supervision,   the  Bank's  ability  to  make  capital  distributions  could  be
restricted.  In addition, the OTS could prohibit a proposed capital distribution
by any institution, which would otherwise be permitted by the regulation, if the
OTS  determines  that such  distribution  would  constitute an unsafe or unsound
practice.

         Qualified  Thrift  Lender  Test.  Savings   institutions  must  meet  a
qualified thrift lender ("QTL") test. If the Bank maintains an appropriate level
of qualified thrift investments  ("QTIs") (primarily  residential  mortgages and
related  investments,   including  certain   mortgage-related   securities)  and
otherwise  qualify as a QTL,  the Bank will  continue  to enjoy  full  borrowing
privileges from the FHLB of Atlanta.  The required  percentage of QTIs is 65% of
portfolio  assets  (defined as all assets minus  goodwill  and other  intangible
assets,  property used by the  institution in conducting its business and liquid
assets in an amount not exceeding  20% of total  assets).  In addition,  savings
institutions may include shares of stock of the FHLBs,  FNMA, and FHLMC as QTIs.
Compliance  with the QTL test is  determined  on a monthly  basis in nine out of
every twelve months.  As of September 30, 1998, the Bank was in compliance  with
its QTL requirement.

         Federal   Reserve.   The  Federal   Reserve   requires  all  depository
institutions  to  maintain  non-interest-bearing  reserves at  specified  levels
against  their  transaction  accounts  (primarily  checking,  NOW and  Super NOW
checking  accounts) and non-personal time deposits.  The balances  maintained to
meet the  reserve  requirements  imposed by the  Federal  Reserve may be used to
satisfy liquidity requirements that are imposed by the OTS.


Item 2. Description of Property

(a)      Properties.

         The Company and the Bank  operate from their office at 100 West Screven
Street, Quitman, Georgia. The Bank has began construction of a new office at 602
East Screven Street,  Quitman,  Georgia,  which when completed,  will become the
main office.



                                       13

<PAGE>



(b)      Investment Policies.

     See "Item 1.  Description of Business"  above for a general  description of
the  Bank's  investment  policies  and any  regulatory  or Board  of  Directors'
percentage  of assets  limitations  regarding  certain  investments.  The Bank's
investments are primarily  acquired to produce  income,  and to a lesser extent,
possible capital gain.

     (1)  Investments  in Real Estate or Interests in Real Estate.  See "Item 1.
Description  of  Business  - Lending  Activities"  and "Item 2.  Description  of
Property."

     (2)  Investments  in Real Estate  Mortgages.  See "Item 1.  Description  of
Business - Lending Activities."

     (3) Investments in Securities of or Interests in Persons  Primarily Engaged
in Real  Estate  Activities.  See "Item 1.  Description  of  Business  - Lending
Activities."

(c)      Description of Real Estate and Operating Data.

         Not Applicable.

Item 3. Legal Proceedings

         There are various  claims and lawsuits in which the Company or the Bank
are  periodically  involved,  such as  claims  to  enforce  liens,  condemnation
proceedings  on properties in which the Bank holds  security  interests,  claims
involving  the making and  servicing of real  property  loans,  and other issues
incident to the Bank's business. In the opinion of management,  no material loss
is expected from any of such pending claims or lawsuits.

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

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.



                                     PART II

Item  5.  Market for Common Equity and Related Stockholder Matters

         The  information  contained under the section  captioned  "Common Stock
Information" of the Company's  Annual Report to Stockholders for the fiscal year
ended  September  30, 1998 (the  "Annual  Report"),  is  incorporated  herein by
reference.

Item  6.  Management's Discussion and Analysis or Plan of Operation

         The  information  contained  in  the  section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of the
Annual Report is incorporated herein by reference.

Item  7.  Financial Statements

         The  Registrant's   financial  statements  listed  under  Item  13  are
incorporated herein by reference.


                                       14

<PAGE>



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

         On September 30, 1997, the audit proposal of Stewart, Fowler & Stalvey,
P.C. for the 1997 audit year was accepted at a meeting of the Board of Directors
of the Bank. Stewart,  Fowler & Stalvey,  P.C. subsequently stated that it would
also  audit  the 1996  and 1998  audit  years.  Simmons  &  Simmons,  P.C.,  the
independent  auditor  for the Bank,  orally  advised the Bank on August 27, 1997
that it did not wish to continue as independent auditor following the conversion
and that it was resigning to allow Stewart,  Fowler & Stalvey, P.C. to audit the
fiscal year ending  September 30, 1997 in connection  with the  conversion.  The
report of Simmons & Simmons,  P.C. for the fiscal year ended  September 30, 1996
contained no adverse  opinion or  disclaimer of opinion and was not qualified or
modified as to  uncertainty,  audit scope or accounting  principles.  During the
fiscal year ended  September  30, 1996 and during the period from  September 30,
1996 to September  30, 1997,  there were no  disagreements  between the Bank and
Simmons & Simmons, P.C. concerning accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.

                                    PART III

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

         The information  contained under the sections  captioned "Section 16(a)
Beneficial  Ownership  Reporting  Compliance"  and  "Proposal  I -  Election  of
Directors" in the Proxy Statement is incorporated herein by reference.

Item 10.  Executive Compensation

         The  information  contained  in the  section  captioned  "Director  and
Executive  Compensation"  in the  Proxy  Statement  is  incorporated  herein  by
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         (a)      Security Ownership of Certain Beneficial Owners

         Information  required by this item is incorporated  herein by reference
to the first chart in the section captioned "Proposal I - Election of Directors"
in the Proxy Statement.

         (b)      Security Ownership of Management

         Information  required by this item is incorporated  herein by reference
to the first chart in the section captioned "Proposal I - Election of Directors"
in the Proxy Statement.

         (c) Management of the Registrant  knows of no  arrangements,  including
any pledge by any person of securities of the Registrant, the operation of which
may at a subsequent date result in a change in control of the Registrant.


                                       15

<PAGE>



Item 12.  Certain Relationships and Related Transactions

         The  information  required  by this  item  is  incorporated  herein  by
reference  to  the  section   captioned  "Certain   Relationships   and  Related
Transactions" in the Proxy Statement.

Item 13.  Exhibits, List, and Reports on Form 8-K

         (a) Listed below are all  financial  statements  and exhibits  filed as
part of this report.

         1.       The consolidated statements of financial condition of
                  Quitman  Bancorp,  Inc. as of September  30, 1998 and
                  1997  and  the  related  consolidated  statements  of
                  income,  consolidated  statements  of equity and cash
                  flows  for each of the  years in the two year  period
                  ended  September 30, 1998,  together with the related
                  notes  and  the  independent   auditors'   report  of
                  Stewart,   Fowler  &   Stalvey,   P.C.,   independent
                  certified public accountants.

         2. Schedules omitted as they are not applicable.

         3.       The following exhibits are included in this Report or
                  incorporated herein by reference:

                  (a)      List of Exhibits:

                   3(i)    Articles of Incorporation of Quitman Bancorp, Inc. *
                   3(ii)   Bylaws of Quitman Bancorp, Inc. *
                  10.1     Director Indexed Salary Continuation Plan *
                  10.2     Executive Indexed Salary Continuation Plan *
                  13       Portions  of  Annual  Report  to Stockholders for the
                           fiscal year ended
                           September 30, 1998
                  21       Subsidiaries of the Registrant
                  27       Financial Data Schedule (electronic filing only)


*    Incorporated  by  reference  to the  identically  numbered  exhibit  to the
     registration statement on Form SB-2 (File No. 333-43063) declared effective
     by the SEC on February 11, 1998.

                  (b)      Not applicable

                                       16

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized  as of
December 28, 1998.

                                      QUITMAN BANCORP, INC.


                                      By: /s/ Melvin E. Plair  
                                          -------------------------------------
                                          Melvin E. Plair
                                          President and Chief Executive Officer
                                          (Duly Authorized Representative)

         Pursuant to the requirement of the Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of December 28, 1998.


/s/ Claude R. Butler                 /s/ Melvin E. Plair              
----------------------------------   -----------------------------------------
Claude R. Butler                     Melvin E. Plair
Chairman of the Board and Director   President and Chief Executive Officer
                                     (Principal Executive and Financial Officer)


/s/ Robert L. Cunningham, III        /s/ Peggy L. Forgione            
----------------------------------   -----------------------------------------
Robert L. Cunningham, III            Peggy L. Forgione
Vice Chairman and Director           Vice President and Controller
                                     (Principal Accounting Officer)


/s/ Walter B. Holwell               
---------------------------------- 
Walter B. Holwell
Director



/s/ John W. Romine                  
John W. Romine
Director



/s/ Daniel M. Mitchell, Jr.         
Daniel M. Mitchell, Jr.
Director