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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K



|x | Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------

For the fiscal year ended December 31, 2008

Commission File No. 000-49766

McINTOSH BANCSHARES, INC.

(Name of Issuer as Specified in Its Charter)



|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Georgia                                                       |  | 58-1922861                         
|(State or Other Jurisdictionof Incorporation or Organization) |  | (I.R.S. EmployerIdentification No.)
|                                                              | 
|210 South Oak StreetJackson, Georgia                          |  | 30233                              
|(Address of Principal Executive Offices)                      |  | (Zip Code)                         

(770) 775-8300

Issuers Telephone Number, Including Area Code

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

Securities registered pursuant to Section 12(g) of the Act:



|                              |  |                                            
|----------------------------- |  | -------------------------------------------
|COMMON STOCK, $2.50 PAR VALUE |  | NONE                                       
|(Title of Class)              |  | (Name of each exchange on which registered)

Indicate by check mark whether the registrant is a well-known seasoned issuer as defined in Rule
405 of the Securities Act. Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes   ̈    No  x

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not 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-K or any amendment to this Form 10-K.  x

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



|                             |  |                                              
|---------------------------- |  | ---------------------------------------------
|Large accelerated filer   ̈   |  | Accelerated filer   ̈                         
|Smaller reporting company  x |  | Non-accelerated filer   ̈                     
|                             |  | (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act of 1934). Yes   ̈    No  x

State the aggregate market value of the voting stock held by nonaffiliates computed by reference to the price at which the stock was last sold, or the average bid and asked prices of such stock, as of June 30, 2008: $31,872,256 (based
on the stock price of $16.00 as of that date).

Indicate the number of shares outstanding of each of the issuers classes of common
stock, as of the latest practicable date: 3,252,581 shares of $2.50 par value common stock as of March 25, 2009.









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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the information required by Part III of this Annual Report are incorporated by reference from the Registrants definitive Proxy
Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report.



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Table of Contents



|           |  |                                                                                                              |  |           
|---------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----------
|ItemNumber |  |                                                                                                              |  | PageNumber
|           |  | PART I                                                                                                       |  |           
|           |  |                                                                                                             
|           |  | Forward Looking Statement Disclosure                                                                         |  | 1         
|           |  |                                                                                                             
|1.         |  | Business                                                                                                     |  | 1         
|1A.        |  | N/A                                                                                                          |  |           
|1B.        |  | N/A                                                                                                          |  |           
|2.         |  | Properties                                                                                                   |  | 11        
|3.         |  | Legal Proceedings                                                                                            |  | 12        
|4.         |  | Submission of Matters to a Vote of Security Holders                                                          |  | 12        
|           |  |                                                                                                             
|           |  | PART II                                                                                                      |  |           
|           |  |                                                                                                             
|5.         |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 12        
|6.         |  | N/A                                                                                                          |  |           
|7.         |  | Managements Discussion and Analysis of Financial Condition and Results of Operation                         |  | 13        
|7A.        |  | N/A                                                                                                          |  |           
|8.         |  | Financial Statements                                                                                         |  | 34        
|9.         |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 34        
|9A.        |  | Controls and Procedures                                                                                      |  | 34        
|9B.        |  | Other Information                                                                                            |  | 35        
|           |  |                                                                                                             
|           |  | PART III                                                                                                     |  |           
|           |  |                                                                                                             
|10.        |  | Directors, Executive Officers and Corporate Governance                                                       |  | 36        
|11.        |  | Executive Compensation                                                                                       |  | 36        
|12.        |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 36        
|13.        |  | Certain Relationships and Related Transactions and Director Independence                                     |  | 36        
|14.        |  | Principal Accounting Fees and Services                                                                       |  | 36        
|           |  |                                                                                                             
|           |  | PART IV                                                                                                      |  |           
|           |  |                                                                                                             
|15.        |  | Exhibits and Financial Statement Schedules                                                                   |  | 36        
|           |  |                                                                                                             
|           |  | Signatures                                                                                                   |  | 37        
|           |  |                                                                                                             
|           |  | Index to Exhibits                                                                                            |  | 39        



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Forward Looking Statement Disclosure

Statements in this Annual Report regarding future events or performance are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the PSLRA) and are made pursuant to the safe harbors of the PSLRA. Actual results of McIntosh Bancshares, Inc. (the Company) could be quite different from those expressed or implied
by the forward-looking statements. Any statements containing the words could, may, will, should, plan, believes, anticipates, estimates,
predicts, expects, projections, potential, continue, or words of similar import, constitute forward-looking statements, as do any other statements that expressly or implicitly
predict future events, results, or performance. Factors that could cause results to differ from results expressed or implied by our forward-looking statements include, among others, risks discussed in the text of this Annual Report as well as the
following specific items:



| |  | General economic conditions, whether national or regional, that could affect the demand for loans or lead to increased loan losses;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  | Competitive factors, including increased competition with community, regional, and national financial institutions, that may lead to pricing pressures that reduce
yields the Company achieves on loans and increase rates the Company pays on deposits, loss of the Companys most valued customers, defection of key employees or groups of employees, or other losses;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Increasing or decreasing interest rate environments, including the shape and level of the yield curve, that could lead to decreases in net interest margin, lower
net interest and fee income, including lower gains on sales of loans, and changes in the value of the Companys investment securities;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Changing business or regulatory conditions or new legislation, affecting the financial services industry that could lead to increased costs, changes in the
competitive balance among financial institutions, or revisions to our strategic focus;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Changes or failures in technology or third party vendor relationships in important revenue production or service areas, or increases in required investments in
technology that could reduce our revenues, increase our costs or lead to disruptions in our business.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Readers are
cautioned not to place undue reliance on our forward-looking statements, which reflect managements analysis only as of the date of the statements. The Company does not intend to publicly revise or update forward-looking statements to reflect
events or circumstances that arise after the date of this report.

Readers should carefully review all disclosures we file from time to
time with the Securities and Exchange Commission (the SEC).



|Item 1. | Business
|------- | --------

General

McIntosh Bancshares, Inc. (the Company), a registered bank holding company, was incorporated under the laws of Georgia in 1990 and acquired
100% of the outstanding shares of McIntosh State Bank (the Bank) on April 25, 1991. The Bank was incorporated under the laws of Georgia on February 14, 1964. In March 1998 the Company capitalized a wholly owned subsidiary,
McIntosh Financial Services, Inc. (MFS), which was incorporated under the laws of Georgia on January 8, 1998.

Services

The Bank is a community oriented, full-service commercial bank, serving the Georgia counties of Butts, Jasper, and South Henry through offices in
Jackson, Monticello, Locust Grove, McDonough and Lake Oconee. The Bank has six automated teller machines (ATMs). The Bank emphasizes autonomy for each office with decisions made locally. The Bank offers checking, savings, individual retirement, and
time deposit accounts, safe deposit boxes, issues ATM and debit cards, conducts wire transfers, and offers internet banking and cash management services. The Bank offers lending services for purposes such as commercial, industrial, real estate,
municipal, and leasehold financing as well as offers personal secured and unsecured credit. The Bank provides secondary market financing for conforming residential real estate loans through conventional, Veterans Administration, Federal Housing
Administration, or Rural Development Authority programs. Neither the Company nor the Bank generates a material amount of revenue from foreign countries, nor does either have material long-lived assets, customer relationships, mortgages or servicing
rights, deferred policy acquisition costs, or deferred tax assets in foreign countries. Thus, the Company has no significant risks attributable to foreign operations.

MFS offers mutual fund investments, fixed and variable annuities, life, health, and long term care insurance, estate planning, and investment management services. MFS has separate offices in the Banks Jackson,
Monticello and McDonough offices.



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Loans

The Bank grants both secured and unsecured loans to individuals and businesses. As of December 31, 2008, the Banks loan portfolio totaled $324,331,007.

Although the Bank has a diversified loan portfolio, a substantial portion is secured by improved and unimproved real estate which is dependent on the
real estate market. As of December 31, 2008, the Bank had a concentration of loans to finance the acquisition, development, and construction (AD&C) of multifamily, commercial, and residential real estate. This AD&C concentration,
including associated unfunded commitments, totals $82,810,867 and represents 24% of gross loans and unfunded loan commitments. The Bank has established a maximum of 37% of gross loans plus unfunded commitments on the AD&C portion of the
portfolio.

Lending Policy

Standards
for extensions of credit are contained in the Banks loan policy. Loans are predominately from borrowers within the Banks delineated areas of Butts, Jasper, Henry, Greene and Putnam counties. Loans are granted to individuals or businesses
on either an unsecured or secured basis. Limits covering the maximum amount of indirect and direct debt to any one borrower, the maximum amount a loan officer may lend, the maximum amount of funds that may be advanced on certain collateral, and the
maximum lending authority of the Banks loan committee and individual loan officers are contained in the loan policy. The loan policy is reviewed and approved annually by the Banks board of directors.

Loans secured by 1-4 family residential real estate are governed by the following underwriting standards:



| | (a) | Owner occupied first mortgage  89% or less loan-to-value (LTV), 30 year amortization, and debt-to-income not to exceed 40%;
| | --- | ----------------------------------------------------------------------------------------------------------------------------



| | (b) | Investor first mortgage  85% or less LTV, 30 year amortization, and debt service requirement minimum of 1.25:1;
| | --- | ----------------------------------------------------------------------------------------------------------------



| | (c) | Construction first mortgage  75% LTV on speculative construction and 80% LTV on presold construction, amortized 15 years if unpaid after 24 months of origination, and debt
service requirement minimum of 1.25:1, and;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Home equity second mortgage  85% or less LTV after considering the unpaid balance of the first mortgage, revolving line of credit with 10 year balloon of principal and
interest monthly; and debt-to-income not to exceed 40%.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Loan Review and Non-Performing Assets

The Bank contracts with a third party for its loan review. The scope of loan review represented a cumulative total of 62% of the portfolio outstanding as
of December 31, 2008, and included all commercial credits in excess of $250,000, all classified (Substandard and Doubtful) or Watch rated loans, and a sample of the consumer loan portfolio. Also included in the scope of loan review are loan
administration matters such as potential violations of law, policy and documentation exceptions, and credit collection efforts. Loan review is conducted quarterly. The results are presented to the Companys Board of Directors and Audit
Committee.

All loans are graded according to an initial risk assessment conducted by the originating loan officer. Thereafter, loan grades
may change based on results of the external loan review process or an examination, at the direction of an office President, or if the loan becomes delinquent. The Banks practice is to charge-off unsecured loans when they become 120 days past
due or are rated Loss. The Bank places loans on nonaccrual status once they become 90 days past due. Exceptions may apply if the loan is consumer installment debt or if the loan is secured by a 1-4 family residence and in the process of collection.
Nonaccrual loans and loans rated Substandard or Doubtful in excess of $200,000 and secured by real property are reviewed for impairment. Loans deemed collateral dependent are charged down to their net realizable value based on a current valuation of
the collateral.

Investment Policy

The
Banks investment policy establishes objectives for the investment portfolio and the guidelines for bank investments. Bank investments provide liquidity to accommodate deposit or loan fluctuations, secure public deposits, and supplement bank
earnings consistent with liquidity, interest sensitivity, and credit quality considerations. Provisions of the investment policy address investment authority and oversight, permissible investments, accounting treatment, selection and monitoring of
broker/dealers, and unsuitable investment practices. Portfolio composition and performance as well as individual transactions are regularly reviewed by the Banks Asset/Liability Committee (ALCO) and the board of directors. The investment
policy is reviewed and approved by the Board of Directors annually.

Asset/Liability Management

The Banks interest rate risk and liquidity policy establishes an ALCO which is responsible for measuring, monitoring, and managing exposure to
adverse interest rate movements. ALCO is composed of the Banks CEO, President, CFO, office Presidents, VP of Accounting, Chief Credit Officer and two outside directors. The Bank manages exposure to interest rate movements by modeling static
gap, earnings at risk, and economic value of equity (EVE).



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Bank management attempts to achieve consistent growth in net interest income (NII) while limiting
volatility arising from changes in interest rates. Measuring the maturity and repricing characteristics of assets and liabilities or gap is one method Bank management utilizes to manage exposure to interest rates. The projected repricing and
prepayment attributes of earning assets and interest bearing liabilities are based on the current interest rate environment and are subject to change as interest rates fluctuate. The Bank has established guidelines for this measure where cumulative
gap must be within positive and negative 15% over select time periods. The following table outlines the Banks cumulative gap for the years ending December 31, 2008 and 2007, respectively.



|               |  |               |   |  |        |   |  |         |   |  |         |   |  |          |  
|-------------- |  | ------------- | - |  | ------ | - |  | ------- | - |  | ------- | - |  | -------- | -
|               |  | Time Horizons |  
|Cumulative GAP |  | 6 months      |   |  | 1 year |   |  | 2 years |   |  | 5 years |   |  | 10 years |  
|2007           |  | -0.09         | % |  | -1.74  | % |  | 0.71    | % |  | 4.51    | % |  | 6.21     | %
|2008           |  | -3.11         | % |  | -10.40 | % |  | -9.30   | % |  | -2.67   | % |  | 0.05     | %

Simulation, or earnings at risk, modeling is also utilized by the Bank to manage interest rate
risk. The upcoming 12 month time period is simulated to determine a baseline NII forecast and the sensitivity of this forecast to changes in interest rates. The baseline earnings at risk measure incorporates managements estimate of interest
rates over the upcoming 12 months and applies those assumptions to earning assets and interest bearing liabilities. Projected rates and volumes for new and renewed loans and deposits are assumed based on experience and forecasts, but are
significantly dependent on market conditions. Management measures the change to baseline NII via rate shocks of 100, 200, and 300 basis points (bps). The Bank has established a maximum of a 20% change in baseline NII as a result of the respective
rate shocks. The following table outlines the effect of changes in projected NII over the next 12 months as of December 21, 2008 and 2007, respectively.



|              |  |            |   |  |          |   |  |          |   |  |          |   |  |          |   |  |           |  
|------------- |  | ---------- | - |  | -------- | - |  | -------- | - |  | -------- | - |  | -------- | - |  | --------- | -
|              |  | Rate Shock |  
|Change in NII |  | -300 bps   |   |  | -200 bps |   |  | -100 bps |   |  | +100 bps |   |  | +200 bps |   |  | + 300 bps |  
|2007          |  | -17.82     | % |  | -11.54   | % |  | -5.32    | % |  | 5.44     | % |  | 11.65    | % |  | 17.89     | %
|2008          |  | -12.76     | % |  | -8.17    | % |  | -3.42    | % |  | -1.66    | % |  | -4.00    | % |  | -4.22     | %

Bank management also utilizes EVE to monitor and manage the longer term impact of interest rate
movements on the Banks capital. EVE attempts to measure the change in cash flows of earning assets and liabilities as rates change. Management measures the change to baseline EVE via rate shocks of 100, 200, and 300 bps. The Bank has
established a maximum of a 20% change in baseline EVE as a result of the respective rate shocks. The following table outlines the effect of changes in projected EVE as of the years ending December 31, 2008 and 2007, respectively.



|              |  |            |   |  |          |   |  |          |   |  |          |   |  |          |   |  |           |  
|------------- |  | ---------- | - |  | -------- | - |  | -------- | - |  | -------- | - |  | -------- | - |  | --------- | -
|              |  | Rate Shock |  
|Change in EVE |  | -300 bps   |   |  | -200 bps |   |  | -100 bps |   |  | +100 bps |   |  | +200 bps |   |  | + 300 bps |  
|2007          |  | 5.13       | % |  | 4.01     | % |  | 2.62     | % |  | -3.62    | % |  | -8.01    | % |  | -15.54    | %
|2008          |  | -18.05     | % |  | -4.96    | % |  | 0.56     | % |  | -1.18    | % |  | -3.29    | % |  | -5.83     | %

Liquidity is measured utilizing a calculation accepted by the Banks regulatory authorities.
A liquidity ratio of 10% or greater and a loan to funding ratio of less than 85% have been approved by the board of directors as suitable measures of liquidity. As of December 31, 2008, the Banks liquidity and loan to funding ratios were
11.4% and 79.8%, respectively. Secondary sources of liquidity include the following: a $6.5 million line of credit with a correspondent bank; the Federal Home Loan Bank of Atlanta totaling $28.3 million, and the Federal Reserve Bank of Atlanta
totaling $15 million. As of December 31, 2008, $16 million was outstanding under these lines.

Supervision and Regulation

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

The Act requires every bank holding company to obtain the prior approval of the Federal Reserve before (i) it may acquire direct or indirect
ownership or control of more than 5% of the voting shares of any bank that it does not already control; (ii) it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of a bank; and (iii) it may
merge or consolidate with any other bank holding company. In addition, a bank holding company is generally prohibited from engaging in, or acquiring, direct or indirect control of the voting shares of any company engaged in non-banking activities.
This prohibition does not apply to activities found by the Federal Reserve, by order or regulation, to be closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the activities that the Federal Reserve
has determined by regulation or order to be closely related to banking are: (i) making or servicing loans and certain types of leases; (ii) performing certain data processing services; (iii) acting as fiduciary or investment or
financial advisor; (iv) providing discount brokerage services; (v) underwriting bank eligible securities; (vi) underwriting debt and equity securities; (vii) underwriting debt and equity securities on a limited basis through
separately capitalized subsidiaries; and (viii) making investments in corporations or projects designed primarily to promote community welfare.



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The Gramm-Leach-Bliley Act (GLBA) of 1999 permits eligible banks and bank holding companies to engage in
activities and to affiliate with nonbank organizations engaged in activities that are financial in nature or incidental or complimentary to such financial activities. The Federal Reserve has the discretion to determine what activities are
complementary to financial activities. The GLBA effectively repeals certain provisions of the Glass-Steagall Act of 1933 which separated banking, insurance, and securities underwriting activities.

Under GLBA, bank holding companies whose banking subsidiaries are well capitalized and well managed may also apply to become a financial holding company.
Financial holding companies have the authority to engage in activities that are financial in nature that are not permitted for other bank holding companies. Some of the activities that the Act provides are financial in nature are: (a) lending,
exchanging, transferring, investing for others, or safeguarding money or securities; (b) insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability, or death, or providing and issuing annuities, and acting as
principal, agent, or broker with respect thereto; (c) providing financial, investment, or economic advisory services, including advising an investment company; (d) issuing or selling instruments representing interests in pools of assets
permissible for a bank to hold directly; and (e) underwriting, dealing in, or making a market in securities. The Company has no immediate plans to register as a financial holding company.

The GBLA also imposed new requirements on financial institutions with respect to consumer privacy. The statute generally prohibits disclosure of consumer
information to non-affiliated third parties unless the consumer has been given the opportunity to object and has not objected to such disclosure. Financial institutions are further required to disclose their privacy policies to consumers annually.
Financial institutions, however, will be required to comply with state law if it is more protective consumer privacy than GBLA. The statute also directed federal regulators, including the Federal Reserve and FDIC, to prescribe standards for the
security of consumer information. The Company and the Bank are subject to such standards, as well as standards for notifying consumers in the event of a security breach.

The Company must also register with the Georgia Department of Banking and Finance (DBF) and file periodic information with the DBF. As part of such registration, the DBF requires information with respect to the
financial condition, operations, management, and inter-company relationships of the Company, the Bank, and MFS and related matters. The DBF may also require such other information as is necessary to keep itself informed as to whether the provisions
of Georgia law and the regulations and orders issued thereunder by the DBF have been complied with, and the DBF may examine the Company.

The Company is an affiliate of the Bank under the Act, which imposes restrictions on (i) loans by the Bank to the Company; (ii) investments in the stock or securities of the Company by the Bank; (iii) the Bank taking the
stock or securities of an affiliate as collateral for loans by the Bank to a borrower, and (iv) the purchase of assets from the Company by the Bank. Further, a bank holding company and its subsidiaries are prohibited from engaging in certain
tie-in arrangements in connection with any extensions of credit, lease or sale of property or furnishing of services.

The Bank is
regularly examined by the FDIC. The Bank, as a state chartered bank under the laws of Georgia, is subject to the supervision of, and is regularly examined by, the DBF. Both the FDIC and DBF must grant prior approval of any merger, consolidation or
other corporate reorganization involving the Bank. A bank can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC in connection with the default of a commonly controlled institution.

Activities of MFS are governed by the State of Georgia Insurance Department (Department) and the Financial Industry Regulatory Authority (FINRA). The
Department and FINRA may examine the activities of MFS at any time. The Department and FINRA require MFS and its representatives to fulfill licensing and continuing education requirements. Customer complaints or compliance lapses deemed serious
enough may be cause for licenses to be revoked and the business to cease operation. As of December 31, 2008, MFS is not aware of any matters pending before the Department or FINRA.

Payment of Dividends

The Company is a legal entity separate and distinct from the Bank. Most of the
revenues of the Company result from dividends paid to it by the Bank. There are statutory and regulatory requirements applicable to the payment of dividends by the Bank to the Company, its shareholder. Under DBF regulations, the Bank may not declare
and pay dividends out of retained earnings without first obtaining the written permission of the DBF unless such bank meets the following requirements: (i) total classified assets as of the most recent examination of the bank does not exceed
80% of equity capital (as defined by the regulation); (ii) the aggregate amount of dividends declared or anticipated to be declared in the calendar year does not exceed 50% of the net profits after taxes but before dividends for the previous
calendar year; and (iii) the ratio of equity capital to adjusted assets is not less than 6%.



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The payment of dividends by the Company and the Bank may also be affected or limited by other factors,
such as the requirement to maintain adequate capital above regulatory guidelines. The Federal Reserve maintains that a bank holding company must serve as source of financial strength to its subsidiary banks. As a result, the Company may be required
to provide financial support to the Bank at a time when, absent such Federal Reserve requirement, the Company may not deem it advisable to provide such assistance. Similarly, the FDIC maintains that insured banks should generally only pay dividends
out of current operating earnings and dividends should only be declared and paid after consideration of the banks capital adequacy in relation to its assets, deposits, and such other items. For 2009, dividends paid to the Company from the Bank
are not permissible as the Bank made no profit in 2008. During the year ending December 31, 2008, the Company declared and paid cash dividends totaling $252,988.

Capital Adequacy

The Federal Reserve and the FDIC have implemented substantially identical rules for
assessing bank and bank holding company capital adequacy. These regulations establish minimum capital standards in relation to assets and off-balance sheet exposures for credit risk. Bank and bank holding companies are required to have (i) a
minimum ratio of Total Capital (as defined) to risk-weighted assets of 8%; (ii) a minimum ratio of Tier One Capital (as defined) to risk-weighted assets of 4%; and (iii) a minimum ratio of stockholders equity to risk-weighted assets
of 4%. The Federal Reserve and the FDIC also require a minimum leverage capital ratio of Tier One Capital to total assets of 3% for the most highly rated banks and bank holding companies. Tier One Capital generally consists of common equity,
minority interests in equity accounts of consolidated subsidiaries, and noncumulative perpetual preferred stock and generally excludes unrealized gains or losses on investment securities, certain intangible assets, and certain deferred tax assets.
The Federal Reserve or the FDIC will require a bank or bank holding company to maintain a leverage ratio greater than 3% if either is experiencing or anticipating significant growth, is operating with less than well-diversified risks, or is
experiencing financial, operational, or managerial weaknesses.

In addition, the FDIC Improvement Act of 1991 provides for prompt
corrective action (PCA) if a banks leverage capital ratio reaches 2%. PCA may call for the bank to be placed in receivership or sold to another depository institution. The FDIC has adopted regulations implementing PCA which place financial
institutions in the following four categories based on capitalization ratios: (i) a well capitalized institution has a total risked-based capital ratio of at least 10%, a Tier One risked-based ratio of at least 6%, and leverage capital ratio of
at least 5%; (ii) an adequately capitalized institution has a total risked-based capital ratio of at least 8%, a Tier One risked-based ratio of at least 4%, and leverage capital ratio of at least 4%; (iii) an undercapitalized institution
has a total risked-based capital ratio under 8%, a Tier One risked-based ratio under 4%, and leverage capital ratio under 4%; and (iv) a critically undercapitalized institution has a leverage capital ratio under 2%. Institutions deemed
adequately capitalized are not permitted to accept brokered deposits (unless waived by the FDIC) and have limitations on the interest rates paid on deposit accounts. Institutions in any of the three undercapitalized categories would be prohibited
from declaring and paying dividends or making capital distributions. The FDIC regulations also establish procedures for downgrading an institution to a lower capital category based on supervisory factors other than capital.

Due to its current condition and results of operation, the Directors of the Company and Bank entered into informal agreements with the Federal Reserve,
FDIC, and DBF in the third quarter of 2008. These regulatory agreements are designed to help the Company and Bank return to profitability and capital adequacy by improving asset quality. Specifically, the agreements provide for reducing troubled
assets; limiting credit to troubled borrowers; maintaining an adequate allowance for loans losses; revising policies to more comprehensively address commercial real estate lending; maintaining a Tier One leverage capital ratio of 8% or more, a Tier
One risked-based capital ratio of 6% or more, and a Total risked-based capital ratio of 10% or more; prohibiting the Bank from paying dividends to the Company without prior approval; prohibiting the Company from paying dividends to shareholders
without prior approval; prohibiting the Company from incurring debt without prior approval; and prohibiting the Company from repurchasing stock without prior approval. Failure to adequately address the provisions contained in these agreements may
result in the issuance of a cease and desist order pursuant to Section 8 of the FDI Act. The Bank is presently unable to achieve the Tier One leverage and Total risked-based capital provisions of the agreements but is negotiating for added
capital. See Item 9B for further information.

As of December 31, 2008 the capital ratios for the Company and the Bank are as
follows:



|                  |  |         |   |  |      |  
|----------------- |  | ------- | - |  | ---- | -
|                  |  | Company |   |  | Bank |  
|Leverage Capital  |  | 6.44    | % |  | 6.69 | %
|Tier 1 Risk-Based |  | 8.22    | % |  | 8.32 | %
|Total Risk-Based  |  | 9.49    | % |  | 9.56 | %



5



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##### Table of Contents

Community Reinvestment Act

The Company and the Bank are subject to the provisions of the Community Reinvestment Act of 1977, as amended (the CRA) and the federal banking agencies regulations issued thereunder. Under the CRA, all
banks and thrifts have a continuing and affirmative obligation, consistent with its safe and sound operation to help meet the credit needs for their entire communities, including low- and moderate-income neighborhoods. The CRA does not establish
specific lending requirements or programs for financial institutions, nor does it limit an institutions discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the
CRA.

The CRA requires a depository institutions primary federal regulator, in connection with its examination of the institution, to
assess the institutions record of assessing and meeting the credit needs of the community served by that institution, including low- and moderate-income neighborhoods. The regulatory agencys assessment of the institutions record is
made available to the public. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, the Federal Reserve will assess the records of each subsidiary depository institution of the applicant bank
holding company, and such records may be the basis for denying the application.

The evaluation system used to judge an institutions
CRA performance consists of three tests: (1) a lending test; (2) an investment test; and (3) a service test. Each of these tests will be applied by the institutions primary federal regulator taking into account such factors as:
(i) demographic data about the community; (ii) the institutions capacity and constraints; (iii) the institutions product offerings and business strategy; and (iv) data on the prior performance of the institution and
similarly-situated lenders.

In addition, a financial institution will have the option of having its CRA performance evaluated based on a
strategic plan of up to five years in length that it had developed in cooperation with local community groups. In order to be rated under a strategic plan, the institution will be required to obtain the prior approval of its federal regulator.

The interagency CRA regulations provide that an institution evaluated under a given test will receive one of five ratings for the test:
(1) outstanding; (2) high satisfactory; (3) low satisfactory; (4) needs to improve; and (5) substantial noncompliance. An institution will receive a certain number of points for its rating on each test, and the points are
combined to produce an overall composite rating. Evidence of discriminatory or other illegal credit practices would adversely affect an institutions overall rating. McIntosh State Bank received a satisfactory rating as a result of its most
recent CRA examination.

Anti-Terrorism Legislation

In the wake of the tragic events of September 11th, on October 26, 2001, the President signed the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
(the USA PATRIOT Act) Act of 2001. Under the USA PATRIOT Act, financial institutions are subject to prohibitions against specified financial transactions and account relationships as well as enhanced due diligence and know your
customer standards in their dealings with foreign financial institutions and foreign customers. For example, the enhanced due diligence policies, procedures, and controls generally require financial institutions to take reasonable steps:



| |  |  | to conduct enhanced scrutiny of account relationships to guard against money laundering and report any suspicious transaction;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | to ascertain the identity of the nominal and beneficial owners of, and the source of funds deposited into, each account as needed to guard against money laundering
and report any suspicious transactions;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to ascertain for any foreign bank, the shares of which are not publicly traded, the identity of the owners of the foreign bank, and the nature and extent of the
ownership interest of each such owner; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to ascertain whether any foreign bank provides correspondent accounts to other foreign banks and, if so, the identity of those foreign banks and related due
diligence information.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The USA PATRIOT Act requires financial institutions to establish anti-money laundering programs.
The USA PATRIOT Act sets forth minimum standards for these programs, including:



| |  |  | the development of internal policies, procedures, and controls;
| | - |  | ---------------------------------------------------------------



| |  |  | the designation of a compliance officer;
| | - |  | ----------------------------------------



| |  |  | an ongoing employee training program; and
| | - |  | -----------------------------------------



| |  |  | an independent audit function to test the programs.
| | - |  | ---------------------------------------------------

In addition, the USA PATRIOT Act authorizes the Secretary of the Treasury to adopt rules increasing the cooperation and information sharing between financial institutions, regulators, and law enforcement authorities
regarding individuals, entities and organizations engaged in, or reasonably suspected based on credible evidence of engaging in, terrorist acts or money laundering activities. Any financial institution complying with these rules will not be deemed
to have violated the privacy provisions of the Gramm-Leach-Bliley Act, as discussed above.



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##### Table of Contents

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) was enacted to increase corporate responsibility, provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and
protect investors by improving the accuracy and reliability of disclosures pursuant to the securities laws. Sarbanes-Oxley includes important new requirements for public companies in the areas of financial disclosure, corporate governance, and the
independence, composition and responsibilities of audit committees. Among other things, Sarbanes-Oxley mandates chief executive and chief financial officer certifications of periodic financial reports, additional financial disclosures concerning
off-balance sheet items, and speedier transaction reporting requirements for executive officers, directors and 10% shareholders. In addition, penalties for non-compliance with the Exchange Act were heightened. SEC rules promulgated pursuant to
Sarbanes-Oxley impose obligations and restrictions on auditors and audit committees intended to enhance their independence from management, and include extensive additional disclosure, corporate governance and other related rules. Sarbanes-Oxley
represents significant federal involvement in matters traditionally left to state regulatory systems, such as the regulation of the accounting profession, and to state corporate law, such as the relationship between a Board of Directors and
Management and between a Board of Directors and its committees.

We have not experienced any significant difficulties in complying with
Sarbanes-Oxley. However, we have incurred, and expect to continue to incur, significant costs in connection with compliance with Section 404 of Sarbanes-Oxley, which requires Management to undertake an assessment of the adequacy and
effectiveness of our internal controls over financial reporting and requires our auditors to attest to, Managements assessment and the operating effectiveness of these controls.

Commercial Real Estate Lending and Concentrations

On December 2, 2006, the federal bank
regulatory agencies released Guidance on Concentrations in Commercial Real Estate (CRE) Lending, Sound Risk Management Practices (the Guidance). The Guidance, which was issued in response to the agencies concern that
rising CRE concentrations might expose institutions to unanticipated earnings and capital volatility in the event of adverse changes in the commercial real estate market, reinforces existing regulations and guidelines for real estate lending and
loan portfolio management.

Highlights of the Guidance include the following:



| |  |  | The agencies have observed that CRE concentrations have been rising over the past several years with small to mid-size institutions showing the most significant
increase in CRE concentrations over the last decade. However, some institutions risk management practices are not evolving with their increasing CRE concentrations, and therefore, the Guidance reminds institutions that strong risk management
practices and appropriate levels of capital are important elements of a sound CRE lending program.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Guidance applies to national banks and state chartered banks and is also broadly applicable to bank holding companies. For purposes of the Guidance, CRE loans
include loans for land development and construction, other land loans and loans secured by multifamily and nonfarm residential properties. The definition also extends to loans to real estate investment trusts and unsecured loans to developers if
their performance is closely linked to the performance of the general CRE market.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The agencies recognize that banks serve a vital role in their communities by supplying credit for business and real estate development. Therefore, the Guidance is
not intended to limit banks CRE lending. Instead, the Guidance encourages institutions to identify and monitor credit concentrations, establish internal concentration limits, and report all concentrations to management and the board of
directors on a periodic basis.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The agencies recognized that different types of CRE lending present different levels of risk, and therefore, institutions are encouraged to segment their CRE
portfolios to acknowledge these distinctions. However, the CRE portfolio should not be divided into multiple sections simply to avoid the appearance of risk concentration.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Institutions should address the following key elements in establishing a risk management framework for identifying, monitoring, and controlling CRE risk:
(1) board of directors and management oversight; (2) portfolio management; (3) management information systems; (4) market analysis; (5) credit underwriting standards; (6) portfolio stress testing and sensitivity
analysis; and (7) credit review function.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As part of the ongoing supervisory monitoring processes, the agencies will use certain criteria to identify institutions that are potentially exposed to significant
CRE concentration risk. An institution that has experienced rapid growth in CRE lending, has notable exposure to a specific type of CRE, or is approaching or exceeds specified supervisory criteria may be identified for further supervisory analysis.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Allowance for Loan and Lease Losses

On December 13, 2006, the federal bank regulatory agencies released Interagency Policy Statement on the Allowance for Loan and Lease Losses (ALLL), which revises and replaces the banking
agencies 1993 policy statement on the ALLL. The revised statement was issued to ensure consistency with generally accepted accounting principles (GAAP) and more recent supervisory guidance. The revised statement extends the applicability of
the policy to credit unions. Additionally, the agencies issued 16 FAQs to assist institutions in complying with both GAAP and ALLL supervisory guidance.

Highlights of the revised statement include the following:



| |  |  | The revised statement emphasizes that the ALLL represents one of the most significant estimates in an institutions financial statements and regulatory reports
and that an assessment of the appropriateness of the ALLL is critical to an institutions safety and soundness.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Each institution has a responsibility to develop, maintain, and document a comprehensive, systematic, and consistently applied process for determining the amounts
of the ALLL. An institution must maintain an ALLL that is sufficient to cover estimated credit losses on individual impaired loans as well as estimated credit losses inherent in the remainder of the portfolio.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The revised statement updates the previous guidance on the following issues regarding ALLL: (1) responsibilities of the board of directors, management, and
bank examiners; (2) factors to be considered in the estimation of ALLL; and (3) objectives and elements of an effective loan review system.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company and its board of directors believe that the Companys ALLL methodology is comprehensive, systematic, and that it is consistently applied across the Company. The Company believes its management
information systems, independent credit administration process, policies and procedures are sufficient to comply with the guidance.

U.S.
Treasurys Troubled Asset Relief Program - Capital Purchase Program

On October 3, 2008, the Emergency Economic Stabilization Act of 2008
(EESA) was enacted that provides the U.S. Secretary of the Treasury (Treasury) with broad authority to implement certain actions to help restore stability and liquidity to U.S. markets. One of the provisions resulting from the legislation is the
Troubled Asset Relief Program Capital Purchase Program (CPP), which provides direct equity investment in perpetual preferred stock by the Treasury in qualified financial institutions. The program is voluntary and requires an institution to comply
with a number of restrictions and provisions, including limits on executive compensation, stock redemptions and declaration of dividends. The CPP provides for a minimum investment of one percent of total risk-weighted assets and a maximum investment
equal to the lesser of three percent of total risk-weighted assets or $25 billion. Participation in the program is not automatic and is subject to approval by the Treasury.



8



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##### Table of Contents

The minimum and maximum preferred stock investment under CPP for the Company is $3.58 million and $10.7
million, respectively. The Company applied for the maximum CPP investment on November 14, 2008; however, the Company has withdrawn its application following consultations with our primary federal regulator and is currently evaluating
alternative sources of capital. We presently anticipate that our agreement to which Redemptus Group, LLC would purchase $8 million of debentures, subject to certain closing conditions, will be extended in order to permit us to explore additional
sources of capital. In addition to the follow-on private placement of our common stock contemplated under our agreement with Redemptus, these sources include, but are not limited to, potential issuances of other equity securities or debt and sales
of assets to improve our capital ratios.

Temporary Liquidity Guarantee Program

On October 14, 2008, the FDIC announced a new program  the Temporary Liquidity Guarantee Program (TLGP). The TLGP has two components  The Debt Guarantee Program and the Transaction Account Guarantee
Program. The Debt Guarantee Program guarantees newly issued senior unsecured debt of a participating organization, up to certain limits established for each institution, issued between October 14, 2008 and June 30, 2009. The FDIC will pay
the unpaid principal and interest on an FDIC-guaranteed debt instrument upon the uncured failure of the participating entity to make a timely payment of principal or interest in accordance with the terms of the instrument. The guarantee will remain
in effect until June 30, 2012. In return for the FDICs guarantee, participating institutions will pay the FDIC a fee based on the amount and maturity of the debt. The Company and Bank have opted to participate in the Debt Guarantee
Program; however, have not issued any debt under the program.

The Transaction Account Guarantee Program provides full federal deposit insurance coverage
for non-interest bearing transaction deposit accounts, regardless of dollar amount, until December 31, 2009. An annualized 10 basis point assessment on balances in noninterest-bearing transaction accounts that exceed the existing deposit
insurance limit of $250,000 will be assessed on a quarterly basis to insured depository institutions that have not opted out of this component of the TLGP. The Bank has opted to participate in the Transaction Account Guarantee Program.



9



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##### Table of Contents

Insurance of Deposit Accounts

The FDIC is an independent federal agency that insures deposits, up to prescribed statutory limits, of federally insured banks and savings institutions and safeguards the safety and soundness of the banking and
savings industries. The FDIC insures our customer deposits through the Deposit Insurance Fund (DIF) up to prescribed limits for each depositor. Pursuant to the EESA, the maximum deposit insurance amount has been increased from $100,000 to $250,000.
The amount of FDIC assessments paid by each DIF member institution is based on its relative risk of default as measured by regulatory capital ratios and other supervisory factors. Pursuant to the Federal Deposit Insurance Reform Act of 2005, the
FDIC is authorized to set the reserve ratio for the DIF annually at between 1.15% and 1.50% of estimated insured deposits. The FDIC may increase or decrease the assessment rate schedule on a semi-annual basis. In an effort to restore DIF levels and
to ensure the DIF will adequately cover projected losses from future bank failures, the FDIC, in October 2008, proposed a rule to alter the way in which it differentiates for risk in the risk-based assessment system and to revise deposit insurance
assessment rates, including base assessment rates. Proposed risk adjusted assessment rates for 2009 range between 7 and 77.5 cents per $100 in domestic deposits depending on the risk characteristics of the bank. The Bank expects to pay between 27
and 58 cents per $100 in domestic deposits under this new assessment program; however, premiums for the rest of 2009 have not yet been set.

On February 27, 2009, the FDIC approved an interim rule to institute a one-time special assessment of 20 cents per $100 of domestic deposits to restore the DIF reserves depleted by recent bank failures. The interim rule additionally
reserves the right of the FDIC to charge an additional up-to-10 basis point special premium at a later point if the DIF reserves continue to fall. The special assessment of 20 cents per $100 of domestic deposits could add up to an additional
$776,000 in expense to the Bank for 2009.

Additionally, by participating in the TLGP, banks temporarily become subject to systemic
risk special assessments of 10 basis points for transaction account balances in excess of $250,000 and assessments up to 100 basis points of the amount of TLGP debt issued. Management believes the systemic risk special assessment will add less
than $15,000 in additional expense to the Bank during 2009. Further, all FDIC-insured institutions are required to pay assessments to the FDIC to fund interest payments on bonds issued by the Financing Corporation (FICO), an agency of
the Federal government established to recapitalize the predecessor to the DIF. The FICO assessment rates, which are determined quarterly, averaged 0.0113% of insured deposits in fiscal 2008. These assessments will continue until the FICO bonds
mature in 2017.

The FDIC may terminate a depository institutions deposit insurance upon a finding that the institutions
financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices that pose a risk to the DIF or that may prejudice the interest of the banks depositors. The termination of deposit insurance for a bank
would also result in the revocation of the banks charter by the DIF.



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##### Table of Contents

Other Pending and Proposed Legislation

Other legislative and regulatory initiatives which could affect the Company, the Bank and the banking industry in general are pending, and additional
initiatives may be proposed or introduced, before the U.S. Congress, the Georgia legislature and other governmental bodies in the future. Such proposals, if enacted, may further alter the structure, regulation and competitive relationship among
financial institutions, and may subject the Bank to increased regulation, disclosure and reporting requirements. In addition, the various banking regulatory agencies often adopt new rules and regulations to implement and enforce existing
legislation. It cannot be predicted whether, or in what form, any such legislation or regulations may be enacted or the extent to which the business of the Company or the Bank would be affected thereby.

Employees

At December 31, 2008 the Company had
125 full time equivalent employees. The Company is not a party to any collective bargaining agreement.



|Item 2. | Properties
|------- | ----------

The assets of the Company consists
almost entirely of its ownership interest in the Bank and MFS. Both the holding company and MFS operate out of premises owned by the Bank. The Bank owns or leases the following properties:



| | (1) | Main Office
| | --- | -----------

210 South Oak Street

Jackson, Georgia 30233

Built in 1964, 11,000
square feet of heated space and five drive-thru lanes.



| | (2) | McLaurin Building
| | --- | -----------------

134 South Oak Street

Jackson, Georgia 30233

Built in 1940 and
remodeled in 2007, 6,100 square feet of heated space.



| | (3) | Monticello Office
| | --- | -----------------

208 East Greene Street

Monticello, Georgia 31064

Built in 1966,
5,100 square feet of heated space, and four remote drive-thru lanes.



| | (4) | Locust Grove Office
| | --- | -------------------

3796 Highway 42 South

Locust Grove, Georgia 30248

Built in 2000,
3,700 square feet of heated space, and three drive-thru lanes.



| | (5) | McDonough Office
| | --- | ----------------

1100 and 1125 Keys Ferry Court

McDonough, Georgia 30253

Built in 1995, 7,600 square feet of heated space (leased).



| | (6) | Operations Center
| | --- | -----------------

264 Alabama Boulevard

Jackson, Georgia 30233

Built in 1998, 17,100
square feet of heated space.



| | (7) | Lake Oconee
| | --- | -----------

1028 Founders Row

Greensboro, Georgia 30642

Built in 2005,
1,320 square feet of heated space (leased).



| | (8) | Remote ATMs:
| | --- | ------------

632 East Third Street, Jackson, Georgia
30233

222 Clubhouse Drive, Monticello, Georgia 31064

The Bank owns the furniture, fixtures and equipment located at the above locations.



11



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##### Table of Contents

|Item 3. | Legal Proceedings
|------- | -----------------

The Bank is from time to time
involved in various legal actions arising from normal business activities. Management believes that the liability, if any, arising from such actions will not have a material adverse effect on the Companys financial condition. Neither the Bank
nor the Company is a party to any proceeding to which any director, officer or affiliate of the issuer, any owner of more than five percent (5%) of its voting securities is a party adverse to the Bank or the Company.



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

A special shareholder meeting of McIntosh Bancshares, Inc. was held January 28, 2009. The following matters were submitted to a vote of security holders:

(1) To approve an amendment of the Articles of Incorporation of McIntosh Bancshares, Inc.; and

(2) To
approve the authority of the management of McIntosh Bancshares, Inc. to adjourn, postpone or continue the special meeting.

Proposal (1) was approved
by affirmative vote of 66% of the Companys commons shareholders; therefore, no vote was necessary under proposal (2). A tabulation of votes concerning Proposal (1) is as follows:



|                              |  |           |  |          
|----------------------------- |  | --------- |  | ---------
|Shares voted in favor         |  |           |  | 1,855,776
|Shares voted against/withheld |  |           |  | 15,586   
|Total shares represented      |  | 1,871,362 |  |          
|Total shares outstanding      |  | 2,810,976 |  |          

The amendment was included as an attachment to the Companys Form 8K filed with Securities
and Exchange Commission on January 30, 2009.



|Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities
|------- | -----------------------------------------------------------------------------------------------------------

There is no established public trading market for the Companys common stock. It is not traded on an exchange or in the over-the-counter market.
There is no assurance that an active market will develop for the Companys common stock in the future. Therefore, management of the Company is furnished with only limited information concerning trades of the Companys common stock. The
following table sets forth for each quarter during the most two recent fiscal years the number of shares traded and the high and low per share sales prices to the extent known to management, and has been adjusted for the 2 for 1 stock split
effective June 1, 2007.



|               |  |                      |  |                            |       |                           |   |      
|-------------- |  | -------------------- |  | -------------------------- | ----- | ------------------------- | - | -----
|YEAR 2007      |  | NUMBEROFSHARESTRADED |  | HIGH SALESPRICE(Per Share) |       | LOW SALESPRICE(Per Share)
|First Quarter  |  | 9,638 Shares         |  | $                          | 22.50 |                           | $ | 22.50
|Second Quarter |  | 10,712 Shares        |  | $                          | 22.50 |                           | $ | 22.50
|Third Quarter  |  | 7,814 Shares         |  | $                          | 27.00 |                           | $ | 25.00
|Fourth Quarter |  | 4,309 Shares         |  | $                          | 25.00 |                           | $ | 20.00
|               |  |                      | 
|YEAR 2008      |  | NUMBEROFSHARESTRADED |  | HIGH SALESPRICE(Per Share) |       | LOW SALESPRICE(Per Share)
|First Quarter  |  | 6,405 Shares         |  | $                          | 20.00 |                           | $ | 19.00
|Second Quarter |  | 1,819 Shares         |  | $                          | 20.00 |                           | $ | 16.00
|Third Quarter  |  | 1,153 Shares         |  | $                          | 15.00 |                           | $ | 8.00 
|Fourth Quarter |  | 0 Shares             |  | $                          |      |                           | $ |     

The Company paid a quarterly dividend totaling $0.09 per share in 2008 and four quarterly
dividends totaling $0.36 per share in 2007, on a split adjusted basis. Any declaration and payment of dividends will be based on the Companys earnings, economic conditions, and the evaluation by the Board of Directors of other relevant
factors. The Companys ability to pay dividends is dependent on cash dividends paid to it by the Bank, its wholly-owned subsidiary. The ability of the Bank to pay dividends to the Company is restricted by applicable regulatory requirements. See
Supervision and Regulation.



12



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##### Table of Contents

As of March 3, 2009 there were 3,252,581 shares of the Companys common stock issued and
outstanding held of record by approximately 665 persons (not including the number of persons or entities holding stock in nominee or street name through various brokerage houses).

In 1998 the Company adopted an incentive stock option plan (1998 Plan) which authorized the Company to issue to officers and other key employees of
McIntosh State Bank options to purchase in the aggregate as many as 35,000 shares of the Companys common stock. The number of shares so authorized was subject to increase in the event, among other matters, of a stock dividend. As a result of
the stock dividends declared by the Company in 1999, 2000, 2001, 2005 and 2007, there are now 119,891 shares of its common stock for which such options may be granted. As of March 3, 2009, all options available under the plan have been granted.
During 2007, exercised options resulted in 2,000 common shares issued.

In 2006 the Company adopted a compensation plan (2006 Plan) which
authorizes the Company to issue to directors, officers and employees of the Company and its affiliates incentive stock options, nonqualified stock options, and/or restricted stock. The 2006 Plan permits up to 210,000 shares of the Companys
common stock to be issued; however, no more than 50,000 shares can be available for issuance as restricted stock. As of December 31, 2008, no restricted shares have been issued. As March 3, 2009, 80,000 incentive stock options have been
granted; however, no options have been exercised.

Unregistered Sales of Equity Securities

On December 29, 2008 the Company issued 441,605 common shares to its directors and select executive officers for $6.85 per share. Proceeds from the
sale totaled $2,984,619, net of a $40,375 placement fee. The common stock was offered and sold only to accredited investors, as the term is defined under the Securities Act of 1933 and the Company relied on the exemption provided under Rule 506 of
Securities Act with respect to the transaction.



|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operation
|------- | ------------------------------------------------------------------------------------

Managements Discussion and Analysis of Financial Condition and Results of Operations for Years ended December 31, 2008 and December 31, 2007.

Financial Condition

The financial condition of the Company as of
December 31, 2008 shows assets declined $11.3 million or 2% compared to December 31, 2007. Liquid assets (cash, federal funds sold, interest bearing depository balances, and investment securities), fell $5.9 million or 6% from year-end.
The decline in liquid assets from the year-end period results from the September 2008 sale of $9.5 million in out-of-sate municipal bonds partially offset by a $4.7 million increase in cash and due from banks. These bonds represented 77% of all tax
free bonds in the portfolio. Managements reasons for selling these bonds were: (a) restructure the bond portfolio to take advantage of higher taxable bond yields; and (b) ongoing concerns over bond insurers financial difficulties as
well as increased concerns about the overall credit worthiness of municipalities facing tax and revenue shortfalls resulting from weakness in the economy. Liquid assets were used, in part, to fund deposit run-off outlined below.

Loans

Gross loans declined $17.5 million or 5% during 2008. Loans
transferred to other real estate during the year ending December 31, 2008 totaled $15.2 million. With the ongoing deterioration of the economy combined with persistent residential real estate market weakness, management expects loan balances
may fall further in coming quarters.

On December 13, 2006 federal bank regulatory agencies issued a new Policy Statement, Interagency Policy
Statement on the Allowance for Loan and Lease Losses, which outlines how banks should approach determining the adequacy of their allowance for loan losses (ALL). Provisions of this new Policy Statement must be considered along with
provisions of Policy Statements on ALL adequacy issued in 1993 and 2001. In 2007, management implemented the requirements of this latest Policy Statement which in combination with the current lending and market conditions has resulted in a generally
higher ALL level.

The ALL rose $1.6 million or 22% for the year ending December 31, 2008. The increase results from $16 million in provision expense
and $14.4 million in net charge-offs. As of December 31, 2008, the ALL as a percentage of gross loans (reserve ratio) is 2.63% versus 2.03% for the prior year-end.

The rise in the overall reserve ratio is due to: (a) a rise in the degree of potential loss in loans with more than the normal risk of repayment (impaired loans); and (b) a rise in the qualitative factors
utilized in the methodology used to determine ALL adequacy. Total impaired loans rose $13.6 million or 55% and the level of potential loss on impaired loans rose which resulted in $1.2 million more required reserve. Given the continuing decline in
market conditions for commercial and residential real estate, management adjusted its qualitative factors used in determining ALL adequacy in 2008. This change resulted in a required ALL that was $1.3 million higher. Had these events not occurred in
2008, the reserve ratio would have been 1.86%. The following table outlines impaired loans:



13



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##### Table of Contents

The following table outlines the changes in impaired loans:



|                                     |  |                           |        |   |      |   |        |  
|------------------------------------ |  | ------------------------- | ------ | - | ---- | - | ------ | -
|In (000s)                            |  | Years Ending December 31, |       
|Impaired loans by loan type:         |  | 2008                      |        |   | 2007 |  
|Commercial, financial & agricultural |  | $                         | 3,664  |   |      | $ | 31     |  
|Real estate-mortgage                 |  |                           | 6,463  |   |      |   | 3,158  |  
|Real estate-construction             |  |                           | 27,567 |   |      |   | 21,483 |  
|Consumer loans                       |  |                           | 576    |   |      |   | 41     |  
|                                     |  |                           |        |   |      |   |        |  
|Total impaired loans                 |  | $                         | 38,270 |   |      | $ | 24,713 |  
|                                     |  |                           |        |   |      |   |        |  
|Allowance for impaired loans         |  | $                         | (4,163 | ) |      | $ | (2,917 | )
|                                     |  |                           |        |   |      |   |        |  
|Impaired Loan %                      |  |                           | 10.9   | % |      |   | 11.8   | %
|                                     |  |                           |        |   |      |   |        |  

The following table highlights the ALL by loan category:



|                                     |  |                           |       |       |      |   |           |   |       |  |      |  
|------------------------------------ |  | ------------------------- | ----- | ----- | ---- | - | --------- | - | ----- |  | ---- | -
|                                     |  | Years Ending December 31, |      
|ALL by Loan Category In (000s)       |  | 2008Total                 |       | 2008% |      |   | 2007Total |   | 2007% | 
|Commercial, financial & agricultural |  | $                         | 995   |       | 1.47 | % |           | $ | 589   |  | 1.02 | %
|Real estate-mortgage                 |  |                           | 2,070 |       | 1.16 | % |           |   | 2,173 |  | 1.37 | %
|Real estate-construction             |  |                           | 5,220 |       | 8.28 | % |           |   | 3,932 |  | 3.58 | %
|Consumer loans                       |  |                           | 232   |       | 1.51 | % |           |   | 262   |  | 1.63 | %
|                                     |  |                           |       |       |      |   |           |   |       |  |      |  
|Total Allowance for Loan Losses      |  | $                         | 8,517 |       | 2.63 | % |           | $ | 6,956 |  | 2.03 | %

The increase in reserve ratio for the commercial, financial, and agricultural category is due to changes in
qualitative factors and higher impairment estimates. Had the qualitative factors remained unchanged from 2007, the ALL for the commercial, financial, and agricultural category would have been $156,000 higher. Had the estimate of impairment for this
category remained unchanged from 2007, the reserve would have been $532,000 lower. Had these events not occurred, the reserve ratio for the commercial, financial, and agricultural category would have been 0.91%.

The decrease in the reserve ratio for the real estate mortgage category is due to changes in qualitative factors and higher impairment estimates. Had the qualitative
factors remained unchanged from 2007, the ALL for the real estate mortgage category would have been $306,000 higher. Had the estimate of impairment for this category remained unchanged from 2007, the reserve would have been $91,000 lower. Had these
events not occurred, the reserve ratio for the real estate-mortgage category would have been 1.28%.

The increase in reserve ratio for the real estate
construction category from the prior year is due to increases in qualitative factors and higher impairment estimates. Qualitative factors were increased due to the overall softness in residential real estate values. Had the qualitative factors
remained unchanged from 2007, the ALL for the real estate construction category would have been $1.8 million lower. Had the estimate of impairment for this category remained unchanged from 2007, the reserve would have been $593,000 lower. Had these
events not occurred, the reserve ratio for the real estate mortgage category would have been 4.48%. The overall rise in reserve ratio from 2007 is predominately the result of loans in this category declining $46.7 million from 2007 to 2008; however,
the reserve associated with this category only rose $1.3 million during the same period.

The decrease in reserve ratio for the consumer loan category from
the prior year is due to decreases in qualitative factors and higher impairment estimates. Had the qualitative factors remained unchanged from 2007, the ALL for the consumer loan category would have been $31,000 higher. Had the estimate of
impairment for this category remained unchanged from 2007, the reserve would have been $30,000 lower. Had these events not occurred, the reserve ratio for the consumer loan category would have been 1.52%.

The Banks delinquency ratio (loans past due 30 days or more and loans on nonaccrual as a percentage of gross loans) rose from 8.72% to 11.43% during the year. The
higher delinquency ratio is principally due to $8.2 million more loans on nonaccural offset by $0.9 million less in loans delinquent 30 days or greater past due and not on nonaccrual. As of December 31, 2008, 36 relationships were on
nonaccrual. The following table outlines nonaccrual loans:



|                                |  |                           |        |   |      |   |        |  
|------------------------------- |  | ------------------------- | ------ | - | ---- | - | ------ | -
|                                |  | Years Ending December 31, |       
|In (000s)                       |  | 2008                      |        |   | 2007 |  
|Total Nonaccrual Loans          |  | $                         | 29,755 |   |      | $ | 21,565 |  
|Nonaccrual Loans to Gross Loans |  |                           | 9.2    | % |      |   | 6.3    | %



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##### Table of Contents

In accordance with Statement of Financial Accounting Standards No. 15, Accounting by Creditors for Trouble Debt
Restructurings, (SFAS 15), management has identified $2.4 million in loans restructured from their original terms. The result of these trouble debt restructurings is the Bank agreed to forbear on collecting $127,959 in accrued but unpaid
interest when the notes matured and were renewed. These credits are currently on nonaccrual and have been reviewed for impairment.

The Bank historically
attempts to meet the housing needs of its markets. As of December 31, 2008 and 2007, loans secured by 1-4 family properties totaled 48% and 50%, respectively, of total loans. Following is a table outlining the Banks loans on 1-4 family
properties:



|                                   |  |                           |         |      |   |        
|---------------------------------- |  | ------------------------- | ------- | ---- | - | -------
|                                   |  | Years Ending December 31,
|In (000s)                          |  | 2008                      |         | 2007
|1-4 family construction loans      |  | $                         | 61,395  |      | $ | 97,416 
|1-4 family mortgages  first lien  |  |                           | 64,677  |      |   | 49,724 
|1-4 family mortgages  junior lien |  |                           | 28,485  |      |   | 22,892 
|                                   |  |                           |         |      |   |        
|Total                              |  | $                         | 154,557 |      | $ | 170,032

As of December 31, 2008, the Company continued to have a concentration in AD&C loans. Management has
lowered its maximum limit where total AD&C loans may not exceed 37% of the Companys loan portfolio including unfunded commitments. As of December 31, 2008, AD&C loans represented 24% of gross loans and commitments versus 38% as of
the prior year-end. The primary risks of AD&C lending are:

(a) Loans are dependent upon continued strength in demand for residential real estate.
Demand for residential real estate is dependent on favorable real estate mortgage rates and population growth from expanding industry and services in the metropolitan Atlanta area;

(b) Loans are concentrated to a limited number of borrowers; and

(c) Loans may be less predictable and more difficult to
evaluate and monitor.

Builders and developers are what comprise the AD&C concentration as well as the bulk of the Banks nonaccrual loans.
Management believes AD&C conditions in the markets served by the Company remain under severe stress from the glut of lot inventory, foreclosure activity, and slow housing turnover. The nationalization of Fannie Mae and Freddie Mac in the second
half of 2008 has led to considerably less liquidity for residential mortgages. In addition, underwriting standards have tightened significantly leading to lower home mortgage originations. Bank management believes the effect of the downturn in
residential real estate continues to be further aggravated by the level of foreclosure activity for both lots and homes. The result has been, and will likely remain for at least the next 18 months, downward pressure on house and lot prices. The
marked decline in residential real estate values experienced during the last 24 months has and will continue to erode or eliminate the collateral margins the Bank typically utilizes to protect itself against losses.

On December 12, 2006 the federal bank regulatory agencies released guidance on Concentration in Commercial Real Estate Lending. This guidance defines
commercial real estate (CRE) loans as loans secured by raw land, land development and construction (including 1-4 family residential construction), multi-family property, and non-farm nonresidential property where the primary or a significant source
of repayment is derived from rental income associated with the property (that is, loans for which 50% or more of the source of repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent
financing of the property. Loans for owner occupied CRE are generally excluded from the CRE guidance.

The CRE guidance is triggered where either:

(a) Total loans for construction, land development, and other land represent 100% or more of the Banks total risk based capital; or

(b) Total loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land represent 300% or more of the
Banks total risk based capital.

Banks that are subject to the CRE guidances triggers will need to implement enhanced strategic planning, CRE
underwriting policies, risk management and internal controls, portfolio stress testing, risk exposure limits, and other policies, including management compensation and incentives, to address the CRE risks. Higher allowances for loan losses and
capital levels may also be appropriate.



15



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##### Table of Contents

The following table outlines the Banks CRE loans by category and CRE loans as percent of total risked based capital
for the years ending December 31, 2008 and 2007.



|                                                                                                  |  |                  |         |   |                |     |   |                  |   |         |                |  |     |  
|------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | -------------- | --- | - | ---------------- | - | ------- | -------------- |  | --- | -
|                                                                                                  |  | 2008             |         |   | 2007           |    
|In (000s)                                                                                         |  | AggregateBalance |         |   | PercentofTotal |     |   | AggregateBalance |   |         | PercentofTotal | 
|Loan Types:                                                                                       |  |                  |         |   |                |     |   |                  |   |         |                |  |     |  
|Construction & development                                                                        |  | $                | 69,359  |   |                | 47  | % |                  | $ | 110,321 |                |  | 58  | %
|Land                                                                                              |  |                  | 33,854  |   |                | 23  | % |                  |   | 34,600  |                |  | 18  | %
|                                                                                                  |  |                  |         |   |                |     |   |                  |   |         |                |  |     |  
|Sub total                                                                                         |  |                  | 103,213 |   |                | 70  | % |                  |   | 144,921 |                |  | 76  | %
|Multi-family                                                                                      |  |                  | 3,602   |   |                | 3   | % |                  |   | 4,086   |                |  | 2   | %
|Non-farm non-residential                                                                          |  |                  | 39,566  |   |                | 27  | % |                  |   | 41,665  |                |  | 22  | %
|                                                                                                  |  |                  |         |   |                |     |   |                  |   |         |                |  |     |  
|Total                                                                                             |  | $                | 146,381 |   |                | 100 | % |                  | $ | 190,672 |                |  | 100 | %
|                                                                                                  |  |                  |         |   |                |     |   |                  |   |         |                |  |     |  
|                                                                                                  |  |                  |         |  
|                                                                                                  |  | Bank Limit       |         |   | Actual         |     |   | Bank Limit       |   |         | Actual         | 
|Percent of Total Risk Based Capital:                                                              |  |                  |         |   |                |     |   |                  |   |         |                |  |     |  
|Construction, development & land                                                                  |  |                  | 415     | % |                | 276 | % |                  |   | 415     | %              |  | 347 | %
|Construction, development & land, multi-family, and non-farm, non-residential (nonowner occupied) |  |                  | 540     | % |                | 392 | % |                  |   | 540     | %              |  | 456 | %

The following is recap of other real estate activity from December 31, 2007 to December 31, 2008:



|                                                           |  |   |        |  
|---------------------------------------------------------- |  | - | ------ | -
|In (000s)                                                  |  |   |       
|Balance as of December 31, 2007                            |  | $ | 6,247  |  
|Additions to base amount                                   |  |   | 1,822  |  
|Write-down                                                 |  |   | (246   | )
|Sale of 11 residential vacant lots                         |  |   | (1,773 | )
|Sale of 38 residential construction properties             |  |   | (6,460 | )
|Foreclosure on 103 residential lots and unimproved acreage |  |   | 4,843  |  
|Foreclosure on 35 residential construction properties      |  |   | 9,833  |  
|Foreclosure on 1 commercial property                       |  |   | 563    |  
|                                                           |  |   |        |  
|Balance as of December 31, 2008                            |  | $ | 14,829 |  

The Bank foreclosed 139 properties with carrying balances totaling $15.2 million and sold 49 properties with
carrying balances totaling $8.2 million from year-end 2007 to December 31, 2008. The Bank devotes two seasoned construction lenders to marketing its other real estate holdings. Despite these efforts, management believes liquidation of
unimproved real estate and residential lot inventory will be protracted until the residential real estate market improves. Through 2008, other real estate properties were sold at an average 14% discount to carrying value. Additions to the base
amount reflect improvements made to finish foreclosed residences. Management anticipates a significant increase in newly foreclosed properties over the next twelve months.

The following is an inventory of other real estate as of December 31, 2008:



|                            |  |        |  |                |       
|--------------------------- |  | ------ |  | -------------- | ------
|In (000s) except for number |  | Number |  | CarryingAmount
|                            | 
|1-4 Family Residences       |  | 35     |  | $              | 7,639 
|Residential Lots            |  | 175    |  |                | 4,227 
|Commercial Property         |  | 1      |  |                | 563   
|Unimproved Acres of Land    |  | 370    |  |                | 2,400 
|                            |  |        |  |                |       
|Total Other Real Estate     |  |        |  | $              | 14,829



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##### Table of Contents

Deposits

Total
deposits declined $11.7 million or 3% from December 31, 2007 to 2008. The change from the prior year-end is principally attributable to a $27 million or 23% decrease in money market and NOW account balances partially offset by an $8.9 million
or 71% increase in savings account balances and a $6 million or a 2% increase in time deposits. Time deposits include $50 million in brokered deposits which is a decrease of $7.2 million or 12% from December 31, 2007. Brokered deposits include
$29.1 million in reciprocal deposits placed under the Certificate of Deposit Account Registry System (CDARS). These CDARS deposits represent stable local deposits, but are designated and reported as brokered deposits under regulatory requirements.
The decrease in brokered deposits from December 31, 2007 to 2008 is essentially the result of asset shrinkage. Time deposits represent 64% and 61% of total deposits as of December 31, 2008 and 2007, respectively. The rise in time deposits
for funding mix is due to declining interest rates which leads customers to lock in interest rates. See Liquidity and Interest Rate Risk comments for further discussion.

Capital

For the year ending December 31, 2008, the Companys equity capital declined $5.5 million or 15%
from the prior period. The change in equity capital over the period resulted from a $8.2 million net loss, a $0.8 million rise in net unrealized gains on securities available for sale, a $0.9 million decline in the after-tax effect of the
Companys current unfunded pension liability (see footnotes 1 and 9 of the Companys consolidated financials statements for further discussion), $93,000 in noncash compensatory stock option expense, $253,000 in cash dividends paid, and
stock issuance with net proceeds totaling $3 million.

Liquidity

The Bank must maintain, on a daily basis, sufficient funds to cover depositor withdrawals and to supply new borrowers with funds. To meet these obligations, the Bank keeps cash on hand, maintains account balances with
its correspondent banks, and purchases and sells Federal funds and other short-term investments. Asset and liability maturities are monitored in order to avoid significant mismatches which could adversely impact liquidity. It is the policy of the
Bank to monitor its liquidity to achieve earnings enhancements and meet regulatory requirements while funding its obligations.

Liquidity is monitored
daily and formally measured on a monthly basis. As of December 31, 2008, the Banks liquidity ratio was 11.4% versus 10.5% as of the prior year-end. In 2008, the Banks brokered deposits declined $7.2 million or 12% from
December 31, 2007. Management may continue to reduce the level of brokered deposits and thus total assets over the next 12 months.

Management has
established a noncore funding (wholesale, brokered (excluding CDARs), and out-of-territory deposits) guideline not to exceed 20% of Bank deposits. As of December 31, 2008 and 2007 the Banks noncore funding measure was 11.4% and 20.1%,
respectively.

The Bank has a $6.5 million secured line of credit with a correspondent bank to supplement short term liquidity. During 2008, the Bank
borrowed for nine days under this commitment with average borrowing of $1.7 million at a weighted average rate of 2.58% and a high of $3.5 million in May 2008.

The Bank has a $2 million FHLB advance that matures January 2009 and $5 million in fixed rate advances that may convert to 3 month LIBOR in 2009. Management believes unless LIBOR rises significantly before conversion, the FHLB will not
exercise its right to convert these advances. Bank management believes that the repayment of $2 million in FHLB advances during 2009 will not materially impact liquidity.

Advances are drawn under a $28.3 million line of credit with the FHLB. The line of credit with FHLB is secured by a blanket lien on the Banks qualified 1-4 family residential mortgages, home equity mortgages,
and multifamily mortgages outstanding as well as the Banks holdings of FHLB stock. During 2008, management drew $4 million in convertible term FHLB advances. The weighted average rate on these advances was 3.23% and the weighted average term
was 8.5 years. During 2008, management utilized the daily revolving credit (DRC) facility as part of its FHLB credit line for 44 days with an average borrowing of $3.4 million, a weighted average rate of 2.38%, and a high of $5 million in May, June,
and July 2008. See Table 8 for a recap of Bank borrowing.

In October 2008, the Bank withdrew its pledge of commercial real estate mortgages from the FHLB.
Instead, management has elected to pledge commercial real estate mortgages to the Federal Reserve Bank of Atlanta (FRB) where terms are considered more favorable to the Bank. The Bank has available credit with the FRB as of December 31, 2008 of
$15 million. No advances on this line occurred in 2008. Management expects to increase this credit line by another $15 million in 2009 through the pledge of additional commercial real estate mortgages.

In January 2008, the Company renewed its line of credit with its primary correspondent bank. The renewal increased the line of credit $4 million to $12 million. The line
of credit is tied to the prime lending rate and was to mature in 2010. The schedule of payments for the



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##### Table of Contents

line called for interest only for a period followed by amortizing the outstanding balance over 10 years. The line of credit was secured by all stock of the
Bank and included negative and positive covenants covering, in part, capital, earnings, and cash dividends. The line was closed in December 2008 and the bank stock pledge was released.

In October 2008, the FDIC approved a program to strengthen market stability for financial institutions called the Temporary Liquidity Guaranty Program (TLGP). Provision one of the TLGP allows the FDIC to guaranty the
debit issued by financial institutions for liabilities outstanding as of September 30, 2008. The debt guaranty amount for the Bank is $8.4 million. Management is still assessing the benefits of this provision of the program and did not opt out
of the program in case further developments prove to benefit the Bank. Provision two of the TLGP raises the FDIC insurance level for all deposit accounts to $250,000 through December 31, 2009. Management has determined this provision would be
beneficial to the Bank and its customers and has opted to take part. The FDIC is not permitted to charge assessments for this added coverage until after December 31, 2009. Management at this time is not aware of the assessment amounts for this
coverage beyond December 31, 2009 as the FDIC has not announced such. Provision three of the TLGP allows the FDIC to insure all the Banks noninterest bearing and interest bearing deposits paying less than 0.50% through December 31,
2009. Management has determined this provision would be beneficial to the Bank and its customers and has opted to take part. The Bank will pay 10 basis points per annum for this deposit coverage above the $250,000 temporary limit outlined in
provision two. Management believes that participation in the program will result in additional expenses of less than $15,000 per year.

Beginning in the
second quarter of 2007, management began offering a retail repurchase agreement to certain Bank customers. The agreement allows the Bank to sell its investment securities overnight and repurchase those securities the following business day. The rate
floats and is tied to the ninety day U. S. Treasury bond. As of December 31, 2008 and 2007, the Bank has sold and is obligated to repurchase $440,757 and $304,555, respectively, in investment securities.

Beginning in the second quarter of 2007, the Bank began participating in a borrowing arrangement with the U. S. Treasury. The Bank, as an approved U. S. Treasury
depository, historically accepts treasury, tax, and loan payments. Those payments were previously remitted to the U. S. Treasury on a daily basis; however, now those payments, up to an agreed upon maximum, can remain on deposit with the Bank. This
obligation is repaid periodically as the U. S. Treasury requires and bears a variable rate of interest approximating the ninety day U. S. Treasury bond. As of December 31, 2008 and 2007, the Bank had $215,746 and $156,823, respectively, in note
obligations under this program.

Critical Accounting Policies

Critical accounting policies are dependent on estimates that are particularly susceptible to significant changes. Determination of the Banks ALL and income taxes have been identified as critical accounting policies.

The ALL is maintained at a level believed to be appropriate by management to provide for probable loan losses inherent in the portfolio as of each quarter-end.
Managements judgment as to the amount of the ALL, including the allocated and unallocated elements, is a result of ongoing review of lending relationships, the overall risk characteristics of the portfolio segments, changes in the character or
size of the portfolio segments, the level of impaired or nonperforming loans, historical net charge-off experience, prevailing economic conditions and other relevant factors. Loans are charged off to the extent they are deemed to be uncollectible.
The ALL level is highly dependent upon managements estimates of variables affecting valuation, appraisals of collateral, evaluations of performance and status, and the timing of collecting nonperforming loans. Such estimates may be subject to
frequent adjustments by management and reflected in the provision for loan losses in the periods in which they become known.

Income taxes are accounted
for using the asset and liability method. Under this method, deferred tax assets or liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The determination of current and deferred taxes is based on complex analyses of many factors including
interpretation of Federal and state income tax laws, the difference between tax and financial reporting basis of assets and liabilities (temporary differences), estimates of amounts due or owed such as the reversals of temporary differences, and
current financial accounting standards. Actual results could differ significantly from the estimates and interpretations used in determining current and deferred taxes.

Off-Balance Sheet Arrangements

As described further in footnote 14 to the Companys audited financial
statements, the Banks lending activities regularly result in unfunded commitments to creditworthy customers requesting financing for working capital, construction and development activities, and home equity lines of credit. Commercial unfunded
commitments are typically secured by collateral margined in accordance with the Banks lending policy. Commercial unfunded commitments, excluding construction and development, are generally for terms less than three years. Unfunded commitments
for construction and development are typically for terms less than 18 months. Home equity lines of credit are generally secured by collateral margined in accordance with Banks lending policy and mature in ten years. Advances under all loan
commitments occur in the normal course of the Banks operations. Management considers its unfunded commitments when assessing the Banks liquidity and monitoring concentrations of credit. Commitment fees generally represent 0.5% to 1.0% of
the total commitment amount (funded and unfunded) and are recognized as origination fees. Origination fees for the years ending December 31, 2008, and 2007 were $369,277 and $791,379 respectively.



18



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##### Table of Contents

From time to time the Bank is asked by its creditworthy customers to issue standby or performance letters of credit.
These letters of credit are generally issued for terms no longer than two years and are secured by collateral margined in accordance with the Banks lending policy. The Bank has not been asked to perform on any of its outstanding letters of
credit during 2008 or 2007. Fees for issuing letters of credit totaled $14,482 and $13,463 for the years ending December 31, 2008 and 2007, respectively.

The following table represents outstanding contingent liabilities by category for the years ending December 31, 2008 and 2007, respectively.



|                                                         |  |           |        |           |      |   |           |   |           |  |      |  
|-------------------------------------------------------- |  | --------- | ------ | --------- | ---- | - | --------- | - | --------- |  | ---- | -
|Contingent Liabilities by Category (Amount in thousands) |  | 2008Total |        | % ofTotal |      |   | 2007Total |   | % ofTotal | 
|Unfunded commitments secured by 1-4 family RE            |  | $         | 14,713 |           | 57.1 | % |           | $ | 14,811    |  | 31.1 | %
|Unfunded commitments secured by commercial RE            |  |           | 5,704  |           | 22.1 | % |           |   | 25,607    |  | 53.8 | %
|Other unfunded commitments                               |  |           | 4,073  |           | 15.8 | % |           |   | 5,149     |  | 10.8 | %
|Financial standby letter of credit                       |  |           | 290    |           | 1.1  | % |           |   | 350       |  | 0.7  | %
|Performance standby letters of credit                    |  |           | 995    |           | 3.9  | % |           |   | 1,719     |  | 3.6  | %
|                                                         |  |           |        |           |      |   |           |   |           |  |      |  
|Total Contingent Liabilities                             |  | $         | 25,775 |           | 100  | % |           | $ | 47,636    |  | 100  | %

Contractual Obligations

In the ordinary course of operations, the Company enters into certain contractual obligations. The following table summarizes the Companys significant fixed and determinable contractual obligations, by payment
date, as of December 31, 2008.



|                                 |  |                                             |         |                |   |                 |  |                 |        |                 |   |        |  |   |      
|-------------------------------- |  | ------------------------------------------- | ------- | -------------- | - | --------------- |  | --------------- | ------ | --------------- | - | ------ |  | - | -----
|                                 |  | Payments Due by Period(Amount in thousands)
|                                 |  | Total                                       |         | Lessthan1 year |   | Over 1to3 years |  | Over 3to5 years |        | Morethan5 years
|Contractual Obligations:         |  |                                             |         |                |   |                 |  |                 |        |                 |   |        |  |   |      
|Deposits without stated maturity |  | $                                           | 143,192 |                | $ | 143,192         |  | $               |       |                 | $ |       |  | $ |     
|Certificates of deposit          |  |                                             | 252,407 |                |   | 189,734         |  |                 | 47,123 |                 |   | 15,550 |  |   |     
|Federal Home Loan Bank advances  |  |                                             | 16,000  |                |   | 2,000           |  |                 | 3,000  |                 |   | 2,000  |  |   | 9,000
|Other borrowed funds             |  |                                             | 657     |                |   | 657             |  |                 |       |                 |   |       |  |   |     
|Lease obligations                |  |                                             | 781     |                |   | 131             |  |                 | 262    |                 |   | 262    |  |   | 126  
|                                 |  |                                             |         |                |   |                 |  |                 |        |                 |   |        |  |   |      
|Total                            |  | $                                           | 413,037 |                | $ | 335,714         |  | $               | 50,385 |                 | $ | 17,812 |  | $ | 9,126



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##### Table of Contents

Results of Operations  Twelve Months Ended December 31, 2008 Compared to 2007

Net interest income for the year ending December 31, 2008 decreased $4.8 million or 27% from the year-ago period. The decrease in net interest income is attributable
to the reversal of interest income on loans placed on nonaccrual totaling $1.2 million, holding of other real estate and nonaccrual loans averaging $9.6 million and $28.7 million, respectively, $493,000 less in loan fee income, and net interest
margin compression resulting from asset sensitivity as the prime lending rate fell 400 basis points (bps) during the year ending December 31, 2008. Management estimates that the effect of 2008 nonaccrual activity in terms of balance and lost
interest income along with balances in other real estate results in $3.5 million in foregone loan interest income. This foregone interest income equates to 0.75% lost to the net interest margin.

The December 31, 2008 tax equivalent net interest margin of 3.11% fell 102 basis points from the year-ago period. Margin decline was attributable to a 92 basis
point decrease in the net interest component of the net interest margin and an 11 basis point decline in the loan fee component of the net interest margin relative to the prior year. The 11 basis point decline in the loan fee component of the margin
is due to $140.7 million fewer loans originated versus the prior year. The decline in the interest component of the net interest margin is principally due to the amount of nonaccrual loans and other real estate and secondarily to loans and other
earning assets repricing faster downward than the decline in funding costs. The yield on earning assets declined 173 basis points from 2007 to 2008 while the cost of funds declined 86 basis points over the same period. The Banks average
loan-to-funding ratio declined from 82.5% to 82% for 2007 to 2008.

Total interest income for the year ending December 31, 2008 declined $8.3 million
or 24% from the year-ago period. The decrease in interest income was attributable to a decline in average earning assets and the level of nonaccrual loans.

In 2008 versus 2007, total average earning assets declined $12 million or 3% and average nonaccrual loans increased $24.5 million or 573%. The tax equivalent yield on earning assets as of December 31, 2008 was 6.17% and declined 175
basis points from the year-ago period. This decrease results from a 207 basis point fall in loan yield, a 5 basis point decline in investment portfolio yield, and a 285 basis point decline in yield on federal funds sold and interest bearing
deposits. The overall decline in yield on earning assets from the year-ago period is principally due to the volume of nonaccrual loans and other real estate and secondarily to loans and other earning assets repricing faster downward as the prime
lending rate fell 400 basis points during the year.

Interest expense for the twelve months ending December 31, 2008 declined $3.4 million or 21% from
the year-ago period. The decrease in interest expense is due to an 86 basis points decline in cost of funds.

The cost of funds as of December 31,
2008 was 3.44% and fell 86 basis points from the year-ago period. The decrease in cost of funds results from a 161 basis point decline in the cost of interest bearing demand deposit accounts, a 1 basis point decline in the cost of funds on savings
accounts, a 74 basis point decrease in cost of funds on time deposits, and a 16 basis point decline in borrowed money. The small decline in cost of funds for savings deposits is due to the increased popularity of a savings account thats tied
to 50% of the prime lending rate and a teaser rate associated with that product. The overall decline in the cost of funds from the year-ago period results from nonmaturing and maturing deposits repricing at lower rates as rates have fallen over the
year.

Provision for loan losses for the twelve months ending December 31, 2008 increased $12.6 million or 380% from the year-ago period. The rise in
provision expense versus the prior year-end was primarily due to $14.4 million in net charge-offs and an increase in problem loans. Refer to the discussion on loans and ALL adequacy for further comment.

During 2008, other income, excluding investment securities, other real estate, and fixed asset gains or losses, declined $37,709 or 1% from the year-ago period. Income
from secondary market financing activity declined $137,855 or 20% from the year-ago period due to tightened credit underwriting standards resulting in lower volume. Mortgage originations for purchasing or refinancing residential real estate and sold
into the secondary market fell 64 or 24% in number and 25% by dollar amount from 2007 to 2008. Overdraft fee income rose $118,225 or 7% due to higher overdraft fees and volume.

Investment securities gains totaling $2,158,514 represent the sale of the Companys equity stake in Silverton Financial Services, Inc.

During 2008, other noninterest expense increased $447,166 or 3% from the year-ago period. This increase is principally attributable to two factors: a $166,261 or 242% increase in collection expenses associated with
the increase in noncurrent loans; a $602,126 or 519% increase in other real estate expenses associated with the increased activity in other real estate. These higher expenses were partially off-set by a $445,787 or 5% decline in salary and employee
benefit expense. From 2007 to 2008 full time equivalent employees declined 22 or 15%.

During 2008, the Company realized a $5.1 million income tax benefit.
This benefit reflects the increase in certain deferred tax credits, a two year net operating loss carry-back, and $287,829 in net operating loss carry-forwards as permitted by tax code. This benefit was the result of the Companys loss before
income taxes.



20



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##### Table of Contents

McIntosh Bancshares, Inc.

Table 1 - Average Balance Sheets, Interest and Rates

The table below shows the year-to-date average balance for each category of interest
earning assets and interest-bearing liabilities for the indicated periods and the average rate of interest earned or paid thereon.



|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|------------------------------------------------ |  | -------------------------------- | ----------- | - | ---------------------- | - | ------------------------ | ---- | ---- | -------------- |  | - | ---------------------- | - | ------------------------ | - | ---------- | -------------- | ---- | - | ---------------------- | - | ------------------------ | - |  | - | ---------- |  | ---- | -
|                                                 |  | For the Years Ended December 31, |            
|                                                 |  | 2008                             |             |   | 2007                   |   |                          | 2006 |     
|                                                 |  | AverageBalance                   |             |   | InterestIncome/Expense |   | WeightedAverageRate (TE) |      |      | AverageBalance |  |   | InterestIncome/Expense |   | WeightedAverageRate (TE) |   |            | AverageBalance |      |   | InterestIncome/Expense |   | WeightedAverageRate (TE) |  
|ASSETS                                           |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Interest earning assets:                         |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Federal funds sold and interest bearing deposits |  | $                                | 11,562,650  |   |                        | $ | 234,238                  |      | 2.03 | %              |  | $ | 9,232,956              |   |                          | $ | 453,892    |                | 4.92 | % |                        | $ | 14,024,172               |   |  | $ | 689,783    |  | 4.92 | %
|Taxable investments                              |  |                                  | 66,738,075  |   |                        |   | 3,287,427                |      | 4.93 | %              |  |   | 70,679,753             |   |                          |   | 3,525,154  |                | 4.99 | % |                        |   | 55,261,514               |   |  |   | 2,491,875  |  | 4.51 | %
|Non-taxable investments                          |  |                                  | 6,635,100   |   |                        |   | 258,390                  |      | 5.90 | %              |  |   | 10,703,778             |   |                          |   | 428,973    |                | 6.07 | % |                        |   | 10,504,769               |   |  |   | 434,784    |  | 6.27 | %
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Total investments                                |  |                                  | 73,373,175  |   |                        |   | 3,545,817                |      | 5.01 | %              |  |   | 81,383,531             |   |                          |   | 3,954,127  |                | 5.13 | % |                        |   | 65,766,283               |   |  |   | 2,926,659  |  | 4.79 | %
|Taxable loans                                    |  |                                  | 334,324,739 |   |                        |   | 21,971,222               |      | 6.57 | %              |  |   | 343,471,851            |   |                          |   | 29,718,212 |                | 8.65 | % |                        |   | 312,246,281              |   |  |   | 27,809,041 |  | 8.91 | %
|Non-taxable loans                                |  |                                  | 3,869,941   |   |                        |   | 181,853                  |      | 7.12 | %              |  |   | 1,068,467              |   |                          |   | 59,886     |                | 8.49 | % |                        |   | 1,336,525                |   |  |   | 73,368     |  | 8.32 | %
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Total loans                                      |  |                                  | 338,194,680 |   |                        |   | 22,153,075               |      | 6.58 | %              |  |   | 344,540,318            |   |                          |   | 29,778,098 |                | 8.65 | % |                        |   | 313,582,806              |   |  |   | 27,882,409 |  | 8.90 | %
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Total interest earning assets                    |  |                                  | 423,130,505 |   |                        |   | 25,933,130               |      | 6.18 | %              |  |   | 435,156,805            |   |                          |   | 34,186,117 |                | 7.91 | % |                        |   | 393,373,261              |   |  |   | 31,498,851 |  | 8.07 | %
|Allowance for loan losses                        |  |                                  | (8,487,782  | ) |                        |   |                          |      |      |                |  |   | (5,124,334             | ) |                          |   |            |                |      |   |                        |   | (4,462,140               | ) |  |   |            |  |      |  
|Other assets                                     |  |                                  | 39,259,217  |   |                        |   |                          |      |      |                |  |   | 29,713,256             |   |                          |   |            |                |      |   |                        |   | 29,970,446               |   |  |   |            |  |      |  
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Total assets                                     |  | $                                | 453,901,940 |   |                        |   |                          |      |      |                |  | $ | 459,745,727            |   |                          |   |            |                |      |   |                        | $ | 418,881,567              |   |  |   |            |  |      |  
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|LIABILITIES AND STOCKHOLDERS EQUITY             |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Interest bearing liabilities:                    |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Deposits:                                        |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Demand                                           |  | $                                | 100,223,572 |   |                        | $ | 1,328,132                |      | 1.33 | %              |  | $ | 116,866,109            |   |                          | $ | 3,441,208  |                | 2.94 | % |                        | $ | 113,605,552              |   |  | $ | 2,941,889  |  | 2.59 | %
|Savings                                          |  |                                  | 17,381,179  |   |                        |   | 264,539                  |      | 1.52 | %              |  |   | 12,010,137             |   |                          |   | 184,350    |                | 1.53 | % |                        |   | 11,448,003               |   |  |   | 139,380    |  | 1.22 | %
|Time                                             |  |                                  | 245,510,133 |   |                        |   | 10,884,689               |      | 4.43 | %              |  |   | 234,323,402            |   |                          |   | 12,125,482 |                | 5.17 | % |                        |   | 199,110,346              |   |  |   | 9,260,632  |  | 4.65 | %
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Total Deposits                                   |  |                                  | 363,114,884 |   |                        |   | 12,477,360               |      | 3.44 | %              |  |   | 363,199,648            |   |                          |   | 15,751,040 |                | 4.34 | % |                        |   | 324,163,901              |   |  |   | 12,341,901 |  | 3.81 | %
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Federal funds purchased                          |  |                                  | 42,855      |   |                        |   | 1,244                    |      | 2.90 | %              |  |   | 84,245                 |   |                          |   | 4,577      |                | 5.43 | % |                        |   | 105,287                  |   |  |   | 6,594      |  | 6.26 | %
|FHLB advances                                    |  |                                  | 14,846,735  |   |                        |   | 531,654                  |      | 3.58 | %              |  |   | 18,941,714             |   |                          |   | 689,972    |                | 3.64 | % |                        |   | 22,832,877               |   |  |   | 825,134    |  | 3.61 | %
|Other borrowings                                 |  |                                  | 540,955     |   |                        |   | 5,131                    |      | 0.95 | %              |  |   | 274,602                |   |                          |   | 9,808      |                | 3.57 | % |                        |   |                         |   |  |   |           |  |     |  
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Total interest bearing liabilities               |  |                                  | 378,545,429 |   |                        |   | 13,015,389               |      | 3.44 | %              |  |   | 382,500,209            |   |                          |   | 16,455,397 |                | 4.30 | % |                        |   | 347,102,065              |   |  |   | 13,173,629 |  | 3.80 | %
|Non-interest bearing demand deposits             |  |                                  | 34,093,123  |   |                        |   |                          |      |      |                |  |   | 34,636,932             |   |                          |   |            |                |      |   |                        |   | 34,738,891               |   |  |   |            |  |      |  
|Other liabilities                                |  |                                  | 4,987,974   |   |                        |   |                          |      |      |                |  |   | 4,811,079              |   |                          |   |            |                |      |   |                        |   | 3,223,539                |   |  |   |            |  |      |  
|Stockholders equity                             |  |                                  | 36,275,414  |   |                        |   |                          |      |      |                |  |   | 37,797,507             |   |                          |   |            |                |      |   |                        |   | 33,817,072               |   |  |   |            |  |      |  
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Total liabilities and stockholders equity       |  | $                                | 453,901,940 |   |                        |   |                          |      |      |                |  | $ | 459,745,727            |   |                          |   |            |                |      |   |                        | $ | 418,881,567              |   |  |   |            |  |      |  
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Net interest income                              |  |                                  |             |   |                        | $ | 12,917,741               |      |      |                |  |   |                        |   |                          | $ | 17,730,720 |                |      |   |                        |   |                          |   |  | $ | 18,325,222 |  |      |  
|                                                 |  |                                  |             |   |                        |   |                          |      |      |                |  |   |                        |   |                          |   |            |                |      |   |                        |   |                          |   |  |   |            |  |      |  
|Net interest spread (TE)                         |  |                                  |             |   |                        |   |                          |      | 2.74 | %              |  |   |                        |   |                          |   |            |                | 3.61 | % |                        |   |                          |   |  |   |            |  | 4.27 | %
|Net interest margin (TE)                         |  |                                  |             |   |                        |   |                          |      | 3.11 | %              |  |   |                        |   |                          |   |            |                | 4.13 | % |                        |   |                          |   |  |   |            |  | 4.72 | %

Non-accrual loans and the interest income which was recorded on these loans, if any, are included in the yield
calculation for loans in all periods reported.

(TE) - Tax Equivalent. Loan fees of $1,141,948; $1,634,948; and $1,995,433 are included in the yields for
2008, 2007 and 2006 respectively.



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McIntosh Bancshares, Inc.

Table 2 - Rate/Volume Variance Analysis

The following tables show a summary of the changes in interest income and interest expense
resulting from changes in volume and changes in rates for each major category of interest-earning assets and interest-bearing liabilities for 2008 over 2007 and 2007 over 2006.



|                                                 |  |                                        |          |   |      |   |            |        |  |   |            |  
|------------------------------------------------ |  | -------------------------------------- | -------- | - | ---- | - | ---------- | ------ |  | - | ---------- | -
|                                                 |  | 2008 over 2007                         |         
|                                                 |  | Increase (decrease) due to changes in: |         
|                                                 |  | Volume                                 |          |   | Rate |   |            | Change | 
|Interest earned on:                              |  |                                        |          |   |      |   |            |        |  |   |            |  
|Federal funds sold and interest bearing deposits |  | $                                      | 47,195   |   |      | $ | (266,849   | )      |  | $ | (219,654   | )
|Taxable investments                              |  |                                        | (194,162 | ) |      |   | (43,565    | )      |  |   | (237,727   | )
|Non-taxable investments                          |  |                                        | (158,446 | ) |      |   | (12,137    | )      |  |   | (170,583   | )
|Taxable loans                                    |  |                                        | (601,132 | ) |      |   | (7,145,858 | )      |  |   | (7,746,990 | )
|Non-taxable loans                                |  |                                        | 131,644  |   |      |   | (9,677     | )      |  |   | 121,967    |  
|                                                 |  |                                        |          |   |      |   |            |        |  |   |            |  
|Total Interest Income                            |  | $                                      | (774,901 | ) |      | $ | (7,478,086 | )      |  | $ | (8,252,987 | )
|Interest paid on:                                |  |                                        |          |   |      |   |            |        |  |   |            |  
|Deposits:                                        |  |                                        |          |   |      |   |            |        |  |   |            |  
|Demand                                           |  |                                        | (220,542 | ) |      |   | (1,892,534 | )      |  |   | (2,113,076 | )
|Savings                                          |  |                                        | 81,746   |   |      |   | (1,557     | )      |  |   | 80,189     |  
|Time                                             |  |                                        | 495,964  |   |      |   | (1,736,757 | )      |  |   | (1,240,793 | )
|Federal funds purchased                          |  |                                        | (1,201   | ) |      |   | (2,132     | )      |  |   | (3,333     | )
|FHLB advances                                    |  |                                        | (146,639 | ) |      |   | (11,679    | )      |  |   | (158,318   | )
|Other borrowings                                 |  |                                        | 2,526    |   |      |   | (7,203     | )      |  |   | (4,677     | )
|                                                 |  |                                        |          |   |      |   |            |        |  |   |            |  
|Total Interest Expense                           |  | $                                      | 211,854  |   |      | $ | (3,651,862 | )      |  | $ | (3,440,008 | )
|                                                 |  |                                        |          |   |      |   |            |        |  |   |            |  
|Net Interest Income                              |  | $                                      | (986,755 | ) |      | $ | (3,826,224 | )      |  | $ | (4,812,979 | )
|                                                 |  |                                        |          |   |      |   |            |        |  |   |            |  



|Note : | Rate/volume variance were allocated between rate variances and volume variances using a weighted average allocation method.
|------ | ---------------------------------------------------------------------------------------------------------------------------



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McIntosh Bancshares, Inc.

Table 2 - Rate/Volume Variance Analysis (continued)



|                                                 |  |                                        |           |   |      |   |            |        |  |   |           |  
|------------------------------------------------ |  | -------------------------------------- | --------- | - | ---- | - | ---------- | ------ |  | - | --------- | -
|                                                 |  | 2007 over 2006                         |          
|                                                 |  | Increase (decrease) due to changes in: |          
|                                                 |  | Volume                                 |           |   | Rate |   |            | Change | 
|Interest earned on:                              |  |                                        |           |   |      |   |            |        |  |   |           |  
|Federal funds sold and interest bearing deposits |  | $                                      | (235,536  | ) |      | $ | (355       | )      |  | $ | (235,891  | )
|Taxable investments                              |  |                                        | 768,985   |   |      |   | 264,294    |        |  |   | 1,033,279 |  
|Non-taxable investments                          |  |                                        | 7,976     |   |      |   | (13,787    | )      |  |   | (5,811    | )
|Taxable loans                                    |  |                                        | 2,701,730 |   |      |   | (792,559   | )      |  |   | 1,909,171 |  
|Non-taxable loans                                |  |                                        | (15,025   | ) |      |   | 1,543      |        |  |   | (13,482   | )
|                                                 |  |                                        |           |   |      |   |            |        |  |   |           |  
|Total Interest Income                            |  | $                                      | 3,228,130 |   |      | $ | (540,864   | )      |  | $ | 2,687,266 |  
|Interest paid on:                                |  |                                        |           |   |      |   |            |        |  |   |           |  
|Deposits:                                        |  |                                        |           |   |      |   |            |        |  |   |           |  
|Demand                                           |  |                                        | 96,009    |   |      |   | 403,310    |        |  |   | 499,319   |  
|Savings                                          |  |                                        | 8,628     |   |      |   | 36,342     |        |  |   | 44,970    |  
|Time                                             |  |                                        | 1,822,162 |   |      |   | 1,042,688  |        |  |   | 2,864,850 |  
|Federal funds purchased                          |  |                                        | (1,143    | ) |      |   | (874       | )      |  |   | (2,017    | )
|FHLB advances                                    |  |                                        | (141,740  | ) |      |   | 6,578      |        |  |   | (135,162  | )
|Other borrowings                                 |  |                                        | 9,808     |   |      |   |           |        |  |   | 9,808     |  
|                                                 |  |                                        |           |   |      |   |            |        |  |   |           |  
|Total Interest Expense                           |  | $                                      | 1,793,724 |   |      | $ | 1,488,044  |        |  | $ | 3,281,768 |  
|                                                 |  |                                        |           |   |      |   |            |        |  |   |           |  
|Net Interest Income                              |  | $                                      | 1,434,406 |   |      | $ | (2,028,908 | )      |  | $ | (594,502  | )
|                                                 |  |                                        |           |   |      |   |            |        |  |   |           |  



|Note : | Rate/volume variance were allocated between rate variances and volume variances using a weighted average allocation method.
|------ | ---------------------------------------------------------------------------------------------------------------------------



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McIntosh Bancshares, Inc.

Table 3 - Investment Portfolio

The following table presents the carrying value of investments by category at December 31, 2008, 2007,
and 2006. Amounts in thousands.



|                              |  |                       |        |                       |   |                       |  |   |       
|----------------------------- |  | --------------------- | ------ | --------------------- | - | --------------------- |  | - | ------
|Securities Available For Sale |  | 2008TotalMarket Value |        | 2007TotalMarket Value |   | 2006TotalMarket Value
|US Treasuries and Agencies    |  | $                     | 27,606 |                       | $ | 43,315                |  | $ | 57,877
|Corporate debt securities     |  |                       | 491    |                       |   | 505                   |  |   | 500   
|SCMs                         |  |                       | 2,259  |                       |   | 11,366                |  |   | 9,891 
|Mortgage backed securities    |  |                       | 40,300 |                       |   | 20,665                |  |   | 16,692
|Equities                      |  |                       |       |                       |   |                      |  |   | 565   
|                              |  |                       |        |                       |   |                       |  |   |       
|Subtotal                      |  | $                     | 70,656 |                       | $ | 75,851                |  | $ | 85,525
|                              |  |                       |       
|Securities Held To Maturity   |  | 2008TotalBook Value   |        | 2007TotalBook Value   |   | 2006TotalBook Value  
|SCMs                         |  |                       |       |                       |   | 236                   |  |   | 323   
|                              |  |                       |        |                       |   |                       |  |   |       
|Total                         |  | $                     | 70,656 |                       | $ | 76,087                |  | $ | 85,848
|                              |  |                       |        |                       |   |                       |  |   |       



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McIntosh Bancshares, Inc.

Table 3 - Investment Portfolio (continued)

The following table presents the maturities of all investment securities at carrying value and
the weighted average yields for each category of securities presented:



|                                      |  |                |           |                   |   |                     |  |                |            |       |   |                            |  |   |            |  |      |  
|------------------------------------- |  | -------------- | --------- | ----------------- | - | ------------------- |  | -------------- | ---------- | ----- | - | -------------------------- |  | - | ---------- |  | ---- | -
|                                      |  | <One YearTotal |           | 1 to 5 YearsTotal |   | >5 to 10 YearsTotal |  | >10 YearsTotal |            | Total |   | WeightedAverage Yield (TE) | 
|Securities available for sale:        |  |                |           |                   |   |                     |  |                |            |       |   |                            |  |   |            |  |      |  
|Treasuries and US government agencies |  |                | 1,273,826 |                   |   | 21,077,125          |  |                | 5,254,690  |       |   |                           |  |   | 27,605,641 |  | 4.96 | %
|State and political divisions         |  |                | 388,534   |                   |   | 1,009,686           |  |                | 642,065    |       |   | 219,170                    |  |   | 2,259,455  |  | 6.35 | %
|Corporate debt securities             |  |                |          |                   |   |                    |  |                | 490,890    |       |   |                           |  |   | 490,890    |  | 6.25 | %
|Mortgage-backed securities            |  |                | 168,093   |                   |   | 6,174,977           |  |                | 7,359,157  |       |   | 26,597,673                 |  |   | 40,299,900 |  | 4.90 | %
|Equities                              |  |                |          |                   |   |                    |  |                |           |       |   |                           |  |   |           |  |     |  
|                                      |  |                |           |                   |   |                     |  |                |            |       |   |                            |  |   |            |  |      |  
|Total                                 |  | $              | 1,830,453 |                   | $ | 28,261,788          |  | $              | 13,746,802 |       | $ | 26,816,843                 |  | $ | 70,655,886 |  | 4.98 | %
|                                      |  |                |           |                   |   |                     |  |                |            |       |   |                            |  |   |            |  |      |  

Mortgage backed securities are included in the maturities categories in which the are anticipated to be repaid
based on scheduled maturities.



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McIntosh Bancshares, Inc.

Table 4 - Loan Portfolio

The following table presents loans by type and the percentage of loans by type at the end of the last 5 years.
Amounts in thousands.



|                                     |  |           |         |   |       |       |   |           |   |         |       |  |       |           |  |   |         |   |  |           |   |  |       |         |   |           |       |   |       |   |         |   |  |       |  
|------------------------------------ |  | --------- | ------- | - | ----- | ----- | - | --------- | - | ------- | ----- |  | ----- | --------- |  | - | ------- | - |  | --------- | - |  | ----- | ------- | - | --------- | ----- | - | ----- | - | ------- | - |  | ----- | -
|                                     |  | 2008Total |         |   | 2008% |       |   | 2007Total |   |         | 2007% |  |       | 2006Total |  |   | 2006%   |   |  | 2005Total |   |  | 2005% |         |   | 2004Total |       |   | 2004% |  
|Classifications:                     |  |           |         |   |       |       |   |           |   |         |       |  |       |           |  |   |         |   |  |           |   |  |       |         |   |           |       |   |       |   |         |   |  |       |  
|Commercial, financial & agricultural |  | $         | 63,787  |   |       | 19.7  | % |           | $ | 56,713  |       |  | 16.6  | %         |  | $ | 49,914  |   |  | 15.2      | % |  | $     | 44,242  |   |           | 15.6  | % |       | $ | 31,134  |   |  | 13.3  | %
|Real estate-mortgage                 |  |           | 178,287 |   |       | 55.0  | % |           |   | 158,317 |       |  | 46.3  | %         |  |   | 150,893 |   |  | 45.9      | % |  |       | 147,541 |   |           | 52.2  | % |       |   | 144,056 |   |  | 61.7  | %
|Real estate-construction             |  |           | 63,052  |   |       | 19.4  | % |           |   | 109,739 |       |  | 32.1  | %         |  |   | 112,220 |   |  | 34.1      | % |  |       | 75,246  |   |           | 26.6  | % |       |   | 42,527  |   |  | 18.2  | %
|Consumer loans                       |  |           | 15,324  |   |       | 4.7   | % |           |   | 16,074  |       |  | 4.7   | %         |  |   | 14,718  |   |  | 4.5       | % |  |       | 14,507  |   |           | 5.1   | % |       |   | 14,060  |   |  | 6.0   | %
|Tax-exempt                           |  |           | 3,881   |   |       | 1.2   | % |           |   | 1,011   |       |  | 0.3   | %         |  |   | 1,132   |   |  | 0.3       | % |  |       | 1,450   |   |           | 0.5   | % |       |   | 1,806   |   |  | 0.8   | %
|                                     |  |           |         |   |       |       |   |           |   |         |       |  |       |           |  |   |         |   |  |           |   |  |       |         |   |           |       |   |       |   |         |   |  |       |  
|                                     |  |           | 324,331 |   |       | 100.0 | % |           |   | 341,854 |       |  | 100.0 | %         |  |   | 328,877 |   |  | 100.0     | % |  |       | 282,986 |   |           | 100.0 | % |       |   | 233,583 |   |  | 100.0 | %
|                                     |  |           |         |   |       |       |   |           |   |         |       |  |       |           |  |   |         |   |  |           |   |  |       |         |   |           |       |   |       |   |         |   |  |       |  
|Allowance                            |  |           | (8,517  | ) |       |       |   |           |   | (6,956  | )     |  |       |           |  |   | (4,662  | ) |  |           |   |  |       | (4,077  | ) |           |       |   |       |   | (2,913  | ) |  |       |  
|                                     |  |           |         |   |       |       |   |           |   |         |       |  |       |           |  |   |         |   |  |           |   |  |       |         |   |           |       |   |       |   |         |   |  |       |  
|Net Loans                            |  | $         | 315,814 |   |       |       |   |           | $ | 334,898 |       |  |       |           |  | $ | 324,215 |   |  |           |   |  | $     | 278,909 |   |           |       |   |       | $ | 230,670 |   |  |       |  
|                                     |  |           |         |   |       |       |   |           |   |         |       |  |       |           |  |   |         |   |  |           |   |  |       |         |   |           |       |   |       |   |         |   |  |       |  

At December 31, 2008, maturities of loans in the indicated classifications were as follows. Amounts in
thousands.



|                                     |  |                 |         |                      |   |                |  |       |       |  |   |        
|------------------------------------ |  | --------------- | ------- | -------------------- | - | -------------- |  | ----- | ----- |  | - | -------
|                                     |  | Maturity        |         |                     
|                                     |  | One YearOr Less |         | Over OneToFive Years |   | Over FiveYears |  | Total
|Commercial, financial & agricultural |  | $               | 40,361  |                      | $ | 21,187         |  | $     | 2,239 |  | $ | 63,787 
|Real estate-construction             |  |                 | 62,689  |                      |   | 363            |  |       |      |  |   | 63,052 
|                                     |  |                 |         |                      |   |                |  |       |       |  |   |        
|Total                                |  | $               | 103,050 |                      | $ | 21,550         |  | $     | 2,239 |  | $ | 126,839
|                                     |  |                 |         |                      |   |                |  |       |       |  |   |        

As of December 31, 2008, the interest terms of loans in the indicated classifications for the indicated
maturity ranges are as follows. Amounts in thousands.



|                                     |  |                                                |       |           |   |        |  |   |       
|------------------------------------ |  | ---------------------------------------------- | ----- | --------- | - | ------ |  | - | ------
|                                     |  | Rate Structure for LoansMaturing Over One Year
|                                     |  | AdjustableRate                                 |       | FixedRate |   | Total 
|Commercial, financial & agricultural |  | $                                              | 7,772 |           | $ | 15,654 |  | $ | 23,426
|Real estate-construction             |  |                                                | 363   |           |   |       |  |   | 363   
|                                     |  |                                                |       |           |   |        |  |   |       
|Total                                |  | $                                              | 8,135 |           | $ | 15,654 |  | $ | 23,789
|                                     |  |                                                |       |           |   |        |  |   |       



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McIntosh Bancshares, Inc.

Table 4 - Loan Portfolio (continued)

The following summarizes past-due and non-accrual loans, other real estate and repossessions and
income that would have reported on non-accrual loans for the years ended December 31, 2008, 2007, 2006, 2005, and 2004. Amounts in thousands.



|                                         |  |           |        |   |           |   |        |           |  |   |           |   |  |           |       |   |  |   |       |  
|---------------------------------------- |  | --------- | ------ | - | --------- | - | ------ | --------- |  | - | --------- | - |  | --------- | ----- | - |  | - | ----- | -
|                                         |  | 2008Total |        |   | 2007Total |   |        | 2006Total |  |   | 2005Total |   |  | 2004Total |      
|Loans on non-accrual                     |  | $         | 27,315 |   |           | $ | 21,565 |           |  | $ | 602       |   |  | $         | 420   |   |  | $ | 1,307 |  
|Trouble debt restructuring (nonaccrual)  |  |           | 2,440  |   |           |   |       |           |  |   |          |   |  |           |      |   |  |   |      |  
|Loans 90 days or more past due           |  |           | 1      |   |           |   | 44     |           |  |   | 335       |   |  |           | 118   |   |  |   | 116   |  
|Other real estate and repossessions      |  |           | 14,829 |   |           |   | 6,249  |           |  |   | 2,208     |   |  |           | 611   |   |  |   | 202   |  
|                                         |  |           |        |   |           |   |        |           |  |   |           |   |  |           |       |   |  |   |       |  
|                                         |  | $         | 44,585 |   |           | $ | 27,858 |           |  | $ | 3,145     |   |  | $         | 1,149 |   |  | $ | 1,625 |  
|Non-performing loans as a % of loans     |  |           | 9.17   | % |           |   | 6.32   | %         |  |   | 0.28      | % |  |           | 0.19  | % |  |   | 0.61  | %
|Interest that would have been recognized |  | $         | 3,475  |   |           | $ | 1,134  |           |  | $ | 60        |   |  | $         | 38    |   |  | $ | 117   |  

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



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McIntosh Bancshares, Inc.

Table 5 - Analysis of the Allowance for Loan Losses

The following table summarizes information concerning the allowance for loan loss.
Amounts in thousands.



|                                        |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|--------------------------------------- |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                        |  | 2008 |        |   | 2007 |   |       | 2006 |  |   | 2005  |   |  | 2004 |      
|Allowance at beginning of year          |  | $    | 6,956  |   |      | $ | 4,662 |      |  | $ | 4,077 |   |  | $    | 2,913 |   |  | $ | 3,178 |  
|Charge-offs:                            |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Commercial, financial, and agricultural |  |      | 259    |   |      |   | 33    |      |  |   | 10    |   |  |      | 47    |   |  |   | 680   |  
|Real estate - mortgage                  |  |      | 449    |   |      |   | 72    |      |  |   | 120   |   |  |      | 84    |   |  |   |      |  
|Real estate-construction                |  |      | 13,601 |   |      |   | 958   |      |  |   | 5     |   |  |      |      |   |  |   |      |  
|Consumer loans                          |  |      | 161    |   |      |   | 175   |      |  |   | 114   |   |  |      | 89    |   |  |   | 63    |  
|Tax exempt                              |  |      |       |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|                                        |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total charge-offs                       |  |      | 14,470 |   |      |   | 1,238 |      |  |   | 249   |   |  |      | 220   |   |  |   | 743   |  
|Recoveries:                             |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Commercial, financial, and agricultural |  |      |       |   |      |   | 1     |      |  |   |      |   |  |      | 6     |   |  |   | 6     |  
|Real estate - mortgage                  |  |      | 12     |   |      |   | 147   |      |  |   | 23    |   |  |      | 119   |   |  |   |      |  
|Real estate-construction                |  |      | 19     |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|Consumer loans                          |  |      | 52     |   |      |   | 60    |      |  |   | 33    |   |  |      | 19    |   |  |   | 14    |  
|Tax exempt                              |  |      |       |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|                                        |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total recoveries                        |  |      | 83     |   |      |   | 208   |      |  |   | 56    |   |  |      | 144   |   |  |   | 20    |  
|                                        |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Net charge-offs                         |  |      | 14,387 |   |      |   | 1,030 |      |  |   | 193   |   |  |      | 76    |   |  |   | 723   |  
|Provisions charged to earnings          |  |      | 15,948 |   |      |   | 3,324 |      |  |   | 778   |   |  |      | 1,240 |   |  |   | 458   |  
|                                        |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Allowance at end of year                |  | $    | 8,517  |   |      | $ | 6,956 |      |  | $ | 4,662 |   |  | $    | 4,077 |   |  | $ | 2,913 |  
|                                        |  |      |        |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Ratio of net charge-offs to avg. loans  |  |      | 4.25   | % |      |   | 0.30  | %    |  |   | 0.06  | % |  |      | 0.03  | % |  |   | 0.33  | %
|Ratio of allowance to total loans       |  |      | 2.63   | % |      |   | 2.03  | %    |  |   | 1.42  | % |  |      | 1.44  | % |  |   | 1.25  | %

The Company has a dedicated loan review function. Sixty-two percent of the portfolio was reviewed in 2008 and
placed into loan grading categories, which assist in developing lists of potential problem loans. These loans are regularly monitored by the loan review function to ensure early identification of deterioration. The formal allowance for loan loss
adequacy test is performed at each calendar quarter end. Specific amounts of loss are estimated on problem loans and historical loss percentages are applied to the balance of the portfolio using certain portfolio stratifications. Additionally, the
evaluation takes into consideration such factors as changes in the nature and volume of the loan portfolio, current economic conditions, regulatory examination results, and the existence of loan concentrations.



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McIntosh Bancshares, Inc.

Table 5 - Cont Analysis of the Allowance for Loan Losses

The following table presents the allocation of allowance for loan losses by
category and the percentage of loans in each category to total loans at end of the last 5 years. Amounts in thousands.



|                                                   |  |            |       |       |       |   |            |   |       |  |       |            |  |       |       |  |            |   |       |   |       |            |       |       |  |   |       |  |       |  
|-------------------------------------------------- |  | ---------- | ----- | ----- | ----- | - | ---------- | - | ----- |  | ----- | ---------- |  | ----- | ----- |  | ---------- | - | ----- | - | ----- | ---------- | ----- | ----- |  | - | ----- |  | ----- | -
|                                                   |  | 2008Amount |       | 2008% |       |   | 2007Amount |   | 2007% |  |       | 2006Amount |  | 2006% |       |  | 2005Amount |   | 2005% |   |       | 2004Amount |       | 2004% | 
|Balance at End of Period Applicable to:            |  |            |       |       |       |   |            |   |       |  |       |            |  |       |       |  |            |   |       |   |       |            |       |       |  |   |       |  |       |  
|Commercial, financial, agricultural and tax exempt |  | $          | 995   |       | 20.9  | % |            | $ | 589   |  | 16.9  | %          |  | $     | 671   |  | 15.5       | % |       | $ | 599   |            | 16.1  | %     |  | $ | 422   |  | 14.1  | %
|Real estate-mortgage                               |  |            | 2,070 |       | 55.0  | % |            |   | 2,173 |  | 46.3  | %          |  |       | 2,192 |  | 45.9       | % |       |   | 2,153 |            | 52.2  | %     |  |   | 1,545 |  | 61.7  | %
|Real estate-construction                           |  |            | 5,220 |       | 19.4  | % |            |   | 3,932 |  | 32.1  | %          |  |       | 1,537 |  | 34.1       | % |       |   | 1,030 |            | 26.6  | %     |  |   | 661   |  | 18.2  | %
|Consumer loans                                     |  |            | 232   |       | 4.7   | % |            |   | 262   |  | 4.7   | %          |  |       | 262   |  | 4.5        | % |       |   | 295   |            | 5.1   | %     |  |   | 285   |  | 6.0   | %
|                                                   |  |            |       |       |       |   |            |   |       |  |       |            |  |       |       |  |            |   |       |   |       |            |       |       |  |   |       |  |       |  
|Total allowance for loan loss                      |  | $          | 8,517 |       | 100.0 | % |            | $ | 6,956 |  | 100.0 | %          |  | $     | 4,662 |  | 100.0      | % |       | $ | 4,077 |            | 100.0 | %     |  | $ | 2,913 |  | 100.0 | %
|                                                   |  |            |       |       |       |   |            |   |       |  |       |            |  |       |       |  |            |   |       |   |       |            |       |       |  |   |       |  |       |  



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McIntosh Bancshares, Inc.

Table 6 - Deposits

The average balance of the deposits and the average rates paid on such deposits are summarized for the periods indicated
in the following table.



|                                     |  |      |             |  |      |   |  |      |             |  |      |   |  |   |             |  |      |  
|------------------------------------ |  | ---- | ----------- |  | ---- | - |  | ---- | ----------- |  | ---- | - |  | - | ----------- |  | ---- | -
|                                     |  | 2008 |             |  | 2007 |   |  | 2006 |            
|Deposits:                            |  |      |             |  |      |   |  |      |             |  |      |   |  |   |             |  |      |  
|Non-interest bearing demand deposits |  | $    | 34,093,123  |  |     |   |  | $    | 34,636,932  |  |     |   |  | $ | 34,738,891  |  |     |  
|Interest bearing demand              |  |      | 100,223,572 |  | 1.33 | % |  |      | 116,866,109 |  | 2.94 | % |  |   | 113,605,552 |  | 2.59 | %
|Savings                              |  |      | 17,381,179  |  | 1.52 | % |  |      | 12,010,137  |  | 1.53 | % |  |   | 11,448,003  |  | 1.22 | %
|Time                                 |  |      | 245,510,133 |  | 4.43 | % |  |      | 234,323,402 |  | 5.17 | % |  |   | 199,110,346 |  | 4.65 | %
|                                     |  |      |             |  |      |   |  |      |             |  |      |   |  |   |             |  |      |  
|Total                                |  | $    | 397,208,007 |  |      |   |  | $    | 397,836,580 |  |      |   |  | $ | 358,902,792 |  |      |  
|                                     |  |      |             |  |      |   |  |      |             |  |      |   |  |   |             |  |      |  

Maturities of time certificates of deposit of $100,000 or more outstanding at December 31, 2008 summarized as
follows. Amounts in thousands.



|                                      |  |       |        
|------------------------------------- |  | ----- | -------
|                                      |  | Total
|Three months or less                  |  | $     | 12,627 
|Over three months through six months  |  |       | 27,412 
|Over six months through twelve months |  |       | 38,176 
|Over twelve months                    |  |       | 30,728 
|                                      |  |       |        
|                                      |  | $     | 108,943
|                                      |  |       |        



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McIntosh Bancshares, Inc.

Table 7 - Selected Ratios

The following table sets out certain ratios of the Company as of and for the years indicated. Amounts in
thousands.



|                                 |  |      |         |   |      |   |         |      |  |   |         |  
|-------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                 |  | 2008 |         |   | 2007 |   |         | 2006 | 
|Net income                       |  | $    | (8,229  | ) |      | $ | 2,588   |      |  | $ | 4,918   |  
|Average assets                   |  |      | 453,902 |   |      |   | 459,746 |      |  |   | 418,882 |  
|Average equity                   |  |      | 36,275  |   |      |   | 37,798  |      |  |   | 33,817  |  
|Dividends                        |  |      | 253     |   |      |   | 1,012   |      |  |   | 840     |  
|Return on average assets         |  |      | -1.81   | % |      |   | 0.56    | %    |  |   | 1.17    | %
|Return on average equity         |  |      | -22.69  | % |      |   | 6.85    | %    |  |   | 14.54   | %
|Dividend payout ratio            |  |      | N/A     |   |      |   | 39.10   | %    |  |   | 17.07   | %
|Average equity to average assets |  |      | 7.99    | % |      |   | 8.22    | %    |  |   | 8.07    | %



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McIntosh Bancshares, Inc.

Table 8 - Analysis of Short-term and Long-term Borrowings

The following table sets out certain information regarding the Companys
borrowings.



|                                                 |  |          |  |        |            |      |      |   |        |   |            |  |      |  
|------------------------------------------------ |  | -------- |  | ------ | ---------- | ---- | ---- | - | ------ | - | ---------- |  | ---- | -
|                                                 |  |          |  | 2008   |            |      | 2007 |  
|Type: Federal Home Loan Bank Advances            |  | Maturity |  | Amount |            | Rate |      |   | Amount |   | Rate       | 
|Fixed rate                                       |  | 01/25/09 |  |        | 2,000,000  |      | 4.05 | % |        |   | 2,000,000  |  | 4.05 | %
|Fixed rate                                       |  | 01/25/10 |  |        | 3,000,000  |      | 4.17 | % |        |   | 3,000,000  |  | 4.17 | %
|Fixed rate convertible to 3 month LIBOR 12/19/08 |  | 12/19/13 |  |        | 2,000,000  |      | 3.44 | % |        |   | 2,000,000  |  | 3.44 | %
|Fixed rate convertible to 3 month LIBOR 3/17/09  |  | 03/17/14 |  |        | 3,000,000  |      | 2.91 | % |        |   | 3,000,000  |  | 2.91 | %
|Fixed rate convertible to 3 month LIBOR 5/19/09  |  | 05/19/15 |  |        | 2,000,000  |      | 3.77 | % |        |   | 2,000,000  |  | 3.77 | %
|Fixed rate convertible to 3 month LIBOR 5/24/10  |  | 05/22/15 |  |        | 2,000,000  |      | 2.86 | % |        |   |           |  |     |  
|Fixed rate convertible to 3 month LIBOR 5/23/13  |  | 05/23/18 |  |        | 2,000,000  |      | 3.60 | % |        |   |           |  |     |  
|                                                 |  |          |  |        |            |      |      |   |        |   |            |  |      |  
|Total                                            |  |          |  | $      | 16,000,000 |      |      |   |        | $ | 12,000,000 |  |      |  
|                                                 |  |          |  |        |            |      |      |   |        |   |            |  |      |  
|Maximum borrowing at any given month end - FHLB  |  |          |  | $      | 21,000,000 |      |      |   |        | $ | 21,000,000 |  |      |  
|Average outstanding borrowings for the period    |  |          |  | $      | 14,846,735 |      | 3.58 | % |        | $ | 18,941,714 |  | 3.64 | %



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McIntosh Bancshares, Inc.

Table 9 - Interest Rate Sensitivity Analysis



|                                                          |  |                 |         |   |                          |   |         |                           |  |   |             |   |  |       |        |   |  |   |        
|--------------------------------------------------------- |  | --------------- | ------- | - | ------------------------ | - | ------- | ------------------------- |  | - | ----------- | - |  | ----- | ------ | - |  | - | -------
|Amounts in thousands repricing or maturing.               |  | One Yearor Less |         |   | Over 1 Yr.Through3 Years |   |         | Over 3 Yrs.Through5 Years |  |   | Over5 Years |   |  | Total
|Interest earning assets:                                  |  |                 |         |   |                          |   |         |                           |  |   |             |   |  |       |        |   |  |   |        
|Adjustable rate loans                                     |  | $               | 144,922 |   |                          | $ |        |                           |  | $ |            |   |  | $     |       |   |  | $ | 144,922
|Fixed rate loans                                          |  |                 | 66,710  |   |                          |   | 66,096  |                           |  |   | 17,358      |   |  |       | 29,245 |   |  |   | 179,409
|Investment securities                                     |  |                 | 33,192  |   |                          |   | 16,009  |                           |  |   | 7,772       |   |  |       | 13,683 |   |  |   | 70,656 
|Other investments                                         |  |                 |        |   |                          |   |        |                           |  |   |            |   |  |       | 3,348  |   |  |   | 3,348  
|Bank owned life insurance                                 |  |                 | 6,774   |   |                          |   |        |                           |  |   |            |   |  |       |       |   |  |   | 6,774  
|Int bearing deposits in other banks & Fed Funds sold      |  |                 | 9,649   |   |                          |   |        |                           |  |   |            |   |  |       |       |   |  |   | 9,649  
|                                                          |  |                 |         |   |                          |   |         |                           |  |   |             |   |  |       |        |   |  |   |        
|Total interest earning assets                             |  |                 | 261,247 |   |                          |   | 82,105  |                           |  |   | 25,130      |   |  |       | 46,276 |   |  |   | 414,758
|Interest bearing liabilities:                             |  |                 |         |   |                          |   |         |                           |  |   |             |   |  |       |        |   |  |   |        
|Fixed maturity deposits                                   |  |                 | 189,734 |   |                          |   | 47,123  |                           |  |   | 15,550      |   |  |       |       |   |  |   | 252,407
|Interest bearing DDA accounts (NOW, Super NOW, MMDA)      |  |                 | 89,486  |   |                          |   |        |                           |  |   |            |   |  |       |       |   |  |   | 89,486 
|Savings accounts                                          |  |                 | 21,488  |   |                          |   |        |                           |  |   |            |   |  |       |       |   |  |   | 21,488 
|Other borrowed funds                                      |  |                 | 9,657   |   |                          |   | 5,000   |                           |  |   | 2,000       |   |  |       |       |   |  |   | 16,657 
|                                                          |  |                 |         |   |                          |   |         |                           |  |   |             |   |  |       |        |   |  |   |        
|Total interest bearing liabilities                        |  | $               | 310,365 |   |                          | $ | 52,123  |                           |  | $ | 17,550      |   |  | $     |       |   |  | $ | 380,038
|Interest rate sensitivity gap                             |  | $               | (49,118 | ) |                          | $ | 29,982  |                           |  | $ | 7,580       |   |  | $     | 46,276 |   |  | $ | 34,720 
|Cummulative interest rate sensitivity gap                 |  | $               | (49,118 | ) |                          | $ | (19,136 | )                         |  | $ | (11,556     | ) |  | $     | 34,720 |   |  |   |        
|Cummulative interest rate sensitivity gap to total assets |  |                 | -10.89  | % |                          |   | -4.24   | %                         |  |   | -2.56       | % |  |       | 7.70   | % |  |   |        



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##### Table of Contents

|Item 8. | Financial Statements
|------- | --------------------

The following consolidated
financial statements of the Registrant and its subsidiaries are included on Exhibit 13.1 of this Annual Report on Form 10-K:

Consolidated
Balance Sheets - December 31, 2008 and 2007

Consolidated Statements of Operations - December 31, 2008 and 2007

Consolidated Statements of Comprehensive Income - December 31, 2008 and 2007

Consolidated Statements of Changes in Stockholders Equity - December 31, 2008 and 2007

Consolidated
Statements of Cash Flows - December 31, 2008 and 2007

Notes to Consolidated Financial Statements



|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

The principal independent accountant of the Company and of the Bank has not resigned, declined to stand for re-election, or been dismissed during the two
most recent fiscal years or any later interim period.



|Item 9A. | Controls and Procedures
|-------- | -----------------------

As of the end of the
period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and the Principal Financial and Accounting Officer, of the design and operation of our disclosure controls
and procedures. Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures are effective.

Managements Report on Internal Control over Financial Reporting

The management
of McIntosh Bancshares, Inc. and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting. This internal control system has been designed to provide reasonable assurance to the
Companys management and board of directors regarding the preparation and fair presentation of the Companys published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and presentation.

The management of McIntosh Bancshares, Inc. and subsidiaries has assessed the effectiveness of the
Companys internal control over financial reporting for the years ending December 31, 2008 and 2007, respectively. To make this assessment, we used the criteria for effective internal control over financial reporting described in Internal
Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, we believe that, as of December 31, 2008 and 2007, respectively, the Companys internal control over
financial reporting met those criteria and is effective.

This annual report does not include an attestation report of the Companys
registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only managements report in this annual report.

Changes in Internal Controls

There were no changes made in our internal controls during the period covered by this report or, to our knowledge, in other factors
that have materially affected, or are reasonably likely to materially after these controls.

See the Certifications pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.



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##### Table of Contents

|Item 9B. | Other Information
|-------- | -----------------

On December 23, 2008, the
Company entered into a Debenture Agreement with Redemptus Group LLC (Redemptus), pursuant to which the Company will issue to Redemptus $8 million in debentures. The Debenture Agreement with Redemptus provides for the issuance to
Redemptus of fixed rate debentures in principal amount of $439,229 (the Fixed Rate Debentures) and floating rate debentures in principal amount of $7,560,771 (the Floating Rate Debentures, and, collectively with the Fixed
Rate Debentures, the Debentures). The Floating Rate Debentures will have quarterly coupon payments at an annual rate based on the prime rate plus 4.50%, subject to a minimum coupon of 7.50% and a maximum coupon of 12.75% and will be
convertible at the option of the holder into common shares of the Company at a conversion price of $6.85 per share (the Conversion Price). The Conversion Price is subject to certain anti-dilution adjustments under the terms of the
Debenture Agreement.

The Fixed Rate Debentures will have quarterly coupon payments at an annual rate of 12.75% and will be mandatorily
convertible into an equal principal amount of Floating Rate Debentures upon the issuance by the Company of a sufficient number of common shares to result in Redemptus owning fewer than 25% of the outstanding common shares upon conversion of all the
Debentures.

The Debentures will be secured by all of the outstanding common stock of the Bank and a $1.5 million interest payment account.
The security interest in the Bank stock will terminate at the end of the fiscal quarter during which the Bank has consummated the sale of certain troubled assets in accordance with the provisions of the Debenture Agreement, provided that specified
capital ratios for the Company and the Bank meet or exceed well-capitalized regulatory standards and that no event of default has occurred and is continuing.

The Debentures have a term of ten years, and will be callable by the Company at its option after five years under certain conditions described in the Debenture Agreement, subject in all cases to prior approval by the
Federal Reserve Board, if then required.

Indebtedness under the Debentures may be accelerated and Redemptus or any subsequent holder of
the Debentures may exercise their rights to the collateral and receive a default rate of interest if any of the following events of default occur:



| | (1) | failure to pay any obligation when due;
| | --- | ---------------------------------------



| | (2) | failure to complete a subsequent private placement and the sale of certain assets in accordance with the provisions of the Debenture Agreement;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | breach of or default under any of the terms and conditions of the Debenture Agreement, subject to a 30-day right to cure certain breaches or defaults;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | failure to make a position available for the holders nominee on the boards of directors of the Company and the Bank;
| | --- | ---------------------------------------------------------------------------------------------------------------------



| | (5) | court-ordered attachment, seizure, receivership, injunction or similar action relating to the material assets or activities of the Company or the Bank;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | insolvency or bankruptcy of the Company or closure or receivership of the Bank;
| | --- | -------------------------------------------------------------------------------



| | (7) | material misrepresentations or omissions reasonably relied upon in evaluating the purchase of the Debentures; or
| | --- | ----------------------------------------------------------------------------------------------------------------



| | (8) | certain change in control transactions.
| | --- | ---------------------------------------

The issuance of
the Debentures is expected to close on or before March 31, 2009 and is subject to specified closing conditions, including but not limited to receipt of required regulatory approvals; receipt of transaction financing by Redemptus; completion of
a $3.0 million private placement to directors and executive officers of the Company; payment of a placement fee and reimbursement of certain expenses to Redemptus; and Redemptuss reasonable satisfaction with its continuing due diligence.



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##### Table of Contents

|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

Code of
Ethics

Upon written request, a copy of the McIntosh Bancshares, Inc. Code of Ethics shall be furnished to shareholders without charge.
Please direct your written request to James P. Doyle, McIntosh Bancshares, Inc., 210 South Oak Street, Jackson, Georgia 30233.

The
remaining information required by this Item is incorporated by reference to the Companys definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal
year covered by this Annual Report.



|Item 11. | Executive Compensation
|-------- | ----------------------

The information required by
this Item is incorporated by reference to the Companys definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual
Report.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The information required by this Item is incorporated by reference to the Companys definitive Proxy Statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.



|Item 13. | Certain Relationships and Related Transactions and Director Independence
|-------- | ------------------------------------------------------------------------

The information required by this Item is incorporated by reference to the Companys definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days
after the end of the fiscal year covered by this Annual Report.



|Item 14. | Principal Accounting Fees and Services
|-------- | --------------------------------------

The
information required by this Item is incorporated by reference to the Companys definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year
covered by this Annual Report.



|Item 15. | Exhibits and Financial Statement Schedules
|-------- | ------------------------------------------



| | (a) | The following documents are filed as part of or incorporated by reference in this report:
| | --- | -----------------------------------------------------------------------------------------



| | (1) | Financial Statements: The consolidated balance sheets of McIntosh Bancshares, Inc. and its subsidiaries as of December 31, 2008 and 2007, and the related consolidated
statements of operations, consolidated statements of comprehensive income, consolidated statements of changes in stockholders equity and consolidated statements of cash flows for each of the years then ended, together with the related notes
and the report of Porter Keadle Moore, LLP, independent registered public accounting firm.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Financial statement schedules: All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Exhibits: A list of the Exhibits as required by Item 601 of Regulation S-K to be filed as part of this Annual Report is shown on the Exhibit Index filed herewith.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



McINTOSH BANCSHARES, INC.Date: March 25, 2009BY:

/s/ William K. MaloneWILLIAM K. MALONE Chief Executive
Officer




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##### Table of Contents

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
William K. Malone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto attorney-in-fact and agent full power and authority to do and perform each and every
act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has
been signed by the following persons in the capacities indicated on March 25, 2009.



|                                              |  |                                                 |  | 
|--------------------------------------------- |  | ----------------------------------------------- |  | 
|Signature                                     |  | Title                                           |  | 
|                                              |  |                                                
|/s/ William K. Malone William K. Malone       |  | Director, Chairman of the Board and CEO         |  | 
|                                              |  |                                                
|/s/ J. Paul Holmes, Jr. J. Paul Holmes, Jr.   |  | Director                                        |  | 
|                                              |  |                                                
|/s/ Dennis Keith Fortson Dennis Keith Fortson |  | Director                                        |  | 
|                                              |  |                                                
|/s/ John L. Carter John L. Carter             |  | Director                                        |  | 
|                                              |  |                                                
|/s/ William T. Webb William T. Webb           |  | Director                                        |  | 
|                                              |  |                                                
|/s/ George C. Barber George C. Barber         |  | Director                                        |  | 
|                                              |  |                                                
|/s/ Thurman L. Willis Thurman L. Willis       |  | Director, President and Chief Operating Officer |  | 
|                                              |  |                                                
|/s/ James P. Doyle James P. Doyle             |  | Chief Financial and Accounting Officer          |  | 



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##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                      
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                          
|2.1         |  | Articles of Incorporation of McIntosh Bancshares, Inc. (incorporated by reference to Exhibit 2(a) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No.
0-49766).                                     
|            | 
|2.2         |  | Amendment to Articles of Incorporation of McIntosh Bancshares, Inc.-April 23, 1998 (incorporated by reference to Exhibit 2(b) to the Registrants Form 10-KSB, filed by the Registrant on
April 29, 2002, File No. 0-49766).         
|            | 
|2.3         |  | Bylaws of McIntosh Bancshares, Inc. (incorporated by reference to Exhibit 2(c) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No.
0-49766).                                                        
|            | 
|2.4         |  | Amendment to bylaws of McIntosh Bancshares, Inc. dated April 23, 1998 (incorporated by reference to Exhibit 2(d) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002,
File No.0-49766).                       
|            | 
|2.5         |  | Amendment to the Articles of Incorporation of McIntosh Bancshares, Inc.  January 29, 2009 (incorporated by reference to Exhibit 3.1 to the Registrants Form 8K, filed by the
Registrant on January 30, 2009, File No. 0-049766).   
|            | 
|4.1         |  | Debenture Agreement between the Registrant and Redemptus, dated December 23, 2008 (incorporated by reference to Exhibit 4.1 to the Registrants Form 8K, filed by the Registrant on December
31, 2008, File No. 0-049766).           
|            | 
|10.1        |  | Stock Option Agreement with William K. Malone (incorporated by reference to Exhibit 6(a) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No. 0-49766).                                              
|            | 
|10.2        |  | Stock Option Agreement with Thurman L. Willis (incorporated by reference to Exhibit 6(b) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No.
0-49766).                                              
|            | 
|10.3        |  | Stock Option Agreement with Bruce E. Bartholomew (incorporated by reference to Exhibit 6(c) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No. 0-49766).                                           
|            | 
|10.4        |  | Stock Option Agreement with James P. Doyle (incorporated by reference to Exhibit 6(d) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No.
0-49766).                                                 
|            | 
|10.5        |  | Change in Control Agreement with William K. Malone (incorporated by reference to Exhibit 6(e) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No. 0-49766).                                         
|            | 
|10.6        |  | Change in Control Agreement with Thurman L. Willis (incorporated by reference to Exhibit 6(f) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No. 0-49766).                                         
|            | 
|10.7        |  | Change in Control Agreement with Bruce E. Bartholomew (incorporated by reference to Exhibit 6(g) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No.
0-49766).                                      
|            | 
|10.8        |  | Change in Control Agreement with James P. Doyle (incorporated by reference to Exhibit 6(h) to the Registrants Form 10-KSB, filed by the Registrant on April 29, 2002, File No. 0-49766).                                            
|            | 
|10.9        |  | Stock Option Agreement with Jason Patrick dated September 18, 2003 (incorporated by reference to Exhibit 6.9 to Registrants Annual Report on Form 10-KSB, filed with the Commission on March
30, 2004, File No. 000-49766).         
|            | 
|10.10       |  | Stock Option Agreement with Rob Beall dated September 18, 2003 (incorporated by reference to Exhibit 6.10 to Registrants Annual Report on Form 10-KSB, filed with the Commission on March
30, 2004, File No. 000-49766).            
|            | 
|10.11       |  | Stock Option Agreement with Bruce Bartholomew dated September 18, 2003 (incorporated by reference to Exhibit 6.11 to Registrants Annual Report on Form 10-KSB, filed with the
Commission on March 30, 2004, File No. 000-49766).    
|            | 
|10.12       |  | Stock Option Agreement with James P. Doyle dated September 18, 2003 (incorporated by reference to Exhibit 6.12 to Registrants Annual Report on Form 10-KSB, filed with the Commission on
March 30, 2004, File No. 000-49766).       
|            | 
|10.13       |  | Stock Option Agreement with William K. Malone dated September 18, 2003 (incorporated by reference to Exhibit 6.13 to Registrants Annual Report on Form 10-KSB, filed with the Commission on
March 30, 2004, File No. 000-49766).    
|            | 
|10.14       |  | Stock Option Agreement with Thurman Willis dated September 18, 2003 (incorporated by reference to Exhibit 6.14 to Registrants Annual Report on Form 10-KSB, filed with the Commission on
March 30, 2004, File No. 000-49766).       
|            | 
|10.15       |  | Salary Continuation Agreement with Thurman L. Willis dated August 10, 2004 (incorporated by reference to Exhibit 6.15 to Registrants Annual Report on Form 10-KSB, filed with the Commission
on March 31, 2005, File No. 000-49766).
|            | 
|10.16       |  | Stock Option Agreement with Rob Beall dated October 20, 2005 (incorporated by reference to Exhibit 10.16 to Registrants Annual Report on Form 10-KSB, filed with the Commission on March 28,
2006, File No. 000-49776).             
|            | 
|10.17       |  | Stock Option Agreement with Jason Patrick dated October 20, 2005 (incorporated by reference to Exhibit 10.17 to Registrants Annual Report on Form 10-KSB, filed with the Commission on March
28, 2006, File No. 000-49776).         



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                     
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                         
|10.18       |  | Stock Option Agreement with Charles Harper dated October 20, 2005 (incorporated by reference to Exhibit 10.18 to Registrants Annual Report on Form 10-KSB, filed with the Commission on
March 28, 2006, File No. 000-49776).                                       
|            | 
|10.19       |  | 2006 Stock Compensation Plan (incorporated by reference to Appendix A of the Registrants Schedule 14A Proxy Statement, filed with the Commission on April 25, 2006, File No.
000-49766).                                                                           
|            | 
|10.20       |  | Stock Option Agreement with William K. Malone dated July 18, 2006 (2006 Stock Compensation Plan Example) (incorporated by reference to Exhibit 10.20 to Registrants Annual Report on Form
10-KSB, filed with the Commission on March 29, 2007, File No. 000-49776).
|            | 
|10.21-.25   |  | Amendments to Salary Continuation Agreements filed on December 1, 2008 (incorporated by reference to Exhibits 10.21-.25 to the Registrants Form 8K, filed by the Registrant on December 1,
2008, File No. 0-049766).                                               
|            | 
|13.1        |  | Consolidated Financial Statements                                                                                                                                                                                                                                   
|            | 
|21.1        |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                     
|            | 
|24.1        |  | Power of Attorney relating to this Form 10-K is set forth on the signature page of this Form 10-K.                                                                                                                                                                  
|            | 
|31.1        |  | Certifications of the Registrants Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                               
|            | 
|31.2        |  | Certifications of the Registrants Chief Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                
|            | 
|32.1        |  | 18 U.S.C. Section 1350 Certifications of the Registrants Chief Executive Officer and Chief Financial and Accounting Officer                                                                                                                                        



40