##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

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

For the Quarterly Period Ended March 31, 2009



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

For the Transition Period from              to

Commission file number 000-53655





TOUCHMARK BANCSHARES, INC.

(Exact name of registrant as specified in its
charter)







|                                               |  |                                     
|---------------------------------------------- |  | ------------------------------------
|Georgia                                        |  | 20-8746061                          
|(State or other jurisdiction of incorporation) |  | (I.R.S. Employer Identification No.)

3740 Davinci Court, Suite 150

Norcross, Georgia 30092

(Address of principal executive offices)

(770) 407-6700

(Issuers telephone number)





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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     ̈  YES     ̈  NO

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



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

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

Indicate the number of shares outstanding of each of the registrants classes of common equity, as of the latest practicable date: 3,470,391 shares of common stock, par value $.01 per share, outstanding as of April 30, 2009.









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##### Table of Contents

INDEX



|                                                                                                                           |  |        
|-------------------------------------------------------------------------------------------------------------------------- |  | -------
|                                                                                                                           |  | Page   
|Part I. Financial Information                                                                                              |  |        
|                                                                                                                           | 
|Item 1. Financial Statements (unaudited)                                                                                   |  |        
|                                                                                                                           | 
|Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008                                           |  | 2      
|                                                                                                                           | 
|Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 
31, 2009 and 2008 |  | 3      
|                                                                                                                           | 
|Condensed Consolidated Statements of Cash Flows For The Three Months Ended March 31, 2009 and
2008                         |  | 4      
|                                                                                                                           | 
|Notes to Condensed Consolidated Financial Statements                                                                       |  | 5 - 10 
|                                                                                                                           | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations                              |  | 11 - 16
|                                                                                                                           | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                         |  | 16     
|                                                                                                                           | 
|Item 4. Controls and Procedures                                                                                            |  | 16     
|                                                                                                                           | 
|Item 4T.Controls and Procedures                                                                                            |  | 16 - 17
|                                                                                                                           | 
|Part II. Other Information                                                                                                 |  |        
|                                                                                                                           | 
|Item 1. Legal Proceedings                                                                                                  |  | 17     
|                                                                                                                           | 
|Item 1A.Risk Factors                                                                                                       |  | 17     
|                                                                                                                           | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                        |  | 17     
|                                                                                                                           | 
|Item 3. Default Upon Senior Securities                                                                                     |  | 17     
|                                                                                                                           | 
|Item 4. Submission of Matters to a Vote of Security Holders                                                                |  | 17     
|                                                                                                                           | 
|Item 5. Other Information                                                                                                  |  | 17     
|                                                                                                                           | 
|Item 6. Exhibits                                                                                                           |  | 18     
|                                                                                                                           | 
|Signatures                                                                                                                 |  | 19     
|                                                                                                                           | 
|Certifications                                                                                                             |  | 21 - 24



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

TOUCHMARK BANCSHARES, INC.

AND SUBSIDIARY

Condensed Consolidated Balance Sheets

March 31, 2009 and December 31, 2008



|                                                                                              |  |                          |            |   |                  |   |            |  
|--------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                                              |  | (unaudited)March 31,2009 |            |   | December 31,2008 |  
|ASSETS                                                                                        |  |                          |            |   |                  |   |            |  
|Cash and due from banks                                                                       |  | $                        | 2,086,058  |   |                  | $ | 1,029,163  |  
|Federal funds sold                                                                            |  |                          | 1,926,000  |   |                  |   | 1,297,000  |  
|Interest-bearing accounts with other banks                                                    |  |                          | 4,508,854  |   |                  |   | 4,073,041  |  
|Investment securities:                                                                        |  |                          |            |   |                  |   |            |  
|Securities available for sale                                                                 |  |                          | 26,966,326 |   |                  |   | 24,978,686 |  
|Securities held to maturity, fair value approximates $5,944,198, and $2,485,527, respectively |  |                          | 6,004,302  |   |                  |   | 2,472,490  |  
|Restricted stock                                                                              |  |                          | 1,403,500  |   |                  |   | 1,329,550  |  
|Loans, less allowance for loan losses of $505,155, and $401,890, respectively                 |  |                          | 39,749,055 |   |                  |   | 31,553,475 |  
|Accrued interest receivable                                                                   |  |                          | 409,765    |   |                  |   | 430,972    |  
|Premises and equipment                                                                        |  |                          | 3,833,856  |   |                  |   | 3,873,011  |  
|Other assets                                                                                  |  |                          | 196,993    |   |                  |   | 165,162    |  
|                                                                                              |  |                          |            |   |                  |   |            |  
|Total assets                                                                                  |  | $                        | 87,084,709 |   |                  | $ | 71,202,550 |  
|                                                                                              |  |                          |            |   |                  |   |            |  
|                                                                                              |  |                         
|LIABILITIES AND SHAREHOLDERS EQUITY                                                          |  |                          |            |   |                  |   |            |  
|                                                                                              |  |                         
|Liabilities:                                                                                  |  |                          |            |   |                  |   |            |  
|Deposits:                                                                                     |  |                          |            |   |                  |   |            |  
|Non-interest bearing demand                                                                   |  | $                        | 2,376,661  |   |                  | $ | 1,792,137  |  
|Interest-bearing                                                                              |  |                          | 41,620,203 |   |                  |   | 25,984,513 |  
|                                                                                              |  |                          |            |   |                  |   |            |  
|Total deposits                                                                                |  |                          | 43,996,864 |   |                  |   | 27,776,650 |  
|Accrued interest payable                                                                      |  |                          | 103,157    |   |                  |   | 28,998     |  
|Federal Home Loan Bank advances                                                               |  |                          | 11,400,000 |   |                  |   | 11,400,000 |  
|Other liabilities                                                                             |  |                          | 379,661    |   |                  |   | 513,033    |  
|                                                                                              |  |                          |            |   |                  |   |            |  
|Total liabilities                                                                             |  |                          | 55,879,682 |   |                  |   | 39,718,681 |  
|                                                                                              |  |                          |            |   |                  |   |            |  
|                                                                                              |  |                         
|Shareholders Equity                                                                          |  |                          |            |   |                  |   |            |  
|Preferred stock, no par value, 10,000,000 shares authorized, none issued                      |  |                          |           |   |                  |   |           |  
|Common stock, $.01 par value, 50,000,000 shares authorized, 3,470,391 issued and outstanding  |  |                          | 34,704     |   |                  |   | 34,704     |  
|Paid in capital                                                                               |  |                          | 35,727,518 |   |                  |   | 35,683,412 |  
|Accumulated deficit                                                                           |  |                          | (5,090,733 | ) |                  |   | (4,551,428 | )
|Accumulated other comprehensive income                                                        |  |                          | 533,538    |   |                  |   | 317,181    |  
|                                                                                              |  |                          |            |   |                  |   |            |  
|Total shareholders equity                                                                    |  |                          | 31,205,027 |   |                  |   | 31,483,869 |  
|                                                                                              |  |                          |            |   |                  |   |            |  
|                                                                                              |  |                         
|Total liabilities and shareholders equity                                                    |  | $                        | 87,084,709 |   |                  | $ | 71,202,550 |  
|                                                                                              |  |                          |            |   |                  |   |            |  

See notes to the consolidated financial statements



2



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##### Table of Contents

TOUCHMARK BANCSHARES, INC.

AND SUBSIDIARY

Condensed
Consolidated Statements of Operations and Comprehensive Loss

Three months ended March 31, 2009 and 2008

(Unaudited)



|                                                            |  |                                 |           |   |                                 |   |            |  
|----------------------------------------------------------- |  | ------------------------------- | --------- | - | ------------------------------- | - | ---------- | -
|                                                            |  | ThreeMonths EndedMarch 31, 2009 |           |   | ThreeMonths EndedMarch 31, 2008 |  
|Interest income:                                            |  |                                 |           |   |                                 |   |            |  
|Loans, including fees                                       |  | $                               | 530,065   |   |                                 | $ | 4,604      |  
|Investment income                                           |  |                                 | 412,754   |   |                                 |   | 307,001    |  
|Federal funds sold                                          |  |                                 | 980       |   |                                 |   | 89,928     |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|Total interest income                                       |  |                                 | 943,799   |   |                                 |   | 401,533    |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|                                                            |  |                                
|Interest expense:                                           |  |                                 |           |   |                                 |   |            |  
|Deposits                                                    |  |                                 | 310,475   |   |                                 |   | 1,346      |  
|Federal Home Loan Bank advances                             |  |                                 | 69,862    |   |                                 |   | 2,446      |  
|Other borrowings                                            |  |                                 | 249       |   |                                 |   |           |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|Total interest expense                                      |  |                                 | 380,586   |   |                                 |   | 3,792      |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|                                                            |  |                                
|Net interest income                                         |  |                                 | 563,213   |   |                                 |   | 397,741    |  
|Provision for loan losses                                   |  |                                 | 103,265   |   |                                 |   | 16,905     |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|Net interest income after provision for loan losses         |  |                                 | 459,948   |   |                                 |   | 380,836    |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|                                                            |  |                                
|Noninterest income:                                         |  |                                 |           |   |                                 |   |            |  
|Service charges on deposit accounts and other fees          |  |                                 | 3,859     |   |                                 |   |           |  
|Gain on sale of securities available for sale               |  |                                 | 129,644   |   |                                 |   |           |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|Total noninterest income                                    |  |                                 | 133,503   |   |                                 |   |           |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|                                                            |  |                                
|Noninterest expense:                                        |  |                                 |           |   |                                 |   |            |  
|Salaries and employee benefits                              |  |                                 | 689,272   |   |                                 |   | 1,679,812  |  
|Occupancy and equipment                                     |  |                                 | 151,553   |   |                                 |   | 51,158     |  
|Other operating expense                                     |  |                                 | 291,931   |   |                                 |   | 164,687    |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|Total noninterest expense                                   |  |                                 | 1,132,756 |   |                                 |   | 1,895,657  |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|                                                            |  |                                
|Net loss                                                    |  | $                               | (539,305  | ) |                                 | $ | (1,514,821 | )
|Other comprehensive income:                                 |  |                                 |           |   |                                 |   |            |  
|Unrealized holding gains arising during the period          |  |                                 | 452,564   |   |                                 |   | 195,455    |  
|Reclassification adjustment for gain realized in net income |  |                                 | (129,644  | ) |                                 |   |           |  
|Tax effect                                                  |  |                                 | (106,563  | ) |                                 |   | (64,500    | )
|                                                            |  |                                 |           |   |                                 |   |            |  
|Other comprehensive income                                  |  |                                 | 216,357   |   |                                 |   | 130,955    |  
|                                                            |  |                                 |           |   |                                 |   |            |  
|Comprehensive loss                                          |  | $                               | (322,948  | ) |                                 | $ | (1,383,866 | )
|                                                            |  |                                 |           |   |                                 |   |            |  
|Basic loss per share                                        |  | $                               | (0.16     | ) |                                 | $ | (0.67      | )
|                                                            |  |                                 |           |   |                                 |   |            |  
|Dividends per share                                         |  | $                               |          |   |                                 | $ |           |  
|                                                            |  |                                 |           |   |                                 |   |            |  

See notes to the consolidated financial statements



3



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TOUCHMARK BANCSHARES, INC.

AND SUBSIDIARY

Condensed
Consolidated Statements of Cash Flows

Three months ended March 31, 2009 and 2008

(Unaudited)



|                                                                           |  |                                 |             |   |                                 |   |             |  
|-------------------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ------------------------------- | - | ----------- | -
|                                                                           |  | ThreeMonths EndedMarch 31, 2009 |             |   | ThreeMonths EndedMarch 31, 2008 |  
|Cash flows from operating activities:                                      |  |                                 |             |   |                                 |   |             |  
|Net loss                                                                   |  | $                               | (539,305    | ) |                                 | $ | (1,514,821  | )
|Adjustments to reconcile net loss to net cash used by operating activities |  |                                 |             |   |                                 |   |             |  
|Depreciation                                                               |  |                                 | 56,549      |   |                                 |   | 25,921      |  
|Net amortization (accretion)                                               |  |                                 | (1,284      | ) |                                 |   | (620        | )
|Provision for loan losses                                                  |  |                                 | 103,265     |   |                                 |   | 16,905      |  
|Gain on sale of securities available for sale                              |  |                                 | (129,644    | ) |                                 |   |            |  
|Stock compensation expense                                                 |  |                                 | 44,106      |   |                                 |   | 1,337,858   |  
|Decrease (increase) in interest receivable                                 |  |                                 | 21,207      |   |                                 |   | (119,247    | )
|Increase in interest payable                                               |  |                                 | 74,159      |   |                                 |   | 3,094       |  
|Decrease in deferred stock issuance costs                                  |  |                                 |            |   |                                 |   | 186,204     |  
|Increase in other assets                                                   |  |                                 | (31,831     | ) |                                 |   | (15,367     | )
|Decrease in other liabilities                                              |  |                                 | (239,935    | ) |                                 |   | (216,243    | )
|                                                                           |  |                                 |             |   |                                 |   |             |  
|                                                                           |  |                                
|Net cash used by operating activities                                      |  |                                 | (642,713    | ) |                                 |   | (296,316    | )
|                                                                           |  |                                 |             |   |                                 |   |             |  
|                                                                           |  |                                
|Cash flows from investing activities:                                      |  |                                 |             |   |                                 |   |             |  
|Purchase of federal funds sold                                             |  |                                 | (629,000    | ) |                                 |   | (7,582,000  | )
|Increase in interest bearing accounts with other banks                     |  |                                 | (435,813    | ) |                                 |   | (30,965     | )
|Purchase of securities held to maturity                                    |  |                                 | (4,031,812  | ) |                                 |   |            |  
|Purchase of securities available for sale                                  |  |                                 | (11,167,885 | ) |                                 |   | (20,620,886 | )
|Proceeds from maturities of securities held to maturity                    |  |                                 | 500,000     |   |                                 |   |            |  
|Proceeds from paydowns of securities available for sale                    |  |                                 | 694,110     |   |                                 |   | 17,819      |  
|Proceeds from sales of securities available for sale                       |  |                                 | 8,939,983   |   |                                 |   |            |  
|Purchase of restricted stock                                               |  |                                 | (73,950     | ) |                                 |   | (921,300    | )
|Net increase in loans                                                      |  |                                 | (8,298,845  | ) |                                 |   | (1,351,232  | )
|Purchase of premises and equipment                                         |  |                                 | (17,394     | ) |                                 |   | (525,103    | )
|                                                                           |  |                                 |             |   |                                 |   |             |  
|                                                                           |  |                                
|Net cash used by investing activities                                      |  |                                 | (14,520,606 | ) |                                 |   | (31,013,667 | )
|                                                                           |  |                                 |             |   |                                 |   |             |  
|                                                                           |  |                                
|Cash flows from financing activities:                                      |  |                                 |             |   |                                 |   |             |  
|Net increase in deposits                                                   |  |                                 | 16,220,214  |   |                                 |   | 909,960     |  
|Organizer repayments                                                       |  |                                 |            |   |                                 |   | (980,000    | )
|Repayment of line of credit                                                |  |                                 |            |   |                                 |   | (575,000    | )
|Repayment of note payable                                                  |  |                                 |            |   |                                 |   | (2,450,000  | )
|Proceeds from Federal Home Loan Bank advances                              |  |                                 |            |   |                                 |   | 2,000,000   |  
|Stock issuance costs                                                       |  |                                 |            |   |                                 |   | (380,476    | )
|Proceeds from sale of common stock                                         |  |                                 |            |   |                                 |   | 34,703,810  |  
|                                                                           |  |                                 |             |   |                                 |   |             |  
|                                                                           |  |                                
|Net cash provided by financing activities                                  |  |                                 | 16,220,214  |   |                                 |   | 33,228,294  |  
|                                                                           |  |                                 |             |   |                                 |   |             |  
|                                                                           |  |                                
|Net change in cash                                                         |  |                                 | 1,056,895   |   |                                 |   | 1,918,311   |  
|                                                                           |  |                                
|Cash at the beginning of the period                                        |  |                                 | 1,029,163   |   |                                 |   |            |  
|                                                                           |  |                                 |             |   |                                 |   |             |  
|                                                                           |  |                                
|Cash at the end of the period                                              |  | $                               | 2,086,058   |   |                                 | $ | 1,918,311   |  
|                                                                           |  |                                 |             |   |                                 |   |             |  
|                                                                           |  |                                
|Supplemental disclosures of cash flow information -                        |  |                                 |             |   |                                 |   |             |  
|Interest paid                                                              |  | $                               | 306,427     |   |                                 | $ | 698         |  
|                                                                           |  |                                 |             |   |                                 |   |             |  

See notes to the consolidated financial statements



4



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TOUCHMARK BANCSHARES, INC.

AND SUBSIDIARY

Notes to Condensed
Consolidated Financial Statements

March 31, 2009

(unaudited)



|1. | BASIS OF PRESENTATION
|-- | ---------------------

The consolidated financial
information included for Touchmark Bancshares, Inc. herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement
of results for the interim periods. These statements should be read in conjunction with the financial statements and related notes included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.

The results of operations for the three month period ended March 31, 2009 are not necessarily indicative of the results to be expected for the full
year.



|2. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | -----------------------------------------------------------

Touchmark Bancshares, Inc. (the Company), a Georgia corporation, was established on April 3, 2007 for the purpose of organizing and managing Touchmark National Bank (the Bank). Concurrent with the formation of
Touchmark Bancshares, Inc. (formerly known as Touchstone Bancshares, Inc.), Touchmark Bancshares, Inc. acquired certain assets and assumed certain liabilities of Formosa Rose, LLC. The Company is a one-bank holding company with respect to its
subsidiary, Touchmark National Bank. The Bank is a national bank, which began operations on January 28, 2008, headquartered in Gwinnett County, Georgia with the purpose of being a community bank in Gwinnett County, Georgia and surrounding
areas.

To capitalize the Bank, the Company offered a minimum of 3,125,000 shares and a maximum of 4,156,250 shares of common stock of the
Company at $10 per share. The Company was required to sell the minimum number of shares in order to meet regulatory conditions for final approval of its charter. The organizers, directors and executive officers of the Company purchased 1,238,433
shares of common stock, at $10 per share, in the offering. The Company completed the stock offering in March 2008. The Company issued 3,470,391 shares for a total of $34,703,910. Offering expenses of $512,367 were netted against these gross
proceeds. Additionally, the Company initially capitalized the Bank with $26,000,000 of the proceeds from the stock offering.

Basis of
Accounting:The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America. In preparing the financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets, liabilities, shareholders equity and net income (loss). Actual results may differ significantly from those estimates. The Company uses the accrual basis of accounting by recognizing revenues when
they are earned and expenses in the period incurred, without regard to the time of receipt or payment of cash.

Allowance for Loan
Losses: Arriving at an appropriate level of allowance for loan losses involves a high degree of judgment. The Companys allowance for loan losses provides for probable losses based upon evaluations of known and inherent risks in the loan
portfolio. Due to our limited operating history, the loans in our loan portfolio and our lending relationships are of very recent origin. In general, loans do not begin to show signs of credit deterioration or default until they have been
outstanding for some period of time, a process known as seasoning. As a result, a portfolio of older loans will usually behave more predictably than a newer portfolio. Because our loan portfolio is new, the current level of delinquencies and
defaults may not be representative of the level that will prevail when the portfolio becomes more seasoned, which may be higher than current levels. If delinquencies and defaults increase, we may be required to increase our provision for loan
losses, which would adversely affect our results of operations and financial condition. The allowance for loan losses is increased by provisions for loan losses and by recoveries of loans previously charged-off and reduced by loans charged-off.



5



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##### Table of Contents

The process of reviewing the adequacy of the allowance for loan losses requires management to make
numerous judgments and assumptions about future events and subjective judgments, including the likelihood of loan repayment, risk evaluation, extrapolation of historical losses of similar banks, and similar judgments and assumptions. If these
assumptions prove to be incorrect, charge-offs in future periods could exceed the allowance for loan losses.

Premises and Equipment:Leasehold improvements, furniture and equipment are stated at cost, net of accumulated depreciation. Land is carried at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets.
Maintenance and repairs are charged to operations, while major improvements are capitalized. Upon retirement, sale or other disposition of premises and equipment, the cost and accumulated depreciation are eliminated from the accounts and gain or
loss is included in operations. The Company had no capitalized lease obligations at March 31, 2009 or December 31, 2008.

Stock
Based Compensation: The Company has adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment. Upon issuance of the Director and Organizer warrants, compensation cost was recognized in the
consolidated financial statements of the Company for all share-based payments granted, based on the grant date fair value as estimated in accordance with the provisions of Statement 123(R). Statement 123(R) requires recognition of expense equal to
the fair value of the warrant over the vesting period of the warrant.

The fair value of each warrant grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the assumptions listed in the table below. Expected volatility for the period has been determined by a combination of a calculated value based on expected volatility of similar entities,
and on the historical volatility of the Companys stock. The expected term of warrants granted is based on the short-cut method and represents the period of time that the warrants granted are expected to be outstanding. Expected
dividends are based on dividend trends and the market price of the Companys stock at grant. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.



|                                                |  |                            |           |  
|----------------------------------------------- |  | -------------------------- | --------- | -
|                                                |  | Period EndedMarch 31, 2008 |          
|Risk-free interest rate                         |  |                            | 2.74-3.10 | %
|                                                | 
|Expected life (years)                           |  |                            | 5.00-6.50 |  
|                                                | 
|Expected volatility                             |  |                            | 28.25     | %
|                                                | 
|Expected dividends                              |  |                            | 0.00      | %
|                                                | 
|Weighted average fair value of warrants granted |  | $                          | 3.04      |  

The Company recorded compensation expense related to the warrants of $8,900 and $1,337,858 for the
three months ended March 31, 2009 and 2008, respectively.

At March 31, 2009, there was $65,267 of unrecognized compensation cost
related to warrants, which is expected to be recognized over a weighted-average period of 1.8 years. The weighted average remaining contractual life of the warrants outstanding as of March 31, 2009 was approximately 8.9 years. The Company had
452,500 warrants exercisable as of March 31, 2009.

During 2008 the Company issued 109,322 options to purchase common stock to
employees of the Company or the Bank and the Company issued 10,000 options to purchase common stock to a new director. Upon issuance of options, compensation cost was recognized in the consolidated financial statements of the Company for all options
granted, based on the grant date fair value as estimated in accordance with the provisions of Statement 123(R). Statement 123(R) requires recognition of expense equal to the fair value of the option over the vesting period of the option.



6



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##### Table of Contents

The fair value of each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the assumptions listed in the table below. Expected volatility for the period has been determined by a combination of a calculated value based on expected volatility of similar entities, and on the historical
volatility of the Companys stock. The expected term of options granted is based on the short-cut method and represents the period of time that the options granted are expected to be outstanding. Expected dividends are based on
dividend trends and the market price of the Companys stock price at grant. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.



|                                               |  |                                               |             |  
|---------------------------------------------- |  | --------------------------------------------- | ----------- | -
|                                               |  | For Options IssuedYear EndedDecember 31, 2008 |            
|Risk-free interest rate                        |  |                                               | 2.93-3.80   | %
|                                               | 
|Expected life (years)                          |  |                                               | 6.50        |  
|                                               | 
|Expected volatility                            |  |                                               | 29.65-38.41 | %
|                                               | 
|Expected dividends                             |  |                                               | 0.00        | %
|                                               | 
|Expected Forfeiture rate                       |  |                                               | 5.00        | %
|                                               | 
|Weighted average fair value of options granted |  | $                                             | 3.73        |  

The Company recorded stock-based compensation expense related to the options of $35,206 and $0
during the three months ended March 31, 2009 and 2008, respectively.

At March 31, 2009, there was $268,283 of unrecognized
compensation cost related to options outstanding, which is expected to be recognized over a weighted-average period of 1.9 years. The weighted average remaining contractual life of the options outstanding as of March 31, 2009 was approximately
9.0 years. The Company had 35,874 options exercisable as of March 31, 2009.

Income Taxes:Deferred income tax assets and
liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the differences between the book and tax bases of the various balance
sheet assets and liabilities, and gives current recognition to changes in tax rates and laws.

A valuation allowance for deferred tax assets
is required when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realization of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities,
projected future taxable income (in the near-term based on current projections), and tax planning strategies.

The following summarizes the
components of deferred taxes at March 31, 2009 and December 31, 2008.



|                                          |  |                |            |   |                   |   |            |  
|----------------------------------------- |  | -------------- | ---------- | - | ----------------- | - | ---------- | -
|                                          |  | March 31, 2009 |            |   | December 31, 2008 |  
|Deferred income tax assets (liabilities): |  |                |            |   |                   |   |            |  
|                                          |  |               
|Allowance for loan losses                 |  | $              | 159,933    |   |                   | $ | 120,362    |  
|Pre-opening expenses                      |  |                | 476,851    |   |                   |   | 485,467    |  
|Net operating loss carryforward           |  |                | 836,287    |   |                   |   | 677,691    |  
|Depreciation                              |  |                | (194,902   | ) |                   |   | (183,825   | )
|Stock options                             |  |                | 488,413    |   |                   |   | 488,413    |  
|Securities available for sale             |  |                | (262,787   | ) |                   |   | (156,224   | )
|Other                                     |  |                | 60,054     |   |                   |   | 53,818     |  
|                                          |  |                |            |   |                   |   |            |  
|                                          |  |                | 1,563,849  |   |                   |   | 1,485,702  |  
|Less valuation allowance                  |  |                | (1,826,636 | ) |                   |   | (1,641,926 | )
|                                          |  |                |            |   |                   |   |            |  
|Deferred tax asset, net                   |  | $              | (262,787   | ) |                   | $ | (156,224   | )
|                                          |  |                |            |   |                   |   |            |  



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Statement of Cash Flows:The statement of cash flows was prepared using the indirect method. Under
this method, net loss was reconciled to net cash flows used by operating activities by adjusting for the effects of operating activities.

Cash and Cash Equivalents:For purposes of presentation in the statement of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption cash and due from banks. Cash flows from
deposits, federal funds purchased and sold, and originations, renewals and extensions of loans are reported net.



|3. | FAIR VALUE MEASUREMENTS
|-- | -----------------------

On January 1, 2008,
the Company adopted FASB No. 157, Fair Value Measurements. FASB No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB No. 157 applies
to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

FASB No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement
should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB No. 157 establishes a fair value
hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting
entitys own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level
1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest
rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entitys own assumptions, as there is little, if
any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value
measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Companys assessment of the significance of a particular input to the fair value measurement in its entirety requires
judgment, and considers factors specific to the asset or liability.

The table below presents the Companys assets and liabilities
measured at fair value on a recurring basis as of March 31, 2009 and December 31, 2008, aggregated by the level in the fair value hierarchy within which those measurements fall.

As of March 31, 2009:



|                                         |  |                                                             |   |                                             |   |                                        |  |       |   |  |   |           
|---------------------------------------- |  | ----------------------------------------------------------- | - | ------------------------------------------- | - | -------------------------------------- |  | ----- | - |  | - | ----------
|                                         |  | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |   | SignificantUnobservableInputs(Level 3) |  | Total
|Assets                                   |  |                                                             |   |                                             |   |                                        |  |       |   |  |   |           
|                                         |  |                                                             |   |                                            
|Investment securities available-for-sale |  | $                                                           |  |                                             | $ | 26,966,326                             |  | $     |  |  | $ | 26,966,326
|                                         |  |                                                             |   |                                            
|Total assets at fair value               |  | $                                                           |  |                                             | $ | 26,966,326                             |  | $     |  |  | $ | 26,966,326



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As of December 31, 2008:



|                                         |  |                                                             |   |                                             |   |                                        |  |       |   |  |   |           
|---------------------------------------- |  | ----------------------------------------------------------- | - | ------------------------------------------- | - | -------------------------------------- |  | ----- | - |  | - | ----------
|                                         |  | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |   | SignificantUnobservableInputs(Level 3) |  | Total
|Assets                                   |  |                                                             |   |                                             |   |                                        |  |       |   |  |   |           
|                                         |  |                                                             |   |                                            
|Investment securities available-for-sale |  | $                                                           |  |                                             | $ | 24,978,686                             |  | $     |  |  | $ | 24,978,686
|                                         |  |                                                             |   |                                            
|Total assets at fair value               |  | $                                                           |  |                                             | $ | 24,978,686                             |  | $     |  |  | $ | 24,978,686



|4. | EARNINGS (LOSS) PER SHARE
|-- | -------------------------

Basic loss per share is
computed by dividing net loss by the weighted average number of shares of common stock outstanding. Diluted loss per share is computed by dividing net loss by the sum of the weighted average number of shares of common stock outstanding and potential
common shares. Potential common shares consist of stock options and warrants. Weighted average shares outstanding for the three months ended March 31, 2009 and 2008 were 3,470,391 and 2,274,192, respectively. Basic loss per share for the three
months ended March 31, 2009 and 2008 was $0.16 and $0.67, respectively. Diluted loss per share is not presented, as the current net loss would result in an anti-dilutive calculation.



|5. | RECENT ACCOUNTING PRONOUNCEMENTS
|-- | --------------------------------

In April 2009,
the FASB issued FSP FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies. FSP FAS 141(R)-1 amends and clarifies SFAS 141(R) to address application issues on initial
recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. The FSP is effective for assets and liabilities arising from contingencies in business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of FSP FAS 141(R)-1 to have a material impact on its
consolidated financial statements.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. FSP FAS 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level of
activity for the asset or liability have significantly decreased. The FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective for interim and annual periods ending after
June 15, 2009, and shall be applied prospectively. Earlier adoption is permitted for periods ending after March 15, 2009. The Company does not expect the adoption of FSP FAS 157-4 to have a material impact on its consolidated financial
statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments. FSP FAS 107-1 and APB 28-1 amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded
companies as well as in annual financial statements. In addition, the FSP amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. The FSP is
effective for interim periods ending after June 15, 2009, with earlier adoption permitted for periods ending after March 15, 2009. The Company does not expect the adoption of FSP FAS 107-1 and APB 28-1 to have a material impact on its
consolidated financial statements.

In April 2009, the FASB issued FSP FAS 115-1 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. FSP FAS 115-1 and FAS 124-2 amends other-than-temporary impairment guidance for debt securities to make guidance more operational and to improve the presentation and disclosure of other-than-temporary
impairments on debt and equity securities. The FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. FSP FAS 115-1 and FAS 124-2 is effective for interim and annual periods
ending after June 15, 2009,



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with earlier adoption permitted for periods ending after March 15, 2009. The Company does not expect the adoption of FSP FAS 115-1 and FAS 124-2 to have
a material impact on its consolidated financial statements.

In April 2009, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 111 (SAB 111). SAB 111 amends and replaces SAB Topic 5.M. in the SAB Series entitled Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities. SAB 111 maintains the SEC Staffs previous views
related to equity securities and amends Topic 5.M. to exclude debt securities from its scope. The Company does not expect the implementation of SAB 111 to have a material impact on its consolidated financial statements.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion reviews our results of operations and assesses our financial condition. You should read the following discussion and analysis in conjunction with the accompanying condensed consolidated
financial statements. The commentary should be read in conjunction with the discussion of forward-looking statements, the consolidated financial statements, and the related notes and the other statistical information included in this report.

DISCUSSION OF FORWARD-LOOKING STATEMENTS

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



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



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



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



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



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



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



| |  |  | the level of our allowance for loan losses and the lack of seasoning of our loan portfolio;
| | - |  | -------------------------------------------------------------------------------------------



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



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



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



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



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



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



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

Overview

The following discussion describes our results of
operations for the three months ended March 31, 2009 and also analyzes our financial condition as of March 31, 2009. Touchmark National Bank, our banking subsidiary (the Bank), opened for business on January 28, 2008, and
the Company was established on April 3, 2007. Our first filing with the SEC was for the quarter ended June 30, 2007. Until January 28, 2008, our principal activities related to our organization, the conducting of our initial public
offering and the pursuit of regulatory approvals from the Office of the Comptroller of the Currency (the OCC) for our application to charter the bank, the pursuit of approvals from



11



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##### Table of Contents

the Federal Reserve to become a bank holding company, and the pursuit of approvals from the Federal Deposit Insurance Corporation (the FDIC) for
our application for insurance of the deposits of the Bank. We received approval from the FDIC, Federal Reserve, and the OCC in January 2008 and commenced business on January 28, 2008. We completed our stock offering in March 2008, with the
issuance of 3,470,391 shares for gross proceeds of $34,703,910, pursuant to an initial closing in January 2008 and a final closing in March 2008. Offering expenses of $512,367 were netted against the gross proceeds. We capitalized the Bank with
$26,000,000 of the proceeds from the stock offering. We now have full service offices in Duluth and Doraville in addition to our headquarters in Norcross.

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

There are risks inherent in all loans, so we maintain an allowance for loan losses to absorb probable losses on existing loans that may become uncollectible. We
establish and maintain this allowance by charging a provision for loan losses against our earnings. In the following section we have included a detailed discussion of this process.

Results of Operations for the Three Months Ended March 31, 2009 and 2008

We incurred a net loss of $539,305 and
$1,514,821 for the three months ended March 31, 2009 and 2008, respectively. For the three months ended March 31, 2009, we realized $943,799 in interest income, consisting primarily of $530,065 from loan activities and $413,754 from
investment activities. For the three months ended March 31, 2008, we realized $401,533 in interest income, consisting primarily of $396,929 from investment activities and $4,604 from loan activities. The provision for loan loss was $103,265 for
the quarter ended March 31, 2009, and $16,905 for the quarter ended March 31, 2008. We anticipate the growth in loans in future quarters will drive the growth in assets and the growth in interest income. The primary sources of funding for
our loan portfolio are deposits and Federal Home Loan advances. We incurred interest expense of $310,475 related to deposit accounts, $69,862 related to Federal Home Loan Bank advances, and $249 related to other borrowings during the three months
ended March 31, 2009. For the three months ended March 31, 2008, we incurred interest expense of $1,346 related to deposit accounts and $2,446 of interest expense related to Federal Home Loan Bank advances. Included in March 31, 2008
income was $1,337,858 of compensation expense related to warrant grants.

We incurred non-interest expenses of $1,132,756 and $1,895,657 during the three
months ended March 31, 2009 and 2008, respectively. Included in non-interest expense for the three months ended March 31, 2009 is $689,272 in salaries and employee benefits, $151,553 of occupancy and equipment expenses, and $291,931 in
other expense. The primary components in the other operating expense category for the three months ended March 31, 2009 were $25,920 in legal fees, $54,930 in data processing and IT related services, and $35,779 in advertising and marketing
expense.

The non-interest expense incurred in the three months ended March 31, 2008 was $1,895,657. Included in non-interest expense was $1,679,812
in salaries and employee benefits, $51,158 of occupancy and equipment expenses, and $164,687 in other operating expenses. Included in salaries and employee benefits expense for the three months ended March 31, 2008 was $1,300,233 of expenses
related to the issuance of warrants to organizers and directors of the Company. Additionally, included in other operating expenses for the quarter ended March 31, 2008 was $37,625 in expense related to warrants issued to the organizational
consultant.

The following tables calculate the net yield on earning assets as of March 31, 2009 and 2008. Net yield on earning assets, defined as net
interest income annualized, divided by average interest earning assets, was at 2.95% for the first three months of 2009. The net yield dropped from 8.15% at March 31, 2008 to 2.95% at March 31, 2009. This drop is due primarily to the
one-time recognition of interest income on escrowed funds which was earned during 2008, and the increase in the Banks leverage of earning assets.



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##### Table of Contents

For the Period Ended March 31, 2009

(Dollars in thousands)



|                                 |  |                        |        |                        |   |            |  |      |  
|-------------------------------- |  | ---------------------- | ------ | ---------------------- | - | ---------- |  | ---- | -
|Description                      |  | Avg.Assets/Liabilities |        | InterestIncome/Expense |   | Yield/Cost | 
|Interest Earning Assets          |  |                        |        |                        |   |            |  |      |  
|Federal Funds Sold               |  | $                      | 1,437  |                        | $ | 1          |  | 0.28 | %
|Securities                       |  |                        | 28,058 |                        |   | 370        |  | 5.27 | %
|Loans                            |  |                        | 35,437 |                        |   | 530        |  | 5.98 | %
|Other                            |  |                        | 11,580 |                        |   | 43         |  | 1.49 | %
|                                 |  |                        |        |                        |   |            |  |      |  
|Total                            |  | $                      | 76,512 |                        |   | 944        |  | 5.00 | %
|                                 |  |                        |        |                        |   |            |  |      |  
|Interest Bearing Liabilities     |  |                        |        |                        |   |            |  |      |  
|Interest Bearing Demand Deposits |  | $                      | 19,833 |                        |   | 158        |  | 3.19 | %
|Time Deposits                    |  |                        | 18,257 |                        |   | 152        |  | 3.33 | %
|Other Borrowings                 |  |                        | 11,556 |                        |   | 70         |  | 2.42 | %
|                                 |  |                        |        |                        |   |            |  |      |  
|Total                            |  | $                      | 49,646 |                        |   | 380        |  | 3.06 | %
|                                 |  |                        |        |                        |   |            |  |      |  
|Net interest income              |  |                        |        |                        | $ | 564        |  |      |  
|                                 |  |                        |        |                        |   |            |  |      |  
|Net yield on earning assets      |  |                        |        |                        |   |            |  | 2.95 | %
|                                 |  |                        |        |                        |   |            |  |      |  

For the Period Ended March 31, 2008

(Dollars in thousands)



|                                 |  |                        |        |                        |   |            |  |       |  
|-------------------------------- |  | ---------------------- | ------ | ---------------------- | - | ---------- |  | ----- | -
|Description                      |  | Avg.Assets/Liabilities |        | InterestIncome/Expense |   | Yield/Cost | 
|Interest Earning Assets          |  |                        |        |                        |   |            |  |       |  
|Federal Funds Sold               |  | $                      | 11,619 |                        | $ | 90         |  | 3.10  | %
|Securities                       |  |                        | 7,468  |                        |   | 306        |  | 16.39 | %
|Loans                            |  |                        | 335    |                        |   | 5          |  | 5.97  | %
|Other                            |  |                        | 170    |                        |   | 1          |  | 2.35  | %
|                                 |  |                        |        |                        |   |            |  |       |  
|Total                            |  | $                      | 19,592 |                        |   | 402        |  | 8.14  | %
|                                 |  |                        |        |                        |   |            |  |       |  
|Interest Bearing Liabilities     |  |                        |        |                        |   |            |  |       |  
|Interest Bearing Demand Deposits |  | $                      | 82     |                        |   |           |  | 0.00  | %
|Time Deposits                    |  |                        | 105    |                        |   | 1          |  | 3.81  | %
|Other Borrowings                 |  |                        | 308    |                        |   | 2          |  | 2.60  | %
|                                 |  |                        |        |                        |   |            |  |       |  
|Total                            |  | $                      | 495    |                        |   | 3          |  | 2.42  | %
|                                 |  |                        |        |                        |   |            |  |       |  
|Net interest income              |  |                        |        |                        | $ | 399        |  |       |  
|                                 |  |                        |        |                        |   |            |  |       |  
|Net yield on earning assets      |  |                        |        |                        |   |            |  | 8.15  | %
|                                 |  |                        |        |                        |   |            |  |       |  

Assets and Liabilities

General

At March 31, 2009, we had total assets of $87,084,709, consisting principally of $32,970,628 in securities, $39,749,055 in net
loans, $4,508,854 in interest-bearing accounts with other banks, and $3,833,856 in premises and equipment. Total assets increased $15,882,159 since December 31, 2008 when we had total assets of $71,202,550. These assets consisted of cash and
deposits due from banks of $1,029,163, federal funds sold of $1,297,000, interest-bearing accounts with other banks of $4,073,041, securities available for sale of $24,978,686, securities held to maturity $2,472,490, premises and equipment of
$3,873,011, net loans of $31,553,475 and accrued interest receivable $430,972, restricted stock of $1,329,550 and other assets of $165,162. Liabilities at March 31, 2009 totaled $55,879,682, consisting principally of $43,996,864 in deposits and
$11,400,000 in Federal Home Loan Bank advances. At March 31, 2009, shareholders equity was $31,205,027. Liabilities increased $16,161,001 from December 31, 2008. Our liabilities at December 31, 2008 were $39,718,681 and
consisted of deposits of $27,776,650, FHLB advances of $11,400,000 and other liabilities of $542,031, including interest payable. Shareholders equity at December 31, 2008 was $31,483,869.



13



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Investments

At
March 31, 2009, the carrying value of our securities and restricted stock amounted to $34,374,128. This included $21,023,237 in mortgage backed securities, $11,947,391 in corporate bonds and $1,403,500 in restricted equity securities. The
restricted equity securities are comprised of stock in the Federal Reserve Bank of Atlanta and the Federal Home Loan Bank of Atlanta. The carrying value of securities and restricted stock increased by $5,593,402 from December 31, 2008 to
March 31, 2009. As of December 31, 2008, the carrying value of our securities and restricted stock amounted to $28,780,726.

Loans

Since loans typically provide higher interest yields than other types of interest earning assets, we intend to invest a substantial percentage of our
earning assets in our loan portfolio. At March 31, 2009, our loan portfolio consisted of $7,116,579 of construction and land development loans, $26,808,613 in other real estate loans, $1,347,207 in consumer loans, $4,840,337 in commercial and
industrial loans, and $141,473 in other loans. The interest on loans is discontinued when, in managements opinion, the borrower may be unable to meet payments as they become due. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received. Loans are returned to accrual status when all the principal and interest amounts contractually due are reasonably assured of repayment
within a reasonable time frame. The Bank has not had nonaccrual loans since inception. Additionally, the Bank has not had to charge-off any loan amounts as of March 31, 2009.

Total loans increased during the three months ended March 31, 2009 by $8,195,580 to $39,749,055 at March 31, 2009 from $31,553,475 at December 31, 2008.

Provision and Allowance for Loan Losses

We have established an
allowance for loan losses through a provision for loan losses charged to expense on our consolidated statement of operations. The allowance for loan losses was $505,155 as of March 31, 2009, an increase of $103,265 from December 31, 2008
when the allowance for loan losses was $401,890. The allowance for loan losses represents an amount which we believe will be adequate to absorb probable losses on existing loans that may become uncollectible. Our judgment as to the adequacy of the
allowance for loan losses is based on a number of assumptions regarding current portfolio and economic conditions, which we believe to be reasonable, but which may or may not prove to be accurate. Over time, we will periodically determine the amount
of the allowance based on our consideration of several factors, including an ongoing review of the quality, mix and size of our overall loan portfolio, our historical loan loss experience, evaluation of economic conditions and other qualitative
factors, specific problem loans and commitments that may affect the borrowers ability to pay.

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

Deposits

Our primary source of funds for loans and securities is deposits and Federal Home Loan Bank advances. At March 31, 2009, we
had $43,996,864 in deposits which consisted primarily of $2,376,661 in non-interest bearing demand deposit accounts, $19,112,832 in time deposits, and $22,507,371 of other interest bearing accounts. Deposits increased $16,220,214 from
December 31, 2008 when deposits were $27,776,650 consisting primarily of $1,792,137 in non-interest bearing demand deposit accounts, $10,634,756 in time deposits, and $15,349,757 of other interest bearing accounts.

Liquidity

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



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Our primary sources of liquidity are deposits, borrowings, scheduled repayments on our loans, and interest on and
maturities of our securities. We plan to meet our future cash needs through the liquidation of temporary investments and the generation of deposits. Occasionally, we might sell securities in connection with the management of our interest sensitivity
gap or to manage cash availability. We may also utilize our cash and due from banks, security repurchase agreements, and federal funds sold to meet liquidity requirements as needed. In addition, we have the ability, on a short-term basis, to
purchase federal funds from other financial institutions. As of March 31, 2009, our primary source of liquidity included our securities portfolio, lines of credit available with correspondent banks totaling $23,000,000, and a line of credit
with the Federal Home Loan Bank of Atlanta. We believe our liquidity levels are adequate to meet our operating needs.

Off-Balance Sheet Risk

Through the operations of the Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These
commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a specified period of time. At March 31, 2009, we had issued commitments to extend credit of approximately $9,130,000 through various
types of lending arrangements. We evaluate each customers credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on our credit evaluation of the borrower.
Collateral varies but may include accounts receivable, inventory, property, plant and equipment, and commercial and residential real estate. We manage the credit risk on these commitments by subjecting them to normal underwriting and risk management
processes.

Capital Resources

Total shareholders
equity decreased from $31.5 million at December 31, 2008 to $31.2 million at March 31, 2009.

The Company and the Bank are subject to various
regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Banks financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the
Banks assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Banks capital amounts and classifications are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors. Regardless, the Bank is well capitalized under these minimum capital requirements as set per bank regulatory agencies.

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

At
the bank level, we are subject to various regulatory capital requirements administered by the federal banking agencies. To be considered adequately capitalized under these capital guidelines, we must maintain a minimum total risk-based
capital of 8%, with at least 4% being Tier 1 capital. In addition, we must maintain a minimum Tier 1 leverage ratio of at least 4%. To be considered well-capitalized, we must maintain total risk-based capital of at least 10%, Tier 1
capital of at least 6%, and a leverage ratio of at least 5%. For the first years of operation, during the Banks de novo period, the Bank will be required to maintain a leverage ratio of at least 8%. The Bank exceeded its minimum
regulatory capital ratios as of March 31, 2009, as well as the ratios to be considered well capitalized.



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The following table sets forth the Banks various capital ratios at March 31, 2009.



|                          |  |       |  
|------------------------- |  | ----- | -
|                          |  | Bank  |  
|Total risk-based capital  |  | 41.79 | %
|                          | 
|Tier 1 risk-based capital |  | 40.95 | %
|                          | 
|Leverage capital          |  | 32.28 | %

We believe that our capital is sufficient to fund the activities of the Bank in its initial stages of operation
and that the rate of asset growth will not negatively impact the capital base. As of March 31, 2009, there were no significant firm commitments outstanding for capital expenditures.

Critical Accounting Policies

We have adopted various accounting policies, which govern the application of accounting
principles generally accepted in the United States of America in the preparation of our financial statements.

Certain accounting policies involve
significant judgments and assumptions by us that may have a material impact on the carrying value of certain assets and liabilities. We consider such accounting policies to be critical accounting policies. The judgments and assumptions we use are
based on historical experience and other factors, which we believe are reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates that could have
a material impact on the carrying values of our assets and liabilities and our results of operations.

Allowance for Loan Losses. We believe that
the determination of the allowance for loan losses is the critical accounting policy that requires the most significant judgments and estimates used in preparation of our consolidated financial statements. Refer to section Allowance for Loan
Losses in this report on Form 10-Q for a more detailed description of the methodology related to the allowance for loan losses.



|Item 3. | Quantitative and Qualitative Disclosure About Market Risk
|------- | ---------------------------------------------------------

Not applicable.



|Item 4. | Controls and Procedures
|------- | -----------------------

Not applicable.



|Item 4T. | Controls and Procedures
|-------- | -----------------------

Management has developed and
implemented a policy and procedures for reviewing disclosure controls and procedures and internal controls over financial reporting on a quarterly basis. Management, including the Chief Executive Officer and the Chief Financial Officer, has
evaluated the effectiveness of the design and operation of disclosure controls and procedures as of March 31, 2009 and, based on such evaluation, has concluded that these controls and procedures are effective. Disclosure controls and procedures
are the Companys controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 (the Exchange
Act) is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files under the Exchange Act is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.

There were no changes in the Companys internal control over financial reporting during the Companys
last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



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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.

Part II  Other Information



|Item 1. | Legal Proceedings
|------- | -----------------

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



|Item 1A. | Risk Factors
|-------- | ------------

Not applicable.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None.



|Item 3. | Default Upon Senior Securities
|------- | ------------------------------

None.



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

None.



|Item 5. | Other Information
|------- | -----------------

None.



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                                               
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Articles of Incorporation (incorporated by reference to Registration Statement on Form SB-2).                                                                 
|     | 
|3.2  |  | Articles of Amendment to Articles of Incorporation (incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form SB-2).      
|     | 
|3.3  |  | Bylaws (incorporated by reference to Registration Statement on form SB-2).                                                                                    
|     | 
|31.1 |  | Certification of the Chief Executive Officer, pursuant to Rule 15d-14(a) under the Securities Exchange Act of 1934.                                           
|     | 
|31.2 |  | Certification of the Chief Financial Officer, pursuant to Rule 15d-14(a) under the Securities Exchange Act of 1934.                                           
|     | 
|32.1 |  | Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Rule 15d-14(b) under the Securities Exchange Act of 1934.
|     | 
|32.2 |  | Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Rule 15d-14(b) under the Securities Exchange Act of 1934.



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SIGNATURES

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



|                   |  |                            |  |                                                               
|------------------ |  | -------------------------- |  | --------------------------------------------------------------
|                   |  | Touchmark Bancshares, Inc.
|                   |  |                           
|Date: May 15, 2009 |  | By:                        |  | /s/ William R. Short                                          
|                   |  |                            |  | William R. Short                                              
|                   |  |                            |  | President and Chief Executive Officer                         
|                   |  |                            |  | (Principal Executive Officer)                                 
|                   |  |                           
|Date: May 15, 2009 |  | By:                        |  | /s/ Robert D. Koncerak                                        
|                   |  |                            |  | Robert D. Koncerak                                            
|                   |  |                            |  | Chief Financial Officer                                       
|                   |  |                            |  | (Principal Financial Officer and Principal Accounting Officer)



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EXHIBIT INDEX



|               |  |                                                                                                                                                               
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                   
|31.1           |  | Certification of the Chief Executive Officer, pursuant to Rule 15d-14(a) under the Securities Exchange Act of 1934.                                           
|               | 
|31.2           |  | Certification of the Chief Financial Officer, pursuant to Rule 15d-14(a) under the Securities Exchange Act of 1934.                                           
|               | 
|32.1           |  | Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Rule 15d-14(b) under the Securities Exchange Act of 1934.
|               | 
|32.2           |  | Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Rule 15d-14(b) under the Securities Exchange Act of 1934.



20