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 June 30, 2008



| ̈ | 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 333-143840





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 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 issuer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 August 1, 2008.









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PART I  FINANCIAL INFORMATION



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

TOUCHMARK
BANCSHARES, INC.

AND SUBSIDIARY

Consolidated Balance Sheets

December 31, 2007 and June 30, 2008



|                                                                                                                  |  |                          |            |   |                   |   |            |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ----------------- | - | ---------- | -
|                                                                                                                  |  | (unaudited)June 30, 2008 |            |   | December 31, 2007 |  
|ASSETS                                                                                                            |  |                          |            |   |                   |   |            |  
|Cash and due from banks                                                                                           |  | $                        | 210,624    |   |                   | $ |           |  
|Federal funds sold                                                                                                |  |                          | 3,221,000  |   |                   |   |           |  
|Interest-bearing account with other bank                                                                          |  |                          | 3,381,341  |   |                   |   |           |  
|Securities available for sale                                                                                     |  |                          | 22,694,130 |   |                   |   |           |  
|Restricted stock                                                                                                  |  |                          | 1,103,950  |   |                   |   |           |  
|Loans, less allowance for loan losses of $125,300 and $0, respectively                                            |  |                          | 9,863,116  |   |                   |   |           |  
|Accrued interest receivable                                                                                       |  |                          | 333,950    |   |                   |   |           |  
|Deferred stock issuance costs                                                                                     |  |                          |           |   |                   |   | 186,204    |  
|Premises and equipment                                                                                            |  |                          | 3,230,278  |   |                   |   | 2,655,125  |  
|Other assets                                                                                                      |  |                          | 325,155    |   |                   |   | 68,291     |  
|                                                                                                                  |  |                          |            |   |                   |   |            |  
|Total assets                                                                                                      |  | $                        | 44,363,544 |   |                   | $ | 2,909,620  |  
|                                                                                                                  |  |                          |            |   |                   |   |            |  
|                                                                                                                  |  |                         
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                              |  |                          |            |   |                   |   |            |  
|Liabilities:                                                                                                      |  |                          |            |   |                   |   |            |  
|Deposits:                                                                                                         |  |                          |            |   |                   |   |            |  
|Non-interest bearing demand                                                                                       |  | $                        | 315,137    |   |                   | $ |           |  
|Interest-bearing                                                                                                  |  |                          | 6,236,784  |   |                   |   |           |  
|                                                                                                                  |  |                          |            |   |                   |   |            |  
|Total deposits                                                                                                    |  |                          | 6,551,921  |   |                   |   |           |  
|Accrued interest payable                                                                                          |  |                          | 8,389      |   |                   |   |           |  
|Line of credit                                                                                                    |  |                          |           |   |                   |   | 575,000    |  
|Advances from organizers, net of discount                                                                         |  |                          |           |   |                   |   | 980,000    |  
|Note payable                                                                                                      |  |                          |           |   |                   |   | 2,450,000  |  
|Federal Home Loan Bank advances                                                                                   |  |                          | 5,900,000  |   |                   |   |           |  
|Other liabilities                                                                                                 |  |                          | 117,140    |   |                   |   | 248,075    |  
|                                                                                                                  |  |                          |            |   |                   |   |            |  
|Total liabilities                                                                                                 |  |                          | 12,577,450 |   |                   |   | 4,253,075  |  
|                                                                                                                  |  |                          |            |   |                   |   |            |  
|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 and 10 issued and outstanding, respectively |  |                          | 34,704     |   |                   |   |           |  
|Paid in capital                                                                                                   |  |                          | 35,598,071 |   |                   |   | 43,049     |  
|Accumulated deficit                                                                                               |  |                          | (3,490,109 | ) |                   |   | (1,386,504 | )
|Accumulated other comprehensive loss                                                                              |  |                          | (356,572   | ) |                   |   |           |  
|                                                                                                                  |  |                          |            |   |                   |   |            |  
|Total shareholders equity                                                                                        |  |                          | 31,786,094 |   |                   |   | (1,343,455 | )
|                                                                                                                  |  |                          |            |   |                   |   |            |  
|Total liabilities and shareholders equity                                                                        |  | $                        | 44,363,544 |   |                   | $ | 2,909,620  |  
|                                                                                                                  |  |                          |            |   |                   |   |            |  

See notes to the consolidated financial statements



2



---

TOUCHMARK BANCSHARES, INC.

AND SUBSIDIARY

Consolidated Statement of Operations

Three and Six months ended June 30, 2008,

and the period April 3, 2007, Date of Inception to June 30, 2007

(Unaudited)



|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|---------------------------------------------------------- |  | ------------------------------ | -------- | - | ---------------------------- | - | ---------- | ----------------------------------------------- |  | - | -------- | -
|                                                           |  | Three monthsEndedJune 30, 2008 |          |   | Six monthsEndedJune 30, 2008 |   |            | April 3, 2007,Date of Inceptionto June 30, 2007 | 
|Interest income:                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Loans, including fees                                      |  | $                              | 73,452   |   |                              | $ | 78,056     |                                                 |  | $ |         |  
|Other investment income                                    |  |                                | 311,023  |   |                              |   | 618,024    |                                                 |  |   |         |  
|Federal funds sold                                         |  |                                | 22,745   |   |                              |   | 112,673    |                                                 |  |   |         |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Total interest income                                      |  |                                | 407,220  |   |                              |   | 808,753    |                                                 |  |   |         |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|                                                           |  |                                |         
|Interest expense:                                          |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Deposits                                                   |  |                                | 17,200   |   |                              |   | 18,546     |                                                 |  |   |         |  
|Federal Home Loan Bank advances                            |  |                                | 22,483   |   |                              |   | 24,929     |                                                 |  |   |         |  
|Other                                                      |  |                                |         |   |                              |   |           |                                                 |  |   | 28,121   |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Total interest expense                                     |  |                                | 39,683   |   |                              |   | 43,475     |                                                 |  |   | 28,121   |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Net interest income (loss)                                 |  |                                | 367,537  |   |                              |   | 765,278    |                                                 |  |   | (28,121  | )
|Provision for loan losses                                  |  |                                | 108,395  |   |                              |   | 125,300    |                                                 |  |   |         |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Net interest income (loss) after provision for loan losses |  |                                | 259,142  |   |                              |   | 639,978    |                                                 |  |   | (28,121  | )
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|                                                           |  |                                |         
|Noninterest income                                         |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Service charges on deposit accounts                        |  |                                | 59       |   |                              |   | 59         |                                                 |  |   |         |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Total noninterest income                                   |  |                                | 59       |   |                              |   | 59         |                                                 |  |   |         |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|                                                           |  |                                |         
|Noninterest expense:                                       |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Salaries and employee benefits                             |  |                                | 534,050  |   |                              |   | 2,213,862  |                                                 |  |   | 203,360  |  
|Occupancy and equipment                                    |  |                                | 60,948   |   |                              |   | 112,106    |                                                 |  |   | 10,200   |  
|Other operating expense                                    |  |                                | 252,987  |   |                              |   | 417,674    |                                                 |  |   | 318,051  |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Total noninterest expense                                  |  |                                | 847,985  |   |                              |   | 2,743,642  |                                                 |  |   | 531,611  |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Net loss                                                   |  | $                              | (588,784 | ) |                              | $ | (2,103,605 | )                                               |  | $ | (559,732 | )
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Basic losses per share                                     |  | $                              | (0.17    | ) |                              | $ | (0.73      | )                                               |  | $ | (55,973  | )
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  
|Dividends per share                                        |  | $                              |         |   |                              | $ |           |                                                 |  | $ |         |  
|                                                           |  |                                |          |   |                              |   |            |                                                 |  |   |          |  

See notes to the consolidated financial statements



3



---

TOUCHMARK BANCSHARES, INC.

AND SUBSIDIARY

Consolidated Statement of Comprehensive Loss

Three and Six months ended June 30, 2008,

and the period April 3, 2007, Date of Inception to June 30, 2007

(Unaudited)



|                                                                                                              |  |                                |            |   |                              |   |            |                                                 |  |   |          |  
|------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | ---------------------------- | - | ---------- | ----------------------------------------------- |  | - | -------- | -
|                                                                                                              |  | Three monthsEndedJune 30, 2008 |            |   | Six monthsEndedJune 30, 2008 |   |            | April 3, 2007,Date of Inceptionto June 30, 2007 | 
|Net loss                                                                                                      |  |                                | (588,784   | ) |                              |   | (2,103,605 | )                                               |  |   | (559,732 | )
|Other comprehensive loss:                                                                                     |  |                                |            |   |                              |   |            |                                                 |  |   |          |  
|Unrealized losses on securities available for sale, net of deferred tax benefit of $240,125, $175,625, and $0 |  |                                | (487,527   | ) |                              |   | (356,572   | )                                               |  |   |         |  
|                                                                                                              |  |                                |            |   |                              |   |            |                                                 |  |   |          |  
|Comprehensive loss                                                                                            |  | $                              | (1,076,311 | ) |                              | $ | (2,460,177 | )                                               |  | $ | (559,732 | )
|                                                                                                              |  |                                |            |   |                              |   |            |                                                 |  |   |          |  

See notes to the consolidated financial statements



4



---

TOUCHMARK BANCSHARES, INC.

AND SUBSIDIARY

Consolidated Statement of Cash Flows

Six months ended June 30, 2008

and the period April 3, 2007, Date of Inception, to June 30, 2007

(Unaudited)



|                                                                           |  |                              |             |   |                                                 |   |          |  
|-------------------------------------------------------------------------- |  | ---------------------------- | ----------- | - | ----------------------------------------------- | - | -------- | -
|                                                                           |  | Six monthsEndedJune 30, 2008 |             |   | April 3, 2007,Date of Inceptionto June 30, 2007 |  
|Cash flow from operating activities:                                       |  |                              |             |   |                                                 |   |          |  
|Net loss                                                                   |  | $                            | (2,103,605  | ) |                                                 | $ | (559,732 | )
|Adjustments to reconcile net loss to net cash used by operating activities |  |                              |             |   |                                                 |   |          |  
|Depreciation                                                               |  |                              | 54,417      |   |                                                 |   | 1,647    |  
|Net amortization (accretion)                                               |  |                              | (310        | ) |                                                 |   | 26,756   |  
|Provision for loan losses                                                  |  |                              | 125,300     |   |                                                 |   |         |  
|Stock based compensation expense                                           |  |                              | 1,398,183   |   |                                                 |   |         |  
|Increase in interest receivable                                            |  |                              | (333,950    | ) |                                                 |   |         |  
|Increase in interest payable                                               |  |                              | 8,389       |   |                                                 |   | 632      |  
|Decrease in deferred stock issuance costs                                  |  |                              | 186,204     |   |                                                 |   |         |  
|Increase in other assets                                                   |  |                              | (81,239     | ) |                                                 |   | (24,757  | )
|Increase (decrease) in other liabilities                                   |  |                              | (130,935    | ) |                                                 |   | 54,110   |  
|                                                                           |  |                              |             |   |                                                 |   |          |  
|Net cash used by operating activities                                      |  |                              | (877,546    | ) |                                                 |   | (501,344 | )
|                                                                           |  |                              |             |   |                                                 |   |          |  
|                                                                           |  |                             
|Cash flow from investing activities:                                       |  |                              |             |   |                                                 |   |          |  
|Purchase of federal funds sold                                             |  |                              | (3,221,000  | ) |                                                 |   |         |  
|Increase in interest bearing accounts with other banks                     |  |                              | (3,381,341  | ) |                                                 |   |         |  
|Purchase of securities available for sale                                  |  |                              | (23,486,485 | ) |                                                 |   |         |  
|Proceeds from paydowns of securities available for sale                    |  |                              | 260,468     |   |                                                 |   |         |  
|Purchase of restricted stock                                               |  |                              | (1,103,950  | ) |                                                 |   |         |  
|Net increase in loans                                                      |  |                              | (9,988,416  | ) |                                                 |   |         |  
|Purchase of premise and equipment                                          |  |                              | (629,570    | ) |                                                 |   | (56,968  | )
|                                                                           |  |                              |             |   |                                                 |   |          |  
|Net cash used by investing activities                                      |  |                              | (41,550,294 | ) |                                                 |   | (56,968  | )
|                                                                           |  |                              |             |   |                                                 |   |          |  
|                                                                           |  |                             
|Cash flow from financing activities:                                       |  |                              |             |   |                                                 |   |          |  
|Net increase in deposits                                                   |  |                              | 6,551,921   |   |                                                 |   |         |  
|Organizer advances (repayments)                                            |  |                              | (980,000    | ) |                                                 |   | 620,000  |  
|Advances (repayment) of line of credit                                     |  |                              | (575,000    | ) |                                                 |   | 150,000  |  
|Repayment of note payable                                                  |  |                              | (2,450,000  | ) |                                                 |   |         |  
|Proceeds from Federal Home Loan Bank advances                              |  |                              | 5,900,000   |   |                                                 |   |         |  
|Stock issuance costs                                                       |  |                              | (512,367    | ) |                                                 |   |          |  
|Proceeds from sale of common stock                                         |  |                              | 34,703,910  |   |                                                 |   | 100      |  
|                                                                           |  |                              |             |   |                                                 |   |          |  
|Net cash provided by financing activities                                  |  |                              | 42,638,464  |   |                                                 |   | 770,100  |  
|                                                                           |  |                              |             |   |                                                 |   |          |  
|Net change in cash                                                         |  |                              | 210,624     |   |                                                 |   | 211,788  |  
|                                                                           |  |                             
|Cash at the beginning of the period                                        |  |                              |            |   |                                                 |   |         |  
|                                                                           |  |                              |             |   |                                                 |   |          |  
|Cash at the end of the period                                              |  | $                            | 210,624     |   |                                                 | $ |         |  
|                                                                           |  |                              |             |   |                                                 |   |          |  
|Supplemental disclosures of cash flow information - Interest paid          |  | $                            | 35,086      |   |                                                 | $ | 732      |  

See notes to the consolidated financial statements



5



---

TOUCHMARK BANCSHARES, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

June 30, 2008

(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, 2007.

The results of operations for the three and six month periods ended June 30, 2008 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
the Company (formerly known as Touchstone Bancshares, Inc.), the Company 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. As of June 30, 2008, the Company had issued 3,470,391 shares for total gross proceeds 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.

In
recognition of financial risks undertaken by the organizers and directors of the Company, warrants to purchase additional shares of the Companys common stock were issued to these individuals. The warrants are divided into Type I (Director) and
Type II (Organizer) warrants, and all warrants are exercisable at a price equal to $10 per share.

Type I warrants were awarded in
recognition of the directors contributions to the initial capitalization of the Company. The Company awarded only 30,000 Type I warrants due to the majority of warrants issued being Type II.

Type II warrants were awarded in recognition of the financial risk undertaken by organizers in contributing seed capital and guaranteeing certain
liabilities of the Company to fund our



6



---

organizational expenses. Warrants were issued based on the amount of funds each organizer placed at risk, which included seed capital contributed and each
organizers pro-rata share of the organizational line of credit and land loan guaranteed. The Company awarded 430,000 Type II warrants.

Additionally, 12,500 warrants were issued to the organizational consultant during the first quarter of 2008.

Stock Based
Compensation: The Company adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment. Upon issuance of 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 estimated in accordance with the provision 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 based on expected volatility of similar entities. 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 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.



|                                                |  |   |           |  
|----------------------------------------------- |  | - | --------- | -
|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 stock-based compensation expense for the warrants of $8,900 for the three
months ended June 30, 2008 and $1,346,758 for the six months ended June 30, 2008.

At June 30, 2008, there was $91,967 of
unrecognized compensation cost related to stock-based payments, which is expected to be recognized over a weighted-average period of 2.5 years. The weighted average remaining contractual life of the warrants outstanding as of June 30, 2008 was
approximately 9.6 years. The Company had 442,500 warrants exercisable as of June 30, 2008.

During the three months ended June 30,
2008, the Company issued 109,322 options to purchase common stock to employees of the Company. Upon issuance of options, 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 estimated in accordance with the provision 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.

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 based on expected volatility of similar entities. 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.



7



---

|                                               |  |   |           |  
|---------------------------------------------- |  | - | --------- | -
|Risk-free interest rate                        |  |   | 2.99-3.80 | %
|Expected life (years)                          |  |   | 6.50      |  
|Expected volatility                            |  |   | 29.65     | %
|Expected dividends                             |  |   | 0.00      | %
|Expected Forfeiture rate                       |  |   | 5.00      | %
|Weighted average fair value of options granted |  | $ | 3.67      |  

The Company recorded stock-based compensation expense related to the options of $51,425 during the
six months ended June 30, 2008.

At June 30, 2008, there was $329,703 of unrecognized compensation cost related to options
outstanding, which is expected to be recognized over a weighted-average period of 2.6 years. The weighted average remaining contractual life of the warrants outstanding as of June 30, 2008 was approximately 9.6 years. The Company had no options
exercisable as of June 30, 2008.

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 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.

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

Property and Equipment: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



8



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of property 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 June 30, 2008 and December 31, 2007.

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 operating results of the
Company and its subsidiary are included in consolidated income tax returns.

As of June 30, 2008, the company had deferred tax assets
of approximately $824,000 relating to $1.6 million in start-up costs and $125,300 in provision for loan losses, and $393,000 in net operating loss carryforwards. A full valuation allowance has been provided against these assets as of June 30,
2008.

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
sold, and 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



9



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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 June 30, 2008, aggregated by the
level in the fair value hierarchy within which those measurements fall.



|                                         |  |                                                             |   |                                             |   |                                        |  |       |   |  |   |           
|---------------------------------------- |  | ----------------------------------------------------------- | - | ------------------------------------------- | - | -------------------------------------- |  | ----- | - |  | - | ----------
|                                         |  | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |   | SignificantUnobservableInputs(Level 3) |  | Total
|Assets                                   |  |                                                             |   |                                             |   |                                        |  |       |   |  |   |           
|Investment securities available-for-sale |  | $                                                           |  |                                             | $ | 22,694,130                             |  | $     |  |  | $ | 22,694,130
|Total assets at fair value               |  | $                                                           |  |                                             | $ | 22,694,130                             |  | $     |  |  | $ | 22,694,130



|4. | EARNING (LOSSES) PER SHARE
|-- | --------------------------

Basic loss per share is
computed by dividing net loss by the weighted average number of shares of common stock outstanding. Diluted earnings (losses) per share are computed by dividing net income (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 June 30, 2008 were 3,470,391. Basic loss per share for the three months ended
June 30, 2008 was $0.17. Weighted average shares outstanding for the six months ended June 30, 2008 were 2,872,292. Basic loss per share for the six months ended June 30, 2008 was $0.73. Diluted earning per share is not presented, as
the current net loss would result in an anti-dilutive calculation.



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

In December 2007,
the FASB issued SFAS No. 141(R), Business Combinations,which replaces SFAS 141. SFAS 141(R) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS 141(R) also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose
to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) applies prospectively to 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 believes the adoption of SFAS 141(R) will not have a material impact on its financial statements.



10



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In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial
Statementsan amendment of ARB No. 51. SFAS 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. In addition to the amendments to ARB 51, SFAS 160 amends SFAS No. 128,
Earnings per Share; so that earnings-per-share data will continue to be calculated the same way those data were calculated before SFAS 160 was issued. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. The Company believes the adoption of SFAS 160 will not have a material impact on its financial statements.

In March 2008, The FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities,an amendment to SFAS 133 intended to improve financial reporting about derivative instruments and
hedging activities by requiring enhanced disclosures. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted
for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. It is effective for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company believes the adoption of SFAS 161 will not have a material impact on its financial statements.



11



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|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 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 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, 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 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 allowance for loan loss 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 Securities and Exchange Commission.
| | - |  | --------------------------------------------------------------------------------------------------------------------

Overview

The following discussion describes our results of
operations for the quarter and six months ended June 30, 2008 and also analyzes our financial condition as of June 30, 2008. Touchmark National Bank, our banking subsidiary, opened for business on January 28, 2008, and the
companys inception was April 3, 2007. Our first filing with the SEC was for the quarter ended June 30, 2007. Because our bank opened on January 28, 2008, a comparison for the quarter and six month periods ended June 30,
2008 to the quarter



12



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and six month periods ended June 30, 2007 would not be meaningful. 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 (OCC) for our application to charter the bank, the pursuit of approvals from the Federal Reserve to become a
bank holding company, and the pursuit of approvals from the Federal Deposit Insurance Corporation (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, upon 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 April
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 a full service office in Duluth in addition to our headquarters in Norcross. We
expect to open a full service branch in Doraville in Fall 2008.

Like most community banks, we derive most of our income from interest we receive on our
loans and investments. 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

We
incurred a net loss of $588,784 and $2,103,605 for the three and six months ended June 30, 2008, respectively. Total losses for the six months ended June 30, 2008 included $275,861 related to pre-opening and organizational costs prior to
the banks opening on January 28, 2008. For the six months ended June 30, 2008, we realized $808,753 in interest income, of which $730,697 was from investment activities and $78,056 was from loan activities. For the quarter ended
June 30, 2008, we realized $407,220 in interest income, of which $333,768 was from investment activities and $73,452 was from loan activities. The provision for loan loss was $108,395 for the quarter ended June 30, 2008, and $125,300 for
six months ended June 30, 2008. We anticipate the growth in loans will continue to drive the growth in assets and the growth in interest income. The primary source of funding for our loan portfolio is deposits that are acquired locally. We
incurred interest expense of $18,546 related to deposit accounts and $24,929 related to Federal Home Loan Bank advances for the six months ended June 30, 2008. For the second quarter of 2008, we incurred interest expense of $17,200 related to
deposit accounts and $22,483 related to Federal Home Loan Bank advances.

We incurred non-interest expenses of $2,743,642 during the six months ended
June 30, 2008. Included in the expense was $2,213,862 in salaries and employee benefits, $112,106 of occupancy and equipment expenses, and $417,674 in other operating expense. Included in salaries and employee benefits expense for the six
months ended June 30, 2008 was $1,309,133 of expense related to the issuance of warrants to organizers and directors of the company. For the six months ended June 30, 2008, the primary components of other operating expenses were $57,440 in
advertising and marketing, $40,741 in data processing and IT related services, $37,625 related to the issuance of warrants to an organizational consultant for the Bank, $36,490 in printing and supplies, $33,492 in legal fees, and $33,108 in
accounting fees. The non-interest expense incurred in the three months ended June 30, 2008 was $847,985. Included in the expense was $534,050 in salaries and employee benefits, $60,948 of occupancy and equipment expenses, and $252,987 in other
operating expense. Included in salaries and employee benefits expense for the second quarter of 2008 was $8,900 of expense related to the issuance of warrants to organizers and directors of the company, and $51,425 of expense related to the issuance
of options to employees.



13



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The primary components in the other operating expense category for the three months ended June 30, 2008 were $33,492 in legal fees, $30,547 in data
processing and IT related services, and $31,185 in advertising and marketing expense. We incurred $112,106 and $60,948 in occupancy and equipment expense related primarily to our headquarters in Norcross and branch office in Duluth for the six and
three months ended June 30, 2008, respectively.

Assets and Liabilities

General

At June 30, 2008, we had total assets of $44.4 million, consisting principally of $22.7 million in
investment securities, $9.9 million in loans, $3.2 million in federal funds sold, $3.4 million in interest-bearing account with other banks, and $3.2 million in premises and equipment. Liabilities at June 30, 2008 totaled $12.6 million,
consisting principally of $6.6 million in deposits and $5.9 million in Federal Home Loan Bank advances. At June 30, 2008, shareholders equity was $31.8 million.

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 June 30, 2008, our loan portfolio consisted primarily of approximately $8.3 million of commercial real estate loans, $660,000 of commercial business loans, $26,000
of personal lines of credit and $1.0 million of home equity loans.

We will discontinue accrual of interest on a loan when we conclude it is doubtful that
we will be able to collect interest from the borrower. We will reach this conclusion by taking into account factors such as the borrowers financial condition, economic and business conditions, and the results of our previous collection
efforts. Generally, we will place a delinquent loan in non-accrual status when the loan becomes 90 days or more past due. When we place a loan in non-accrual status, we will reverse all interest which has been accrued on the loan but remains unpaid
and we will deduct this interest from earnings as a reduction of reported interest income. We will not accrue any additional interest on the loan balance until we conclude the collection of both principal and interest is reasonably certain. At
June 30, 2008, there were no impaired loans, no loans that were 90 days or more past due and accruing, or nonaccrual loans.

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 $125,300 as of June 30, 2008. 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 the borrowers ability to pay.

Due to our
short 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



14



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affect our results of operations and financial condition. 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 particular accounting periods.

Deposits

Our primary source of funds for loans and investments is our deposits. At June 30, 2008, we had $6.6 million in deposits which consisted primarily of $315,000 in
demand deposit accounts, $3.0 million in certificates of deposit, and $3.26 million of money market 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.

Our primary sources of liquidity are
deposits, scheduled repayments on our loans, and interest on and maturities of our investments. We plan to meet our future cash needs through the liquidation of temporary investments and the generation of deposits. Occasionally, we might sell
investment 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 June 30, 2008, our primary source of liquidity included federal funds sold totaling $3,221,000.
We also have lines of credit available with correspondent banks totaling $10,500,000, 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 Risk

Through the operations of our 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
June 30, 2008, we had unused commitments to extend credit of $1,789,000 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.



15



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Capital Resources

Total shareholders equity increased from a deficit of $1,343,455 at December 31, 2007 to $31,786,094 at June 30, 2008. The increase is due to completion of our initial public offering which raised $34,191,543, net of
offering expenses. This increase was offset by the net loss for the period of $2,103,605.

Our Bank and Company are subject to various regulatory capital
requirements administered by the federal banking agencies. However, the Federal Reserve guidelines contain an exemption from the capital requirements for small bank holding companies which in 2006 were amended to cover most bank holding
companies with less than $500 million in total assets that do not have a material amount of debt or equity securities outstanding registered with the SEC. Since our stock is not registered under Section 12 of the Securities Exchange Act of
1934, we believe the Company qualifies as a small bank holding company and is exempt from the capital requirements. Nevertheless, our Bank remains subject to these capital requirements. 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, our 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 quarterly 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 our 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 June 30, 2008, as well as the ratios to be considered well capitalized.

The following table sets forth the Banks various capital ratios at June 30, 2008.



|                          |  |        |  
|------------------------- |  | ------ | -
|                          |  | Bank   |  
|Total risk-based capital  |  | 134.63 | %
|Tier 1 risk-based capital |  | 133.97 | %
|Leverage capital          |  | 80.66  | %



16



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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 June 30, 2008, 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 Provision and
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 required.



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

As of the end of the period covered
by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as
defined in Exchange Act Rule 15d-15(e). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective as of June 30, 2008. There have been no
significant changes in our internal controls over financial reporting during the fiscal quarter ended June 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.



17



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

Not applicable.



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

Not applicable.



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

There
were three matters submitted to a vote of security holders during the quarter ended June 30, 2008 at our annual meeting of shareholders held on May 21, 2008. The matters were (a) the election of (i) six members of the Board of
Directors as Class I directors for a one-year term, (ii) six members of the Board of Directors as Class II directors for a two-year term, and (iii) six members of the Board of Directors as Class III directors for a three-year term;
(b) the approval of our 2008 Stock Incentive Plan; and (c) the ratification of the appointment of Mauldin & Jenkins, LLC as our independent registered public accounting firm for 2008. The following describes the matters voted upon
at the annual meeting and sets forth the number of votes cast for, against or withheld and the number of abstentions as to each such matter (except as provided below, there were no broker non-votes).

Proposal No. 1Election of Directors

Our Board of
Directors is divided into three classes with each class to be as nearly equal in number as possible. The three classes of directors have staggered terms, so that the terms of only approximately one-third of the Board members will expire at each
annual meeting of shareholders. Because this was our first annual meeting of shareholders, the terms of all of our initial directors expired at the annual meeting on May 21, 2008. The following six directors were nominated for election and
stood for election as Class I directors at the annual meeting for a one-year term expiring at the 2009 annual meeting: Thomas E. Persons, Sr., J. Egerton Burroughs, Howard Greenfield, Moon Kim, Hasmukh P. Rama, and William R. Short. The following
six directors were nominated for election and stood for election as Class II directors at the annual meeting for a two-year term expiring at the 2010 meeting: Vivian A. Wong, J. William Butler, Barry Culbertson, John L. Johnson, Hiluard Kitchens,
and Jayendrakuma J. Shah. The following six directors were nominated for election and stood for election as Class III directors at the annual meeting for a three-year term expiring at the 2010 annual meeting: Bobby G. Williams, Daniel B. Cowart,
Yuling Hayter, Daniel J. Kaufman, Sudhirkumar C. Patel, and Meena J. Shah. Votes for the election of directors were as follows:



18



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|                         |  |           |  |                   
|------------------------ |  | --------- |  | ------------------
|Name                     |  | Votes For |  | Withheld Authority
|J. Egerton Burroughs     |  | 2,272,800 |  | 11,000            
|J. William Butler        |  | 2,280,800 |  | 3,000             
|Daniel B. Cowart         |  | 2,270,800 |  | 13,000            
|Barry A. Culbertson      |  | 2,280,800 |  | 3,000             
|Howard R. Greenfield     |  | 2,272,800 |  | 11,000            
|Yuling R. Hayter         |  | 2,270,800 |  | 13,000            
|John L. Johnson          |  | 2,280,800 |  | 3,000             
|Daniel J. Kaufman        |  | 2,270,800 |  | 13,000            
|Moon K. Kim              |  | 2,272,800 |  | 11,000            
|C. Hiluard Kitchens, Jr. |  | 2,280,800 |  | 3,000             
|Sudhirkumar C. Patel     |  | 2,270,800 |  | 13,000            
|Thomas E. Persons, Sr.   |  | 2,272,800 |  | 11,000            
|Hasmukh P. Rama          |  | 2,272,800 |  | 11,000            
|J. J. Shah               |  | 2,280,800 |  | 3,000             
|Meena J. Shah            |  | 2,270,800 |  | 13,000            
|William R. Short         |  | 2,272,800 |  | 11,000            
|Bobby G. Williams        |  | 2,270,800 |  | 13,000            
|Vivian A. Wong           |  | 2,280,800 |  | 3,000             

Proposal No. 2Approval of our 2008 Stock Incentive Plan

The 2008 Stock Incentive Plan was approved at the annual meeting of shareholders held on May 21, 2008 with 2,239,300 votes in favor, 35,000 votes against, and 9,500
abstained.

Proposal No. 3Ratification of Auditors

The appointment of Mauldin & Jenkins, LLC as our independent registered public accounting firm for 2008 was ratified at the annual meeting of shareholders held on May 21, 2008 with 2,272,800 votes in favor, no votes against,
and 11,000 abstained.



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

At our annual meeting of the shareholders
on May 21, 2008, our shareholders approved the Touchmark Bancshares, Inc. 2008 Stock Incentive Plan. The board of directors previously approved the plan on March 19, 2008. The plan authorizes the grant to our employees and directors,
including our principal executive officer, principal financial officer and any other named executive officers, stock options and restricted stock for up to 191,000 shares of common stock from time to time during the term of the plan, subject to
adjustment upon changes in capitalization. A copy of the plan was filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008, as filed with the SEC on May 15, 2008.



19



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



|     |  |                                                                 
|---- |  | ----------------------------------------------------------------
|31.1 |  | Rule 15d-14(a) Certification of the Principal Executive Officer.
|     | 
|31.2 |  | Rule 15d-14(a) Certification of the Principal Financial Officer.
|     | 
|32   |  | Section 1350 Certifications.                                    



20



---

SIGNATURES

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



|                      |  |                            |  |                                                               
|--------------------- |  | -------------------------- |  | --------------------------------------------------------------
|                      |  | Touchmark Bancshares, Inc.
|                      |  |                           
|Date: August 14, 2008 |  | By:                        |  | /s/ William R. Short                                          
|                      |  |                            |  | William R. Short                                              
|                      |  |                            |  | President and Chief Executive Officer                         
|                      |  |                            |  | (Principal Executive Officer)                                 
|                      |  |                           
|Date: August 14, 2008 |  | By:                        |  | /s/ Robert D. Koncerak                                        
|                      |  |                            |  | Robert D. Koncerak                                            
|                      |  |                            |  | Chief Financial Officer                                       
|                      |  |                            |  | (Principal Financial Officer and Principal Accounting Officer)



21



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EXHIBIT INDEX



|              |  |                                                                 
|------------- |  | ----------------------------------------------------------------
|ExhibitNumber |  | Description                                                     
|31.1          |  | Rule 15d-14(a) Certification of the Principal Executive Officer.
|              | 
|31.2          |  | Rule 15d-14(a) Certification of the Principal Financial Officer.
|              | 
|32            |  | Section 1350 Certifications.                                    



22