EXHIBIT 10.4

STATE OF GEORGIA                                                         1/20/99
COUNTY OF BULLOCH

                              EMPLOYMENT AGREEMENT


         AGREEMENT  made  this  1st day of  January,  1999,  between  FARMERS  &
MERCHANTS BANK (hereinafter  referred to as the "Bank");  and LEONARD HERRINGTON
of the State of Georgia (hereinafter referred to as the "Executive").


                              W I T N E S S E T H:


         WHEREAS,  the Bank is a banking  corporation  with its principal office
located in Bulloch County, Georgia; and

         WHEREAS, the Bank desires to hire and employ Executive as President and
Chief Executive  Officer and Executive desires to be employed by the Bank as its
President and Chief  Executive  Officer,  all in  accordance  with the terms and
conditions as hereinafter set forth,

         NOW, THEREFORE, in consideration of the premises herein contained,  the
mutual   covenants   hereinafter   set  forth,   and  other  good  and  valuable
consideration, the Bank and Executive agree as follows:

         1. EMPLOYMENT:  The Bank hereby agrees to employ the Executive, and the
Executive  agrees to accept such employment as the President and Chief Executive
Officer  of the Bank in  accordance  with the  terms,  duties,  and  obligations
hereinafter set forth.


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         2. TERM:  The  initial  term of this  agreement  shall be for three (3)
years beginning  January 1, 1999 and ending December 31, 2001, and the agreement
shall  continue  from  year to  year  thereafter  unless  sooner  terminated  as
hereinafter provided.

         3.  COMPENSATION:  The Bank shall pay the  Executive  for all  services
rendered  under this  agreement a salary of One  Hundred  Eleven  Thousand  Five
Hundred Ten Dollars ($111,510.00) per year. The Executive shall be paid with the
same  frequency as are other  executives of the Bank.  Salary  payments shall be
subject to withholding and other applicable  taxes.  The Executive's  salary and
bonus will be reviewed and may be changed on a year to year basis with the first
review to be no earlier than December, 1999.

         BONUSES:  The Executive shall be entitled to an annual bonus based upon
the Bank's  performance as shown on the  Accountant's  final year-end audit. The
bonus shall be paid within 30 days of the Board of Directors being furnished the
final  year-end  audit.  The Executive  shall receive up to $25,000 as an annual
bonus based on the following formula:

                              Total Bonus Schedule

I.       GROWTH RATES                                                   (20%)
         ------------

         A.       Average Assets                                         10%
         B.       Pretax Operating Income                                10%

II.      FINANCIAL CONDITION                                            (60%)
         -------------------

         A.       Return on Average Assets                               30%
         B.       Return on Average Equity                               30%

III.     ASSET QUALITY                                                  (20%)
         -------------

         A.       Non-Current Loans to Gross Loans                       10%
         B.       Net Loan Loss to Average Total Loans                   10%


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                              Levels of Performance

--------------------------------------------------------------------------------
Threshold - 0%                          Target - 75%              Maximum - 100%

I.       Growth Rates

         A.       7%                           10%                       12%
         B.       9%                           11%                       13%

II.      Financial Condition

         A.       1%                          1.175%                    1.50%
         B.       12%                         12.75%                    15%

III.     Asset Quality

         A.       1.15%                        .95%                      .75%
         B.        .25%                        .18%                      .10%


         The Board of  Directors  of the Bank shall use the  method  used in the
Bank's Uniform Bank  Performance  Report in determining the Bank's growth rates,
financial condition and asset quality.

         4.  AUTOMOBILE:  The  Bank  recognizes  the  Executive's  need  for  an
automobile  for  business  purposes.  Therefore,  the  Bank  shall  provide  the
Executive  with an  automobile,  including  all  related  maintenance,  repairs,
insurance, and other costs. The automobile and related costs shall be comparable
to those which the Bank presently  provides other  executives of the Bank and as
may be  mutually  agreed  upon by  Executive  and the Bank.  At the  Executive's
option,  in lieu of being  provided an automobile as set forth herein,  the Bank
shall  reimburse  the  Executive  for business use of the  Executive's  personal
automobile  at a rate  equal to the per mile rate of  reimbursement  of  federal
employees and published from time to time by the Internal Revenue Service.


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         5.  DUTIES:  The  Executive  shall  serve as the  President  and  Chief
Executive  Officer  of the Bank and shall at all times  discharge  his duties in
consultation with and under the supervision of the Bank's Board of Directors, to
whom he shall  report.  He will be in  charge of all day to day  operations  and
management of the Bank,  including,  but not limited to, all personnel decisions
and other  functions  to make the Bank  successful.  The Bank may,  from time to
time, extend or curtail the Executive's precise services.

         6. EXTENT OF SERVICES:  The Executive  shall exert his best efforts and
devote his entire time and attention to the Bank's business.  During the term of
this agreement,  the Executive  shall not engage in any other business  activity
regardless of whether it is pursued for gain or profit,  if it detracts from his
duties with the Bank. It is understood that the Executive will not engage in any
business that conflicts with his duties as Chief  Executive  Officer of the Bank
or that may be deemed a conflict of interest.

         Should the Executive  desire to become  engaged in a business  activity
that does not conflict or detract from his duties as Chief Executive  Officer of
the Bank, then he will advise the Board of Directors of the Bank of his business
activities  prior to engaging in same and shall obtain  approval by the Board of
Directors.

         7.  PRESIDENT  REPORTING:  The  Executive  shall work with the Board of
Directors and shall report to the Board and keep them informed as to all matters
that pertain to or affect the Board or the Bank or stockholders.


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         8.  WORKING  FACILITIES:  The  Executive  shall have a private  office,
secretarial  help,  and other  facilities  and services that are suitable to his
position and appropriate for the performance of his duties.

         9. EXPENSES:  The Executive may incur reasonable expenses for promoting
the Bank's business,  including expenses for entertainment,  travel, and similar
items.  The Bank will  reimburse  the  Executive  for all such expenses upon the
Executive's  periodic  presentation of an itemized account of such expenditures,
which shall be examined  on a monthly  basis by at least two outside  directors.
One of the directors must be the Chairman of the Board.

         10. CAPITAL EXPENDITURES:  The Executive shall obtain prior approval of
the Board of Directors for any capital expenditure over $ 1,000.00

         11. DISABILITY:  If the Executive becomes disabled during the period of
this  agreement,  his salary shall  continue at the same rate that it was on the
date of such disability. If such disability continues for a continuous period of
three (3) consecutive  months,  the Bank, at its option,  may  thereafter,  upon
written notice to the Executive or his personal  representative,  terminate this
agreement. If the Executive receives disability payments from insurance policies
paid for by the Bank,  the  salary  paid to the  Executive  during any period of
disability shall be reduced by the amount of disability  payment received by the
Executive  under any such insurance  policy or policies.  For the purpose of the
agreement,  disability  shall mean  mental or  physical  illness or a  condition
rendering the Executive incapable of performing his normal duties with the Bank.



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         12. DEATH DURING  EMPLOYMENT:  If the Executive dies during the term of
employment,  the Bank shall pay to the Executive's  estate the compensation that
would  otherwise be payable to the Executive up to the end of the month in which
his death occurs.

         13.  EMPLOYMENT  BENEFITS:  This agreement  shall not be in lieu of any
rights,  benefits and  privileges  to which the  Executive may be entitled as an
employee of the Bank under any retirement,  pension, profit sharing,  insurance,
hospital  or other plans  which may now be in effect or which may  hereafter  be
adopted.  The Executive shall have the same rights and privileges to participate
in  such  plans  and  benefits  as any  other  employee  during  his  period  of
employment.  The Executive  shall be entitled to health,  life,  and  disability
benefits  available to all employees of the Bank in  accordance  with his income
level.  The Bank agrees to  reimburse  him for his  Country  Club and civic club
dues.

         14. VACATIONS: The Executive shall be entitled to annual vacations in a
manner commensurate with Ws status as a principal executive,  which shall not be
less than two (2) weeks per year.

         15.  BUY-OUT  PROVISION:  Should  the Bank be purchased or merge into a
holding  company that is independent of the Farmers & Merchants  Bank, or should
the bank be purchased by another bank,  then in that event,  if the Executive is
terminated  for reasons  other than those listed in Paragraph  16, then he shall
receive  one year of his  base  salary  as  severance  pay.  A  holding  company
independent of the Farmers & Merchants Bank shall be a holding  company that was


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not  created or  authorized  to be formed or created by the  Farmers & Merchants
Bank stockholders or directors.

         16. TERMINATION: The Bank reserves the right to terminate the Executive
upon ten (10) days written  notice for cause,  including  but not limited to: 1)
failure to carry out the directives of the Board of Directors; 2) failure to act
ethically  with  the  Bank's   regulators,   customers  and/or   directors;   3)
participating  or being  involved in such  activities as are  detrimental to the
best interests of the Bank and its shareholders;  4) any other provision of this
agreement;  or, 5) any other reason that the Board of  Directors  deems good and
sufficient  cause. In the event of termination for cause, the Bank shall pay the
Executive  his  compensation  up to  the  date  of  termination,  whereupon  all
obligations  hereunder  shall cease.  This  agreement  may also be terminated by
either party at any time, without cause, upon ninety (90) days written notice to
the other party.

         17.  ASSIGNMENT:  This  agreement  is intended  to secure the  personal
services of the Executive and cannot be assigned or transferred in any manner by
the Executive.

         18. NOTICES:  All notices  required or permitted to be given under this
agreement shall be given by certified  mail,  return receipt  requested,  to the
parties at the  following  addresses  or to such other  addresses  as either may
designate in writing to the other party.

         To the Bank:
                                    Chairman of the Board of Directors
                                    Farmers & Merchants Bank
                                    P.O. Box 2789
                                    Statesboro, GA 30458


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         To the Executive:
                                    Mr. Leonard Herrington
                                    Farmers & Merchants Bank
                                    P.O. Box 2789
                                    Statesboro, GA 30458

         19.  SUCCESSORS AND ASSIGNS:  This agreement shall inure to the benefit
of and be binding upon the Bank, its successors and assigns, including,  without
limitation,  any corporation  which may acquire all or substantially  all of the
Bank's assets and business or into which the Bank may be consolidated or merged,
and  the   Executive,   his   heirs,   executors,   administrators   and   legal
representatives.

         20.  ENTIRE   AGREEMENTEEMENT:   This  agreement  contains  the  entire
agreement  between the  parties  and  supersedes  all prior  understandings  and
agreements  between  the  parties.  It may not be  changed,  waived or  modified
orally,  but only by an agreement in writing,  signed by the party  against whom
enforcement of any waiver, change, modification or discharge is sought.

         21.  CONSTRUCTION:  The provisions of this agreement shall be construed
in accordance with the laws of the State of Georgia.

         22.  HEADINGS:  Headings in this agreement are for convenience only and
shall not be used to interpret or construe its provisions.

         23.  NON-WAIVER:  No delay or failure of either party in exercising any
right  under this  agreement,  and no partial or single  exercise of that right,
shall constitute a waiver of that or any other right.


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         24.  COUNTERPARTS:  This  agreement  may be executed in two (2) or more
counterparts,  each of  which  shall  be  deemed  an  original  but all of which
together shall constitute one and the same instrument.


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         IN WITNESS  WHEREOF,  the parties  hereto have affixed  their hands and
seals the day and year first above written.

                                          FARMERS & MERCHANTS BANK


                                          By: /s/ James Davis
                                              --------------------------------

                                              Chairman of the Board of Directors

                                          Attest:  /s/ Sheryl Swint
                                                  ---------------------------



Signed, sealed & delivered
in the presence of:

/s/ Marie McKinny
-----------------------------------
Witness

/s/ Patricia E. Tootle
-----------------------------------
Notary Public

                                          EXECUTIVE

                                           /s/ Leonard Herrington
                                           ---------------------------------
                                           Leonard Herrington

Signed, sealed & delivered
in the presence of:

/s/ Marie McKinny
-----------------------------------

Witness

/s/ Patricia E. Tootle
-----------------------------------
Notary Public


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