EXHIBIT 10.5

STATE OF GEORGIA                                                         1/20/99

COUNTY OF BULLOCH



                              EMPLOYMENT AGREEMENT


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

                                   WITNESSETH:

         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 Executive
Vice  President and Chief Loan Officer and  Executive  desires to be employed by
the  Bank as its  Executive  Vice  President  and  Chief  Loan  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 Executive Vice President and
Chief  Loan  Officer  of the Bank in  accordance  with the  terms,  duties,  and
obligations hereinafter set forth.



<PAGE>

         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 Ninety-three  thousand,  eight hundred
seventeen  dollars  ($93,817.00)  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 $15,000 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. DUTIES:  The Executive  shall serve as the Executive  Vice President
and Chief Loan Officer of the Bank and shall at all times  discharge  his duties
in  consultation  with and under the supervision of the President and 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 loans and  collection,  including,  but not
limited to, all personnel  decisions  associated  with the Loan  Department  and
other  functions to make the Bank  successful.  The Bank may, from time to time,
extend or curtail the Executive's precise services.

         5.  EXTENT OF  SERVICES:  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 Executive  Vice President and Chief
Loan Officer of the Bank or that may be deemed a conflict of interest.


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<PAGE>

         Should the Executive  desire to become  engaged in a business  activity
that does not conflict or detract from his duties as  Executive  Vice  President
and Chief Loan  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.

         6.  VICE  PRESIDENT  REPORTING:  The  Executive  shall  report  to  the
President  and work with the  President  and keep him  informed in regard to the
Loan and Collection Department.

         7.  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.

         8. 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.

         9. 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


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<PAGE>

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.

         10. 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.

         11.  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 Executive shall be permitted to honor his National Guard obligations.

         12. VACATIONS: The Executive shall be entitled to annual vacations in a
manner commensurate with his status as a principal executive,  and in accordance
with the Bank's standard vacation policy.

         13.  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


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<PAGE>

listed in  Paragraph  14,  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 not created or  authorized  to be formed or
created by the Farmers & Merchants Bank stockholders or directors.

         14. 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.

         15.  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.

         16. 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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<PAGE>

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


         17.  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.

         18. ENTIRE  AGREEMENT:  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.

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

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

         21.  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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         22.  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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<PAGE>


         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
                                                 -------------------------------
                                                 Secretary

Signed, sealed & delivered
in the presence of:

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

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

                                         EXECUTIVE

                                         /s/ Ricky Nessmith
                                         ---------------------------------------
                                         Ricky Nessmith


Signed, sealed & delivered
in the presence of:

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

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


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