MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



          The  following  is  a discussion of the financial condition of Forsyth
Bancshares,  Inc.  (the "Company") and its bank subsidiary, The Citizens Bank of
Forsyth  County  (the  "Bank")  at December 31, 1999 and 1998 and the results of
operations for the years then ended.  The purpose of this discussion is to focus
on information about the Company's financial condition and results of operations
that  is  not  otherwise  apparent  from  the  audited  consolidated  financial
statements.  Reference  should  be  made  to  those  statements and the selected
financial  data  presented  elsewhere in this report for an understanding of the
following  discussion  and  analysis.

          Forward-Looking  Statements

     The  Company  may  from  time  to time make written or oral forward-looking
statements,  including  statements  contained  in the Company's filings with the
Securities  and Exchange Commission and its reports to stockholders.  Statements
made  in  the Annual Report, other than those concerning historical information,
should  be  considered  forward-looking  and  subject  to  various  risks  and
uncertainties.  Such forward-looking statements are made based upon management's
belief  as  well as assumptions made by, and information currently available to,
management  pursuant  to  "safe  harbor"  provisions  of  the Private Securities
Litigation  Reform  Act  of  1995.  The  Company's  actual  results  may  differ
materially  from  the results anticipated in forward-looking statements due to a
variety of factors, including governmental monetary and fiscal policies, deposit
levels,  loan  demand,  loan  collateral  values,  securities  portfolio values,
interest  rate  risk  management,  the  effects  of  competition  in the banking
business  from other commercial banks, thrifts, mortgage banking firms, consumer
finance  companies,  credit  unions,  securities  brokerage  firms,  insurance
companies,  money market funds and other financial institutions operating in the
Company's  market  area  and elsewhere, including institutions operating through
the  Internet,  changes  in  governmental  regulation  relating  to  the banking
industry,  including regulations relating to branching and acquisitions, failure
of  assumptions  underlying  the  establishment  of  reserves  for  loan losses,
including the value of collateral underlying delinquent loans and other factors.
The  Company cautions that such factors are not exclusive.  The Company does not
undertake  to update any forward-looking statement that may be made from time to
time  by,  or  on  behalf  of,  the  Company.

     Overview

     The Company's 1999 results were highlighted by the complete recovery of its
accumulated  deficit  and  an  increase of pretax earnings before the cumulative
effect  of  a  change  in  accounting  principle of 24%.  Overall, stockholders'
equity  has  decreased  due  to  net  income  of  $485,000 being offset by other
comprehensive  losses  related  to  the  Company's  available-for-sale  security
portfolio  of  $789,000.  The  Company  is preparing for future loan and deposit
growth  with  the  opening of a new branch in its primary market area of Forsyth
county  in  early  2000.


                                        3
<PAGE>
     Financial  Condition  at  December  31,  1999  and  1998

     Following  is  a  summary  of  the  Company's  balance sheets for the years
indicated:

<TABLE>
<CAPTION>
                           December 31,                Percentage
                               1999          1998      Increase
                          (Dollars in Thousands)      (Decrease)
<S>                       <C>             <C>          <C>
Cash and due from banks   $        1,959  $     1,326     47.74%
Federal funds sold                 2,060        8,180    (74.82)
Securities                        21,843       21,460      1.78
Loans, net                        38,072       27,175     40.10
Premises and equipment             1,051          943     11.33
Other assets                       1,224          673     81.87
                          --------------  -----------

                          $       66,209  $    59,757     10.80
                          ==============  ===========

Total deposits            $       58,040  $    51,412     12.89
Other liabilities                    462          334     37.91
Stockholders' equity               7,707        8,011     (3.79)
                          --------------  -----------

                          $       66,209  $    59,757     10.80
                          ==============  ===========
</TABLE>

     Financial  Condition  at  December  31,  1999  and  1998

     As  of December 31, 1999, the Company had total assets of $66.2 million, an
increase  of  10.8%  as  compared  to December 31, 1998.  Total interest-earning
assets  were  $61.9  million  at  December 31, 1999 or 93.61% of total assets as
compared to 95.08% at December 31, 1998.  The Company's primary interest-earning
assets  at  December  31,  1999  were  loans,  which  made  up  61.43%  of total
interest-earning  assets  as  compared  to  47.83%  at  December  31, 1998.  The
Company's loan to deposit ratio was 66.43% as compared to 53.56% at December 31,
1998.  Deposit  growth  of $6.6 million and decreased Federal funds sold of $6.1
million  have been used to fund loan growth of $11.0 million and to increase the
investment  portfolio  by  $1.5  million.

     The  Company's  investment  portfolio,  consisting of primarily U.S. Agency
securities and mortgage-backed securities, amounted to $21.8 million at December
31,  1999.  Unrealized losses on securities amounted to $1.1 million at December
31,  1999.  As  of  December 31, 1999 management had not specifically identified
any securities for sale in future periods which, if so designated, would require
a  charge  to operations if the market value would not be reasonably expected to
recover  prior  to  the  time  of  sale.

     The  Company  has  61%  of its loan portfolio collateralized by real estate
located  in  the Company's primary market area of Forsyth County and surrounding
counties.  The  Company's  real  estate  mortgage  and  construction  portfolio
consists  of  loans collateralized by one- to four-family residential properties
(43%),  construction  loans  to build one- to four-family residential properties
(23%),  and  nonresidential  properties  consisting  primarily of small business
commercial  properties  (34%).  The  Company  generally  requires  that  loans
collateralized  by  real  estate  not  exceed  80%  of  the  collateral  value.


                                        4
<PAGE>
     The  Company's  remaining 39% of its loan portfolio consists of commercial,
consumer, and other loans. the Company requires collateral commensurate with the
repayment  ability  and  creditworthiness  of  the  borrower.

     The  specific economic and credit risks associated with  the Company's loan
portfolio,  especially  the  real estate portfolio, include, but are not limited
to,  a  general downturn in the economy which could affect unemployment rates in
the  Company's  market  area, general real estate market deterioration, interest
rate  fluctuations,  deteriorated  or  non-existing  collateral,  title defects,
inaccurate  appraisals,  financial  deterioration  of  borrowers, fraud, and any
violation  of  banking  protection  laws.  Construction lending can also present
other  specific risks to the lender such as whether developers can find builders
to buy lots for home construction, whether the builders can obtain financing for
the construction, whether the builders can sell the home to a buyer, and whether
the  buyer  can  obtain  permanent financing.  Currently, real estate values and
employment  trends  in  the Company's market area are stable with no indications
of  a  significant  downturn  in  the  general  economy.

     The  Company attempts to reduce these economic and credit risks not only by
adherence  to  loan  to  value  guidelines,  but  also  by  investigating  the
creditworthiness  of  the  borrower  and  monitoring  the  borrower's  financial
position.  Also,  the  Company  establishes and periodically reviews its lending
policies  and  procedures.  State  banking  regulations  limit  exposure  by
prohibiting  secured  loan relationships that exceed 25% of the Bank's statutory
capital and unsecured loan relationships that exceed 15% of the Bank's statutory
capital.

     Liquidity  and  Capital  Resources

     The  purpose of liquidity management is to ensure that there are sufficient
cash  flows  to satisfy demands for credit, deposit withdrawals, and other needs
of  the  Company.  Traditional sources of liquidity include asset maturities and
growth in core deposits.  A company may achieve its desired liquidity objectives
from  the  management  of  assets  and liabilities and through funds provided by
operations.  Funds  invested  in  short-term  marketable  instruments  and  the
continuous  maturing  of  other earning assets are sources of liquidity from the
asset  perspective.  The  liability  base  provides sources of liquidity through
deposit  growth,  the  maturity  structure  of liabilities, and accessibility to
market  sources  of  funds.

     Scheduled  loan  payments are a relatively stable source of funds, but loan
payoffs  and deposit flows fluctuate significantly, being influenced by interest
rates and general economic conditions and competition.   the Company attempts to
price  its deposits to meet its asset/liability objectives consistent with local
market  conditions.

     The liquidity and capital resources of the Bank are monitored on a periodic
basis  by  State  and  Federal  regulatory  authorities.  As  determined  under
guidelines  established by those regulatory authorities and internal policy, the
Bank's  liquidity  was  considered  satisfactory.

     At December 31, 1999,  the Company had loan commitments outstanding of $6.1
million.  Because  these  commitments  generally have fixed expiration dates and
many  will  expire without being drawn upon, the total commitment amounts do not
necessarily  represent  future  cash  requirements.  If needed, the Bank has the
ability  on  a  short-term basis to borrow and purchase Federal funds from other
financial  institutions.  At  December  31, 1999, the Bank has arrangements with
two  commercial  banks  for  short-term  advances  of  $2,150,000.


                                        5
<PAGE>
     At  December  31,  1999,  the  Company's and the Bank's capital ratios were
considered  adequate  based  on  regulatory  minimum capital requirements.   the
Company's  stockholders' equity increased due to net income in 1999 of $485,000.
The Company's stockholders' equity decreased due to a decrease in the fair value
of  securities  available-for-sale,  net of tax, in the amount of $789,000.  For
regulatory  purposes, the net unrealized losses on securities available-for-sale
are  excluded  in  the  computation  of  the  capital  ratios.

     In the future, the primary source of funds available to the Company will be
the  payment of dividends by its subsidiary Bank.  Banking regulations limit the
amount  of  the  dividends that may be paid without prior approval of the Bank's
regulatory  agency.  Currently,  approximately $257,000 of dividends can be paid
by  the  Bank  to  the  Company  without  regulatory  approval.

     The  minimum  capital  requirements to be considered well capitalized under
prompt  corrective  action  provisions  and  the  actual capital ratios for  the
Company  and  the  Bank  as  of  December  31,  1999  are  as  follows:

<TABLE>
<CAPTION>
                                            Actual
                              ----------------------------------
                              Regulatory
                                Company     Bank   Requirements
                              -----------  ------  -------------
<S>                           <C>          <C>     <C>
Leverage capital ratio             12.87%     11.00%       5.00%
  Risk-based capital ratios:
    Core capital                   19.48      16.76        6.00
    Total capital                  20.60      17.90       10.00
</TABLE>

     At  December 31, 1999,  the Company had $207,000 of commitments for capital
expenditures  to  complete  its  branch.

     These  ratios  may  decline  as  asset  growth  continues, but, as earnings
improve to support the growth, should remain in excess of the regulatory minimum
requirements.

     Management  believes  that its liquidity and capital resources are adequate
and will meet its foreseeable short and long-term needs.  Management anticipates
that  it  will  have sufficient funds available to meet current loan commitments
and  to fund or refinance, on a timely basis, its other material commitments and
liabilities.

     Except  for  expected continued growth common to a de novo bank, management
is  not  aware of any other known trends, events or uncertainties that will have
or  that  are  reasonably  likely  to  have  a material effect on its liquidity,
capital  resources  or  operations.  Management is also not aware of any current
recommendations  by  the regulatory authorities which, if they were implemented,
would  have  such  an  effect.

     Effects  of  Inflation

     The  impact  of inflation on banks differs from its impact on non-financial
institutions.  Banks,  as  financial  intermediaries,  have  assets  which  are
primarily  monetary  in  nature  and  which  tend  to  fluctuate in concert with
inflation.  A  bank can reduce the impact of inflation if it can manage its rate
sensitivity  gap.  This  gap  represents  the  difference between rate sensitive
assets  and  rate  sensitive  liabilities.   The  Company,  through  its


                                        6
<PAGE>
asset-liability  committee, attempts to structure the assets and liabilities and
manage  the  rate  sensitivity  gap,  thereby  seeking to minimize the potential
effects  of  inflation.  For  information  on  the  management of  the Company's
interest  rate  sensitive  assets  and  liabilities,  see  the  "Asset/Liability
Management"  section.

     Results  of  Operations  For  The  Years  Ended  December 31, 1999 and 1998

     Following  is  a  summary  of  the  Company's  operations  for  the periods
indicated.

<TABLE>
<CAPTION>
                            Years Ended
                            December 31,         Percentage
                               1999       1998    Increase
                      (Dollars in Thousands)     (Decrease)
<S>                         <C>          <C>     <C>

Interest income             $     4,666  $3,821     22.11%

Interest expense                  2,213   1,891     17.03

Net interest income               2,453   1,930     27.10

Provision for loan losses           171     128     33.59

Other income                        129     105     22.86

Other expenses                    1,711   1,432     19.40

Pretax income                       700     475     47.68

Income taxes                        215       -         -

Net income                          485     475      2.32
</TABLE>

     Net  Interest  Income

     The  Company's  results  of  operations  are  determined  by its ability to
effectively  manage interest income and expense, to minimize loan and investment
losses,  to  generate  non-interest  income,  and to control operating expenses.
Since  interest  rates  are  determined by market forces and economic conditions
beyond  the  control  of  the  Company,  the  Company's  ability to generate net
interest income is dependent upon its ability to obtain an adequate net interest
spread between the rate paid on interest-bearing liabilities and the rate earned
on  interest-earning  assets.

     The  net  yield  on  average  interest-earning  assets was 4.08% in 1999 as
compared  to  4.16%  in  1998.  Average  loans  increased  by $7.2 million which
accounted  for  the  majority  of  a  $13.7  million  increase  in total average
interest-earning  assets.  Average  interest-bearing  liabilities  increased  by
$11.4  million with average interest-bearing demand and time deposits accounting
for  the  vast  majority  of  this  increase.  The  rate  earned  on  average
interest-earning assets decreased to 7.77% in 1999 from 8.23% in 1998.  The rate
paid  on  average  interest-bearing  liabilities decreased to 4.64% in 1999 from
5.20%  in  1998.

     The  net  yield  on  average  interest-earning  assets was 4.16% in 1998 as
compared  to  4.31%  in  1997.  Average  loans  increased by $16.4 million which


                                        7
<PAGE>
accounted  for  the  majority  of  a  $22.1  million  increase  in total average
interest-earning  assets.  Average  interest-bearing  liabilities  increased  by
$20.1  million with average interest-bearing demand and time deposits accounting
for  the  vast  majority  of  this  increase.  The  rate  earned  on  average
interest-earning assets increased to 8.23% in 1998 from 7.85% in 1997.  The rate
paid  on  average  interest-bearing  liabilities  was 5.20% in 1998 and 5.29% in
1997.

Provision  for  Loan  Losses

     The  provision for loan losses was $171,000 in 1999 as compared to $128,000
in 1998.  The amounts provided are due primarily to the growth of the portfolio.
Based  upon  management's  evaluation of the loan portfolio, management believes
the reserve for loan losses to be adequate to absorb possible losses on existing
loans  that  may  become  uncollectible.  This evaluation considers past due and
classified  loans, underlying collateral values, and current economic conditions
which  may affect the borrower's ability to repay.  As of December 31, 1999, the
Company  has  nonperforming  loans  and assets of $23,000 as compared to none at
December 31, 1998.  The allowance for loan losses as a percentage of total loans
at  December  31,  1999  and  1998  was  1.25%  and  1.31%,  respectively.

     Other  Income

     Other  operating income consists of service charges on deposit accounts and
other  miscellaneous  revenues and fees.  Other operating income was $129,000 in
1999  as compared to $105,000 in 1998.  The increase of $24,000 is due primarily
to  increased  service  charges  on  deposit  accounts  related to the Company's
deposit  growth.

     Other operating income was $105,000 in 1998 as compared to $50,000 in 1997.
The  increase  is  due to the Company being open for the entire year in 1998 and
deposit  growth.

     Non-interest  Expense

     Other operating expense for 1999 consists of salaries and employee benefits
($830,000),  equipment  and  occupancy  expenses ($281,000), and other operating
expenses  ($600,000).  The  increases  over  1998  ($157,000  for  salaries  and
employee  benefits,  $26,000 for equipment and occupancy, and $184,000 for other
operating  expenses)  are  due  primarily  to  the  overall  growth of the Bank.
Specifically,  the Company's other operating expenses were higher in 1999 due in
part  to  increased  professional  fees  of $114,000 and data processing fees of
$74,000.

     Other operating expense for 1998 consists of salaries and employee benefits
($673,000),  equipment  and  occupancy  expenses ($255,000), and other operating
expenses ($416,000).  The increases over 1997 ($93,000 for salaries and employee
benefits,  $31,000  for equipment and occupancy, and $34,000 for other operating
expenses)  are  due  primarily to the Company being open for the entire year and
overall  growth.  The Company also adopted SOP 98-5 which required the write-off
of  $89,000  of  organization  costs.

     Income  Tax

     The  year  1999  marked  the first time in which income tax provisions were
required.  The  Company's  statutory  tax  rate  of  34%  was  reduced to 31% by
nontaxable  interest  income.  The  Company  had  no  income  tax expense due to
accumulated  deficits  of  $25,000  at  December  31,  1998.


                                        8
<PAGE>
Asset/Liability  Management

     It  is  the Company's objective to manage assets and liabilities to provide
a  satisfactory,  consistent  level  of  profitability  within  the framework of
established  cash,  loan,  investment, borrowing, and capital policies.  Certain
officers  are  charged  with  the  responsibility  for  monitoring  policies and
procedures  that  are  designed  to  ensure  acceptable  composition  of  the
asset/liability  mix.  It  is  the  overall  philosophy of management to support
asset growth primarily through growth of core deposits of all categories made by
local  individuals,  partnerships,  and  corporations.

     The  Company's  asset/liability  mix is monitored on a regular basis with a
report reflecting the interest rate-sensitive assets and interest rate-sensitive
liabilities  being  prepared and presented to the Board of Directors of the Bank
on  a  monthly  basis.  The  objective  of  this  policy  is to monitor interest
rate-sensitive  assets  and  liabilities  so  as  to  minimize  the  impact  of
substantial  movements  in interest rates on earnings.  An asset or liability is
considered to be interest rate-sensitive if it will reprice or mature within the
time  period  analyzed,  usually one year or less. The interest rate-sensitivity
gap  is  the difference between the interest-earning assets and interest-bearing
liabilities  scheduled  to  mature or reprice within such time period.  A gap is
considered  positive  when  the amount of interest rate-sensitive assets exceeds
the amount of interest rate-sensitive liabilities.  A gap is considered negative
when  the  amount  of  interest  rate-sensitive liabilities exceeds the interest
rate-sensitive assets.  During a period of rising interest rates, a negative gap
would  tend  to adversely affect net interest income, while a positive gap would
tend  to  result  in  an  increase  in net interest income. Conversely, during a
period  of  falling  interest  rates,  a negative gap would tend to result in an
increase  in  net  interest income, while a positive gap would tend to adversely
affect  net  interest  income.  If  the  Company's  assets  and liabilities were
equally  flexible and moved concurrently, the impact of any increase or decrease
in  interest  rates  on  net  interest  income  would  be  minimal.

     A  simple  interest  rate  "gap"  analysis by itself may not be an accurate
indicator  of  how  net  interest income will be affected by changes in interest
rates.  Accordingly,  the Company also evaluates how the repayment of particular
assets  and  liabilities  is  impacted  by  changes  in  interest rates.  Income
associated  with  interest-earning  assets  and  costs  associated  with
interest-bearing  liabilities  may  not  be  affected  uniformly  by  changes in
interest  rates.  In addition, the magnitude and duration of changes in interest
rates  may  have  a  significant  impact  on  net interest income.  For example,
although  certain  assets and liabilities may have similar maturities or periods
of  repricing, they may react in different degrees to changes in market interest
rates.  Interest  rates  on certain types of assets and liabilities fluctuate in
advance  of changes in general market rates, while interest rates on other types
may  lag  behind  changes in general market rates.  In addition, certain assets,
such  as adjustable rate mortgage loans, have features (generally referred to as
"interest  rate  caps  and  floors")  which  limit  changes  in  interest rates.
Prepayment  and  early  withdrawal  levels also could deviate significantly from
those  assumed  in  calculating  the  interest  rate  gap.  The  ability of many
borrowers  to  service  their  debts  also may decrease during periods of rising
interest  rates.

     Changes  in  interest  rates also affect  the Company's liquidity position.
The  Company  currently  prices  deposits  in response to market rates and it is
management's  intention  to continue this policy.  If deposits are not priced in
response  to market rates, a loss of deposits could occur which would negatively
affect  the  Company's  liquidity  position.

     At  December  31,  1999,  the  Company's  cumulative  one  year  interest
rate-sensitivity gap ratio was 50%.  The Company's targeted ratio is 80% to 120%
in  this  time  horizon.  This  indicates  that  the  Company's interest-bearing
liabilities  will reprice during this period at a rate faster than the Company's
interest-earning  assets.  The  Company  is  currently  not  within its targeted
parameters  due  primarily  to 93% of certificates of deposit repricing within a


                                        9
<PAGE>
one year time frame as opposed to 38% of loans and securities repricing within a
one  year  time  frame.  It is management's belief that competitive market rates
are  being  paid  for  certificates  of deposit, and as long as the rates remain
competitive,  liquidity,  while  not assured, should not be materially adversely
affected.  However,  due  to  the  long-term  nature  of  the  Company's
interest-earning  assets  and  the  short-term  nature  of  the interest-bearing
liabilities,  the  Company's  earnings  could be negatively impacted in a rising
interest rate environment.  The Company intends to obtain Federal Home Loan Bank
borrowings  to  assist  in  offsetting  the  current  imbalance.

     The  following  table  sets forth the distribution of the repricing of  the
Company's  interest-earning  assets  and  interest-bearing  liabilities  as  of
December  31,  1999, the interest rate- sensitivity gap, the cumulative interest
rate-sensitivity gap, the interest rate-sensitivity gap ratio and the cumulative
interest rate-sensitivity gap ratio.  The table also sets forth the time periods
in which earning assets and liabilities will mature or may reprice in accordance
with  their contractual terms.  However, the table does not necessarily indicate
the  impact  of general interest rate movements on the net interest margin since
the  repricing  of  various  categories  of assets and liabilities is subject to
competitive  pressures  and the needs of  the Company's customers.  In addition,
various assets and liabilities indicated as repricing within the same period may
in  fact,  reprice at different times within such period and at different rates.

<TABLE>
<CAPTION>
                                            After       After
                                            Three       One
                                            Months      Year but
                                 Within     but         Within    After
                                 Three      Within      Five      Five
                                 Months     One Year    Years     Years    Total
<S>                             <C>        <C>         <C>       <C>      <C>
(Dollars in Thousands)
Interest-earning assets:
  Federal funds sold            $  2,060   $      --   $    --   $    --  $ 2,060
  Securities                          --          --    10,432    11,411   21,843
  Loans                           16,486       6,175    15,199       694   38,554
                                ---------  ----------  --------  -------  -------

                                  18,546       6,175    25,631    12,105   62,457
                                ---------  ----------  --------  -------  -------
Interest-bearing liabilities:
  Interest-bearing demand
  deposits                        14,359          --        --        --   14,359
  Savings                            756          --        --        --      756
  Time deposits, less than
  $100,000                         3,749      14,377     1,751        --   19,877
  Time deposits, $100,000
  and over                         2,499      13,611       733        --   16,843
                                ---------  ----------  --------  -------  -------

                                  21,363      27,988     2,484        --   51,835
                                ---------  ----------  --------  -------  -------

Interest rate sensitivity
  gap                           $ (2,817)  $ (21,813)  $23,147   $12,105  $10,622
                                =========  ==========  ========  =======  =======
Cumulative interest rate
  sensitivity gap               $ (2,817)  $ (24,630)  $(1,483)  $10,622
                                =========  ==========  ========  =======
Interest rate sensitivity
  gap ratio                          .87         .22     10.32        --
                                =========  ==========  ========  =======
Cumulative interest rate
  sensitivity gap ratio              .87         .50       .97      1.20
                                =========  ==========  ========  =======
</TABLE>


                                        10
<PAGE>
     YEAR  2000  DISCLOSURES

     Based  on  a  review  of  the Company's business since January 1, 2000, the
Company  has  not  experienced  any  material  effects of the Year 2000 problem.
Although the Company has not been informed of any material risks associated with
the  Year  2000  problem  from third parties, there can be no assurance that the
Company  will  not  be  impacted  in  the future.  The Company will continuously
monitor  its  business  applications  and  maintain contact with its third party
vendors  and  key  business  partners to resolve any Year 2000 problems that may
arise  in  the  future.  The  costs incurred by the Company to address Year 2000
issues  were  approximately  $79,000.

               SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA

The  tables  and  schedules on the following pages set forth certain significant
financial  information and statistical data with respect to: the distribution of
assets,  liabilities and stockholders' equity of the Company, the interest rates
experienced  by  the  Company; the investment portfolio of the Company; the loan
portfolio  of  the  Company,  including  types  of  loans,  maturities,  and
sensitivities  of  loans  to  changes  in  interest  rates  and  information  on
nonperforming  loans;  summary of the loan loss experience and reserves for loan
losses of the Company; types of deposits of the Company and the return on equity
and  assets  for  the  Company.


                                        11
<PAGE>

                    DISTRIBUTION OF ASSETS, LIABILITIES, AND
                              STOCKHOLDERS' EQUITY:
                    INTEREST RATES AND INTEREST DIFFERENTIALS

AVERAGE  BALANCES

The condensed average balance sheet for the period indicated is
presented below. (1)

<TABLE>
<CAPTION>
                                          Years  Ended
                                          December  31,

                                         1999      1998
<S>                                     <C>        <C>
                                     (Dollars in Thousands)
ASSETS

Nontaxable securities                   $1,552      $-
Cash and due from banks                 1,477     1,112
Taxable securities                      22,598    18,353
Securities valuation account            (421)       80
Federal funds sold                      3,208     2,558
Loans (2)                               32,729    25,518
Reserve for loan losses                 (407)     (314)
Other assets                            1,902     1,190
                                       --------  --------
                                       $62,638   $48,497
                                       ========  ========

Total interest-earning assets          $60,087   $46,429
                                       ========  ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Noninterest-bearing demand              $6,486    $4,149
Interest-bearing demand                 12,930    9,734
Savings                                  732       458
Time                                    34,071    26,162
                                       --------  --------
Total deposits                         $54,219   $40,503

Other liabilities                        575       255
                                       --------  --------
Total liabilities                       54,794    40,758
                                       --------  --------
Stockholders' equity                    7,844     7,739
                                       --------  --------
                                       $62,638   $48,497
                                       ========  ========

Total interest-bearing liabilities     $47,733   $36,354
                                       ========  ========
<FN>

(1)          For each category, average balances were determined using the daily
average  balances  during  the  year.

(2)          Nonaccrual  loans  of  $25,000  were  included in average loans for
1999.  There  were  no  nonaccrual  loans  included  in  average loans for 1998.
</TABLE>


                                       12
<PAGE>
     INTEREST  INCOME  AND  INTEREST  EXPENSE

     The  following tables set forth the amount of the Company's interest income
and  interest  expense  for  each  category  of  interest-earning  assets  and
interest-bearing  liabilities  and  the  average  interest  rate  for  total
interest-earning  assets  and  total  interest-bearing liabilities, net interest
spread  and  net  yield  on  average  interest-earning  assets.


<TABLE>
<CAPTION>
                                                         Years  Ended  December  31,
                                                         1999                 1998
                                                              Average            Average
                                                    Interest    Rate    Interest   Rate
                                                           (Dollars in Thousands)
<S>                                                <C>         <C>      <C>        <C>
INTEREST INCOME:
    Interest and fees on loans (1)                 $   3,145     9.61%  $   2,545  9.97%
    Interest on taxable securities                     1,298     5.75       1,140  6.21
    Interest on nontaxable securities (2)                 66     4.21           -     -
    Interest on Federal funds sold                       157     4.90         136  5.32
                                                   ----------           ---------
    Total interest income                          $   4,666     7.77   $   3,821  8.23
                                                   ----------           ---------

  INTEREST EXPENSE:
    Interest on interest-bearing
      demand deposits                              $     346     2.68   $     322  3.31
    Interest on savings deposits                          18     2.51          12  2.66
    Interest on time deposits                          1,849     5.43       1,557  5.95
                                                   ----------           ---------
    Total interest expense                             2,213     4.64       1,891  5.20
                                                   ----------           ---------

  NET INTEREST INCOME                              $   2,453               $1,930
                                                   ==========             =======

    Net interest spread                                          3.13%             3.03%
                                                               ========            ======
    Net yield on average interest-earning assets                 4.08%             4.16%
                                                               ========            ======
<FN>

(1)          Interest  and  fees  on  loans  includes  $243,000 and $150,000 of loan fee
income  for  the  years  ended  December  31, 1999 and 1998, respectively.  There was no
interest  income  recognized  on  nonaccrual  loans  during  1999  or  1998.

(2)          Average  rates  on  nontaxable  securities have not been presented on a tax
equivalent  basis.
</TABLE>


                                       13
<PAGE>
     RATE  AND  VOLUME  ANALYSIS

     The following table describes the extent to which changes in interest rates
and  changes  in  volume  of  interest-earning  assets  and  interest-bearing
liabilities  have  affected the Company's interest income and expense during the
year  indicated.  For  each  category  of  interest-earning  assets  and
interest-bearing liabilities, information is provided on changes attributable to
(1)  change  in  volume (change in volume multiplied by old rate); (2) change in
rate  (change in rate multiplied by old volume); and (3) a combination of change
in  rate  and  change  in  volume.  The  changes in interest income and interest
expense attributable to both volume and rate have been allocated proportionately
on  a  consistent  basis to the change due to volume and the change due to rate.

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                                        1999 vs. 1998
                                                       Changes Due To:
                                                                       Increase
                                               Rate       Volume      (Decrease)
                                                    (Dollars in Thousands)
Increase (decrease) in:
Income from interest-earning assets:
<S>                                            <C>       <C>          <C>
  Interest and fees on loans                   $   (96)  $       696  $   600
  Interest on taxable securities                   (91)          249      158
  Interest on nontaxable securities                  -            66       66
  Interest on Federal funds sold                   (11)           32       21
                                               --------  -----------  -------
    Total interest income                         (198)        1,043      845
                                               --------  -----------  -------

  Expense from interest-bearing liabilities:
  Interest on interest-bearing
    demand deposits                                (69)           93       24
  Interest on savings deposits                      (1)            7        6
  Interest on time deposits                       (146)          438      292
                                               --------  -----------  -------
    Total interest expense                        (216)          538      322
                                               --------  -----------  -------
    Net interest income                        $    18   $       505  $   523
                                               ========  ===========  =======
</TABLE>


                                       14
<PAGE>
                              INVESTMENT PORTFOLIO

     TYPES  OF  INVESTMENTS

     The carrying amounts of securities at the dates indicated are summarized as
follows:

<TABLE>
<CAPTION>
                                         December 31,
                                       1999        1998
                                    (Dollars in Thousands)
<S>                                <C>            <C>
  U.S. Government agencies         $      16,000  $18,066
  State and municipal securities           1,651      268
  Mortgage-backed securities               4,192    3,126
                                   -------------  -------
                                   $      21,843  $21,460
                                   =============  =======
</TABLE>

     MATURITIES

     The  amounts  of  securities  in  each category as of December 31, 1999 are
shown  in  the following table according to contractual maturity classifications
(1)  one  year  or  less,  (2) after one year through five years, (3) after five
years  through  ten  years  and  (4)  after  ten  years.

<TABLE>
<CAPTION>
                                                    After one year    After five years
                                One year or less  through five years  through ten years
                                Amount   Yield(1)  Amount   Yield(1)  Amount   Yield(1)
<S>                             <C>      <C>       <C>      <C>       <C>      <C>
U.S. Government agencies        $    --       --%  $ 9,999     6.03%  $ 6,001     6.54%
State and municipal securities       --       --        --       --       371     3.98
Mortgage-backed securities           --       --       433     6.36     1,261     5.51
                                -------            -------            -------
                                $    --       --   $10,432     6.04   $ 7,633     6.25
                                =======            =======            =======
</TABLE>

<TABLE>
<CAPTION>
                                   After ten years            Total
                                 Amount       Yield (1)  Amount   Yield (1)
<S>                         <C>               <C>        <C>      <C>
U.S. Government agencies          $       --       -- %  $16,000      6.22%
State and municipal                    1,280       4.46    1,651      4.35
Mortgage-backed securities             2,498       5.06    4,192      5.33
                                  ----------             -------
                                  $    3,778       4.86  $21,843      5.91
                                   ==========             =======
<FN>
(1)     Yields were computed using coupon interest, adding discount accretion or
subtracting  premium  amortization,  as appropriate, on a ratable basis over the
life  of  each security.  The weighted average yield for each maturity range was
computed  using  the  carrying  value  of  each  security  in  that  range.
</TABLE>

                                       15
<PAGE>
                         LOAN PORTFOLIO

     TYPES  OF  LOANS

     The  amount  of  loans  outstanding at the indicated dates
are shown in the following table according to the type of  loan.

<TABLE>
<CAPTION>
                                               December 31,
                                              1999         1998
                                           (Dollars in Thousands)
<S>                                      <C>             <C>
  Commercial                             $       7,520   $ 8,590
  Real estate-construction                       5,419     4,330
  Real estate-mortgage                          18,276     8,886
  Consumer installment loans and other           7,339     5,729
                                         --------------  --------
                                                38,554    27,535
  Less allowance for loan losses                  (482)     (360)
                                         --------------  --------
    Net loans                            $      38,072   $27,175
                                         ==============  ========
</TABLE>

     MATURITIES  AND  SENSITIVITIES  OF  LOANS  TO  CHANGES  IN  INTEREST  RATES

     Total  loans  as  of  December  31,  1999  are shown in the following table
according  to  contractual  maturity  classifications  (1) one year or less, (2)
after  one  year  through  five  years,  and  (3)  after  five  years.

     The  disclosure  of  loans  by  the  required  categories,  commercial  and
financial  and  real  estate  - construction, is not available and would involve
undue  burden  and  expense  to  the Company.  In making this determination, the
Company  has  considered  the estimated cost to compile the required information
and  its  current  electronic  data  processing  capability.


                                                       (Dollars  in  Thousands)
     Maturity:
           One  year  or  less                                $     23,701
           After  one  year  through  five  years                   14,649
           After  five  years                                          204
                                                                  --------
                                                              $     38,554
                                                                    ======

     The  following  table  summarizes  loans  at December 31, 1999 with the due
dates  after  one  year  which  have  predetermined  and  floating or adjustable
interest  rates.

                                                          (Dollars in Thousands)

     Predetermined  interest  rates                            $     13,585
     Floating  or  adjustable  interest  rates                        1,268
                                                                    -------
                                                               $     14,853
                                                                     ======


                                       16
<PAGE>
RISK  ELEMENTS

     Information with respect to nonaccrual, past due, and restructured loans at
December  31,  1999  and  1998  is  as  follows:

<TABLE>
<CAPTION>
                                                        December 31,
                                                      1999       1998
                                                  (Dollars in Thousands)
<S>                                               <C>            <C>
  Nonaccrual loans                                        $  23   $  0
  Loans contractually past due ninety
    days or more as to interest or
    principal payments and still accruing                     0      0
  Restructured loans                                          0      0
  Loans, now current about which there are
    serious doubts as to the ability of the
    borrower to comply with loan repayment terms              0      0
  Interest income that would have been recorded
    on nonaccrual and restructured loans under
    original terms                                            2      0
  Interest income that was recorded on
    nonaccrual and restructured loans                         0      0
</TABLE>

     It  is the policy of the Bank to discontinue the accrual of interest income
when,  in  the  opinion  of  management,  collection  of  such  interest becomes
doubtful.  This status is accorded such interest when (1) there is a significant
deterioration  in  the financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or interest is more
than  ninety  days  past  due,  unless  the loan is both well-secured and in the
process  of  collection.

     Loans classified for regulatory purposes as loss, doubtful, substandard, or
special  mention that have not been included in the table above do not represent
or  result from trends or uncertainties which management reasonably expects will
materially  impact  future  operating  results, liquidity, or capital resources.
These  classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the  ability  of  such  borrowers  to  comply  with  the  loan  repayment terms.


                                       17
<PAGE>
                         SUMMARY OF LOAN LOSS EXPERIENCE

     The  following  table  summarizes  average  loan  balances  for  the  year
determined  using  the  daily  average  balances during the year; changes in the
allowance for loan losses arising from loans charged off and recoveries on loans
previously  charged  off;  additions to the allowance which have been charged to
operating  expense;  and the ratio of net charge-offs during the year to average
loans.

<TABLE>
<CAPTION>
                                              Years Ended December 31,
                                                   1999       1998
                                               (Dollars in Thousands)
<S>                                             <C>         <C>
  Average amount of loans outstanding           $  32,729   $ 25,518
                                                ==========  =========

  Balance of allowance for loan losses
  at beginning of year                          $     360   $    235
                                                ----------  ---------
  Loans charged off
  Commercial and financial                             50         --
  Real estate mortgage                                 --         --
  Real estate mortgage                                 --         --
  Installment                                           1          7
                                                ----------  ---------
                                                       51          7
                                                ----------  ---------
  Loans recovered
  Commercial and financial                             --         --
  Real estate mortgage                                 --         --
  Installment                                           2          4
                                                ----------  ---------
                                                        2          4
                                                ----------  ---------
  Net charge-offs                                      49          3
                                                ----------  ---------
  Additions to allowance charged to operating
  expense during year                                 171        128
                                                ----------  ---------
  Balance of allowance for loan losses
  at end of year                                $     482   $    360
                                                ==========  =========
  Ratio of net loans charged off during the
  year to average loans outstanding                  0.15%      0.01%
                                                ==========  =========
</TABLE>


                                       18
<PAGE>
     ALLOWANCE  FOR  LOAN  LOSSES

     The  allowance  for  loan  losses  is  maintained at a level that is deemed
appropriate  by  management  to adequately cover all known and inherent risks in
the  loan  portfolio.  Management's  evaluation of the loan portfolio includes a
periodic  review  of loan loss experience, current economic conditions which may
affect  the borrower's ability to pay and the underlying collateral value of the
loans.

     As of December 31, 1999 and 1998, management had made no allocations of its
allowance  for  loan  losses  to  specific  categories  of  loans.  Based  on
management's  best  estimate, the allocation of the allowance for loan losses to
types  of  loans,  as  of  the  indicated  dates,  is  as  follows:

<TABLE>
<CAPTION>
                                December 31, 1999          December 31, 1998
                                   Percent of loans in        Percent of loans in
                                      each category             each category
                             Amount   to total loans   Amount   to total loans
                                           (Dollars in Thousands)
<S>                          <C>      <C>              <C>      <C>
Commercial                   $   145           19.51%  $   108           31.19%
Real estate - construction        72           14.05        54           15.73
Real estate - mortgage           217           47.40       162           32.27
Consumer installment
  loans and other                 48           19.04        36           20.81
                             -------  ---------------  -------  ---------------
                             $   482          100.00%  $   360          100.00%
                             =======  ===============  =======  ===============
</TABLE>


                                       19
<PAGE>
                                    DEPOSITS

     Average amount of deposits and average rates paid thereon, classified as to
noninterest-bearing  demand  deposits, interest-bearing demand deposits, savings
deposits,  and time deposits, for the periods of banking operations is presented
below.(1)

<TABLE>
<CAPTION>


                                          Years  Ended  December  31,
                                           1999               1998
                                      Amount   Percent   Amount   Percent
(Dollars in Thousands)
<S>                                   <C>      <C>       <C>      <C>       <C>
Noninterest-bearing demand deposits   $ 6,486        --        %  $  4,149   -- %
Interest-bearing demand deposits       12,930      2.68    9,734      3.31
Savings deposits                          732      2.51      458      2.66
Time deposits                          34,071      5.43   26,162      5.95
                                      -------           --------
                                      $54,219           $ 40,503
                                      =======           ========
<FN>
     (1)          Average  balances  were  determined  using  the  daily  average
balances  during  the  year.

</TABLE>

     The  amounts  of time certificates of deposit issued in amounts of $100,000
or  more  as of December 31, 1999 are shown below by category, which is based on
time  remaining  until  maturity  of  (1)  three  months or less, (2) over three
through  six  months,  (3)  over  six through twelve months, and (4) over twelve
months.
                                                          (Dollars in Thousands)
     Three  months  or  less                                    $      2,499
     Over  three  months  through  six  months                         5,817
     Over  six  through  twelve  months                                7,794
     Over  twelve  months                                                733
                                                                    --------
          Total                                                 $     16,843
                                                                      ======

                    RETURN ON ASSETS AND STOCKHOLDERS' EQUITY

The  following  rate  of return information for the years indicated is presented
below.

                                                     Years  Ended  December  31,
                                                            1999     1998

     Return  on  assets  (1)                                0.77%    0.98%
     Return  on  equity  (2)                                6.19     6.13
     Dividend  payout  ratio  (3)                             -       -
     Equity  to  assets  ratio  (4)                        12.52    15.96

(1)     Net  income  divided  by  average  total  assets.
(2)     Net  income  divided  by  average  equity.
(3)     Dividends  declared  per share of common stock divided by net income per
        share.
(4)     Average  common  equity  divided  by  average  total  assets.


                                       20
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT
--------------------------------------------------------------------------------

TO  THE  BOARD  OF  DIRECTORS
FORSYTH  BANCSHARES,  INC.  AND  SUBSIDIARY
CUMMING,  GEORGIA

     We  have  audited  the  accompanying consolidated balance sheets of FORSYTH
BANCSHARES,  INC.  AND  SUBSIDIARY  as  of  December  31, 1999 and 1998, and the
related statements of income, comprehensive income (loss), stockholders' equity,
and  cash  flows  for  the years then ended.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.


     We  conducted  our  audits  in  accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audits  provide  a  reasonable  basis  for  our opinion.


     In  our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Forsyth Bancshares, Inc. and
subsidiary as of December 31, 1999 and 1998, and the results of their operations
and  their  cash  flows  for  the years then ended, in conformity with generally
accepted  accounting  principles.


                                       /s/  MAULDIN  &  JENKINS,  LLC


Atlanta,  Georgia
February  10,  2000


                                       21
<PAGE>
<TABLE>
<CAPTION>
                                         FORSYTH BANCSHARES, INC.
                                              AND SUBSIDIARY

                                       CONSOLIDATED BALANCE SHEETS
                                        DECEMBER 31, 1999 AND 1998


ASSETS                                                                  1999                 1998
                                                                 -------------------  -------------------
<S>                                                              <C>                  <C>
  Cash and due from banks                                        $        1,958,658   $        1,326,028
  Federal funds sold                                                      2,060,000            8,180,000
  Securities available-for-sale                                          20,910,159           19,850,223
  Securities held-to-maturity, at cost (fair value of $922,840
         and $1,625,358)                                                    932,579            1,609,806

  Loans                                                                  38,554,138           27,535,516
  Less allowance for loan losses                                            481,930              360,052
                                                                 -------------------  -------------------
         Loans, net                                                      38,072,208           27,175,464

  Premises and equipment                                                  1,051,136              943,207
  Other assets                                                            1,224,000              672,968
                                                                 -------------------  -------------------

              TOTAL ASSETS                                       $       66,208,740   $       59,757,696
                                                                 ===================  ===================

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Deposits
           Noninterest-bearing demand                            $        6,214,719   $        5,127,899
           Interest-bearing demand                                       14,358,555           11,922,927
           Savings                                                          746,213              602,876
           Time, $100,000 and over                                       16,843,202           16,095,235
           Other time                                                    19,877,410           17,663,507
                                                                 -------------------  -------------------
               Total deposits                                            58,040,099           51,412,444
  Other liabilities                                                         461,554              334,348
                                                                 -------------------  -------------------
                TOTAL LIABILITIES                                        58,501,653           51,746,792
                                                                 ===================  -------------------

  Commitments and contingent liabilities

  Stockholders' equity
          Common stock, no par value; 10,000,000 shares
           authorized; 800,000 issued and outstanding                     7,960,341            7,960,341
           Retained earnings (deficit)                                      459,735              (25,497)
           Accumulated other comprehensive income (loss)                   (712,989)              76,060
                                                                 -------------------  -------------------
                  TOTAL STOCKHOLDERS' EQUITY                              7,707,087            8,010,904
                                                                 -------------------  -------------------
                  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $       66,208,740   $       59,757,696
                                                                 ===================  ===================
</TABLE>

See  Notes  to  Consolidated  Financial  Statements.


                                       22
<PAGE>
<TABLE>
<CAPTION>

                                              FORSYTH BANCSHARES, INC.
                                                   AND SUBSIDIARY

                                          CONSOLIDATED STATEMENTS OF INCOME
                                       YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------------------------------------------
                                                                            1999                      1998
                                                                   -----------------------  ------------------------
<S>                                                                <C>                      <C>
  INTEREST INCOME
     Loans                                                         $             3,145,196  $             2,544,637
     Taxable securities                                                          1,298,263                1,140,389
     Nontaxable securities                                                          65,405                        -
     Federal funds sold                                                            157,297                  136,164
                                                                   -----------------------  ------------------------
            TOTAL INTEREST INCOME                                                4,666,161                3,821,190
                                                                   -----------------------  ------------------------

  INTEREST EXPENSE ON DEPOSITS                                                   2,213,029                1,890,802
                                                                   -----------------------  ------------------------

            NET INTEREST INCOME                                                  2,453,132                1,930,388
  PROVISION FOR LOAN LOSSES                                                        170,818                  127,748
                                                                   -----------------------  ------------------------
            NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                  2,282,314                1,802,640
                                                                   -----------------------  ------------------------

  OTHER INCOME
     Service charges on deposit accounts                                           103,566                   70,529
     Other operating income                                                         18,256                   21,173
     Net realized gains on sales of securities available-for-sale                    7,089                   12,885
                                                                   -----------------------  ------------------------
            TOTAL OTHER INCOME                                                     128,911                  104,587
                                                                   -----------------------  ------------------------

  OTHER EXPENSES
     Salaries and employee benefits                                                830,537                  672,845
     Equipment and occupancy expenses                                              281,020                  255,055
     Other operating expenses                                                      600,104                  415,829
                                                                   -----------------------  ------------------------
            TOTAL OTHER EXPENSES                                                 1,711,661                1,343,729
                                                                   -----------------------  ------------------------

            INCOME BEFORE INCOME TAXES AND CUMULATIVE
            EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                             699,564                  563,498

  INCOME TAX EXPENSE                                                               214,332                        -
                                                                   -----------------------  ------------------------

            INCOME BEFORE CUMULATIVE EFFECT OF A
              CHANGE IN ACCOUNTING PRINCIPLE                                       485,232                  563,498

  CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                                  -                  (88,805)
                                                                   -----------------------  ------------------------

                   NET INCOME                                      $               485,232  $               474,693
                                                                   =======================  ========================

  EARNINGS PER COMMON SHARE BEFORE CUMULATIVE EFFECT
       OF A CHANGE IN ACCOUNTING PRINCIPLE                         $                  0.61  $                  0.70
  CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                                  -                    (0.11)
  EARNINGS PER COMMON SHARE                                                           0.61                     0.59
                                                                   =======================  ========================
</TABLE>
SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS.


                                       23
<PAGE>
<TABLE>
<CAPTION>
                                              FORSYTH BANCSHARES, INC.
                                                   AND SUBSIDIARY

                               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                       YEARS ENDED DECEMBER 31, 1999 AND 1998

--------------------------------------------------------------------------------------------------------------------

                                                                                1999                    1998
                                                                      ------------------------  --------------------
NET INCOME                                                            $               485,232   $           474,693
                                                                      ------------------------  --------------------
<S>                                                                   <C>                       <C>
  OTHER COMPREHENSIVE INCOME (LOSS):

       Unrealized gains (losses) on securities available-for-sale:

           Unrealized holding gains (losses) arising during period,
               net of tax (benefits) of $(404,070) and $43,563,
               respectively                                                          (784,370)               33,572

            Reclassification adjustment for gains realized
                in net income, net of tax of $2,410 and $4,381,
                respectively                                                           (4,679)               (8,504)
                                                                      ------------------------  --------------------

  OTHER COMPREHENSIVE INCOME (LOSS)                                                  (789,049)               25,068
                                                                      ------------------------  --------------------

COMPREHENSIVE INCOME (LOSS)                                           $              (303,817)  $           499,761
                                                                      ------------------------  --------------------
</TABLE>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS.


                                       24
<PAGE>
<TABLE>
<CAPTION>
                                               FORSYTH BANCSHARES, INC.
                                                    AND SUBSIDIARY

                                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                          YEARS ENDED DECEMBER 31, 1999 AND 1998
----------------------------------------------------------------------------------------------------------------------

                                             Commonstock                               ACCUMULATED
                                        -----------------------                            Other            Total
                                                     At Amount    Retained Earnings    Comprehensive    Stockholders'
                                          Shares      Paid-In         (Deficit)        Income (Loss)       Equity
                                        -----------  ----------  -------------------  ---------------  ---------------
<S>                                     <C>          <C>         <C>                  <C>              <C>
Balance, December 31, 1997                  800,000  $7,960,341  $         (500,190)  $       50,992   $    7,511,143
    Net Income                                    -           -             474,693                -          474,693
    Other Comprehensive Income                    -           -                   -           25,068           25,068
                                        -----------  ----------  -------------------  ---------------  ---------------
Balance, December 31, 1998                  800,000   7,960,341             (25,497)          76,060        8,010,904
    Net Income                                    -           -             485,232                -          485,232
    Other Comprehensive Loss                      -           -                   -         (789,049)        (789,049)
                                        -----------  ----------  -------------------  ---------------  ---------------
Balance, December 31, 1999                  800,000  $7,960,341  $          459,735   $     (712,989)  $    7,707,087
                                        ===========  ==========  ===================  ===============  ===============
</TABLE>

SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS.


                                       25
<PAGE>
<TABLE>
<CAPTION>
                                   FORSYTH BANCSHARES, INC.
                                        AND SUBSIDIARY

                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                            YEARS ENDED DECEMBER 31, 1999 AND 1998

---------------------------------------------------------------------------------------------

                                                                     1999           1998
                                                                   -----------  -------------
<S>                                                              <C>            <C>
  OPERATING ACTIVITIES
      Net income                                                 $    485,232   $    474,693
      Adjustments to reconcile net income to net cash
        provided by operating activities:
           Depreciation                                               124,833        107,453
           Write-off/amortization of organization costs                     -         88,805
           Provision for loan losses                                  170,818        127,748
           Deferred income taxes                                      (40,891)      (129,777)
           Gain on sale of securities available-for-sale               (7,089)       (12,885)
           Increase in interest receivable                            (98,181)      (123,392)
           Increase (decrease) in interest payable                    (32,992)       148,103
           Other operating activities                                 154,718        (26,894)
                                                                   -----------  -------------

              Net cash provided by operating activities               756,448        653,854
                                                                   -----------  -------------

  INVESTING ACTIVITIES
      Purchases of securities available-for-sale                  (11,747,136)   (15,214,920)
      Proceeds from maturities of securities available-for-sale     7,239,072      4,198,212
      Proceeds from sales of securities available-for-sale          2,259,688      2,013,555
      Proceeds from maturities of securities held-to-maturity         677,227      2,351,611
      Net (increase) decrease in Federal funds sold                 6,120,000     (6,170,000)
      Net increase in loans                                       (11,067,562)    (8,738,318)
      Purchase of premises and equipment                             (232,762)      (621,564)
                                                                   -----------  -------------

              Net cash used in investing activities                (6,751,473)   (22,181,424)
                                                                   -----------  -------------

  FINANCING ACTIVITIES

      Net increase in deposits                                      6,627,655     21,066,847
                                                                   -----------  -------------

                Net cash provided by financing activities           6,627,655     21,066,847
                                                                   -----------  -------------

      Net increase (decrease) in cash and due from banks              632,630       (460,723)
                                                                   -----------  -------------

      Cash and due from banks at beginning of year                  1,326,028      1,786,751
                                                                   -----------  -------------

    Cash and due from banks at end of year                       $  1,958,658   $  1,326,028
                                                                  ===========  ==============
</TABLE>


                                       26
<PAGE>
<TABLE>
<CAPTION>
                                 FORSYTH BANCSHARES, INC.
                                      AND SUBSIDIARY

                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                          YEARS ENDED DECEMBER 31, 1999 AND 1998
------------------------------------------------------------------------------------------

                                                                      1999        1998
                                                                   ----------  -----------
<S>                                                                <C>         <C>
  SUPPLEMENTAL DISCLOSURES
       Cash paid for:
           Interest                                                $2,246,021  $1,742,699

           Income taxes                                            $  128,000  $  132,000

  NONCASH TRANSACTIONS
       Unrealized (gains) losses on securities available-for-sale  $1,195,529  $  (64,250)
</TABLE>


SEE  NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS.


                                       27
<PAGE>
                            FORSYTH BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE 1.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

          NATURE  OF  BUSINESS

Forsyth  Bancshares,  Inc.  (the  "Company")  is  a  bank  holding company whose
business  is  conducted  by  its  wholly-owned  subsidiary, The Citizens Bank of
Forsyth County, (the "Bank").  The Bank is a commercial bank located in Cumming,
Forsyth  County, Georgia.  The Bank provides a full range of banking services in
its  primary  market  area  of  Forsyth  County  and  surrounding  counties.

          BASIS  OF  PRESENTATION

The  consolidated  financial  statements include the accounts of the Company and
its  subsidiary.  Significant  intercompany  transactions  and  accounts  are
eliminated  in  consolidation.

The  preparation  of  financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  and disclosures of
contingent  assets and liabilities as of the balance sheet date and the reported
amounts  of  revenues  and expenses during the reporting period.  Actual results
could  differ  from  those  estimates.  Material estimates that are particularly
susceptible  to  significant change in the near term relate to the determination
of  the  allowance  for  loan  losses  and  deferred  tax  assets.

          CASH  AND  DUE  FROM  BANKS

Cash  on  hand,  cash items in process of collection, and amounts due from banks
are  included  in  cash  and  due  from  banks.

The  Company  maintains  amounts  due  from  banks  which,  at times, may exceed
Federally  insured  limits.  The  Company has not experienced any losses in such
accounts.


                                       28
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE 1.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

          SECURITIES

Securities  are  classified  based  on  management's  intention  on  the date of
purchase.  Securities  which  management  has  the intent and ability to hold to
maturity are classified as held-to-maturity and recorded at amortized cost.  All
other securities are classified as available-for-sale and recorded at fair value
with  net  unrealized  gains  and  losses reported in other comprehensive income
(loss),  net  of  tax.

Interest  and  dividends  on  securities, including amortization of premiums and
accretion  of  discounts,  are  included in interest income.  Realized gains and
losses  from  the  sales  of  securities  are  determined  using  the  specific
identification  method.

          LOANS

Loans  are  reported  at their outstanding principal balances less the allowance
for  loan  losses.  Interest  income  is  accrued based on the principal balance
outstanding.

Loan  origination  fees and certain direct costs of most loans are recognized at
the  time the loan is recorded.  Because net loan origination fees and costs are
not  material,  the  results of operations are not materially different than the
results  which  would  be  obtained  by  accounting  for  loan fees and costs in
accordance  with  generally  accepted  accounting  principles.

The  allowance for loan losses is maintained at a level that management believes
to  be  adequate  to absorb potential losses in the loan portfolio.  Loan losses
are  charged against the allowance when management believes the uncollectibility
of  a  loan  is confirmed.  Subsequent recoveries are credited to the allowance.
Management's  determination  of  the  adequacy  of  the allowance is based on an
evaluation  of  the  portfolio,  past  loan  loss  experience,  current economic
conditions,  volume,  growth, composition of the loan portfolio, and other risks
inherent  in  the  portfolio.  This  evaluation  is  inherently subjective as it
requires material estimates that are susceptible to significant change including
the  amounts and timing of future cash flows expected to be received on impaired
loans.  In  addition,  regulatory  agencies,  as  an  integral  part  of  their
examination  process,  periodically  review  the  Company's  allowance  for loan
losses,  and  may require the Company to record additions to the allowance based
on  their  judgment  about  information  available  to them at the time of their
examinations.

The  accrual of interest on loans is discontinued when, in management's opinion,
the borrower may be unable to meet payments as they become due.  Interest income
is  subsequently  recognized  only  to  the  extent  cash payments are received.


                                       29
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

          LOANS  (CONTINUED)

A loan is impaired when it is probable the Company will be unable to collect all
principal  and interest payments due in accordance with the contractual terms of
the  loan  agreement.  Individually identified impaired loans are measured based
on  the present value of payments expected to be received, using the contractual
loan  rate  as  the  discount  rate.  Alternatively, measurement may be based on
observable  market  prices  or,  for  loans  that  are  solely  dependent on the
collateral  for  repayment,  measurement  may  be based on the fair value of the
collateral.  If the recorded investment in the impaired loan exceeds the measure
of  fair  value,  a  valuation  allowance  is  established as a component of the
allowance for loan losses.  Changes to the valuation allowance are recorded as a
component  of  the  provision  for  loan  losses.

          PREMISES  AND  EQUIPMENT

Land  is  carried  at  cost.  Premises  and  equipment  are carried at cost less
accumulated  depreciation.  Depreciation  is  computed  principally  by  the
straight-line  method  over  the  estimated  useful  lives  of  the  assets.

          INCOME  TAXES

Income  tax  expense consists of current and deferred taxes.  Current income tax
provisions  approximate  taxes  to  be paid or refunded for the applicable year.
Deferred  income  tax  assets  and  liabilities are determined using the 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.

Recognition  of  deferred  tax  balance  sheet  amounts is based on management's
belief  that  it  is  more  likely than not that the tax benefit associated with
certain  temporary  differences  will  be  realized.  A  valuation  allowance is
recorded  for those deferred tax items for which it is more likely than not that
realization  will  not  occur  in  the  near  term.

The  Company  and  the  Bank file a consolidated income tax return.  Each entity
provides  for  income taxes based on its contribution to income taxes (benefits)
of  the  consolidated  group.


                                       30
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

          EARNINGS  PER  COMMON  SHARE

Earnings  per  common  share  are  computed  by  dividing  net  income  by  the
weighted-average  number  of  shares  of  common  stock  outstanding.  The
weighted-average  shares  of  common  stock outstanding was 800,000 for 1999 and
1998.

          CUMULATIVE  EFFECT  OF  A  CHANGE  IN  ACCOUNTING  PRINCIPLE

In  April of 1998, the Accounting Standards Executive Committee issued Statement
of  Position ("SOP") 98-5, "Reporting on the Costs of Start Up Activities".  SOP
98-5  requires  that  costs  of  start-up  activities  and organization costs be
expensed  as  incurred.  SOP  98-5 became effective for financial statements for
fiscal  years  beginning after December 15, 1998.  Early adoption was encouraged
for  fiscal  years  in  which  financial statements had not been issued.  During
1998,  the  Company  wrote  off  $88,805  of unamortized organization costs upon
adoption  of  SOP  98-5.  Prior  to  the  adoption  of SOP 98-5, the Company was
amortizing  these  costs  over  a  five  year  period.

          COMPREHENSIVE  INCOME

Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130, ("Reporting
Comprehensive  Income"),  describes  comprehensive  income  as  the total of all
components  of  comprehensive income, including net income.  Other comprehensive
income  refers  to  revenues,  expenses,  gains  and losses that under generally
accepted accounting principles are included in comprehensive income but excluded
from  net  income.  Currently, the Company's other comprehensive income consists
of  unrealized  gains  and  losses  on  available-for-sale  securities.


                                       31
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

          RECENT  ACCOUNTING  PRONOUNCEMENTS

In  June  1998,  the  Financial  Accounting Standards Board issued SFAS No. 133,
"Accounting  for  Derivative Instruments and Hedging Activities".  The effective
date  of  this  statement  has been deferred by SFAS No. 137 until fiscal  years
beginning after June 15, 2000.  However, the statement permits early adoption as
of  the beginning of any fiscal quarter after its issuance.  The Company expects
to  adopt  this  statement effective January 1, 2001.  SFAS No. 133 requires the
Company  to  recognize  all  derivatives  as either assets or liabilities in the
balance sheet at fair value.  For derivatives that are not designated as hedges,
the  gain  or  loss must be recognized in earnings in the period of change.  For
derivatives  that  are  designated  as  hedges, changes in the fair value of the
hedged  assets,  liabilities, or firm commitments must be recognized in earnings
or  recognized in other comprehensive income until the hedged item is recognized
in earnings, depending on the nature of the hedge.  The ineffective portion of a
derivative's  change  in  fair value must be recognized in earnings immediately.
Management  has not yet determined what effect the adoption of SFAS No. 133 will
have  on  the  Company's  earnings  or  financial  position.

There  are  no  other  recent  accounting  pronouncements  that have had, or are
expected  to  have,  a  material  effect  on the Company's financial statements.


                                       32
<PAGE>
<TABLE>
<CAPTION>
                               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------------------------------

NOTE  2.     SECURITIES

The  amortized  cost  and  fair  value  of  securities  are  summarized  as  follows:

                                                                     GROSS        GROSS
                                            AMORTIZED             UNREALIZED    UNREALIZED      FAIR
                                               COST                  GAINS        LOSSES        VALUE
                                            -------------------  -----------  ------------  -----------
<S>                                         <C>                   <C>          <C>           <C>
  SECURITIES AVAILABLE-FOR-SALE
  DECEMBER 31, 1999:
  U. S. GOVERNMENT AND AGENCY
  SECURITIES                                 $        16,184,104  $         -  $  (683,822)  $15,500,282
  STATE AND MUNICIPAL SECURITIES                       1,851,280            -     (200,168)    1,651,112
  MORTGAGE-BACKED SECURITIES                           3,955,062            -     (196,297)    3,758,765
                                             -------------------  -----------  ------------  -----------
                                             $        21,990,446  $         -  $(1,080,287)  $20,910,159
                                             ===================  ===========  ============  ===========

  DECEMBER 31, 1998:
  U. S. Government and agency
  securities                                $         16,941,184  $   150,890  $   (24,609)  $17,067,465
  State and municipal securities                         275,000            -       (7,312)      267,688
  Mortgage-backed securities                           2,518,797        3,077       (6,804)    2,515,070
                                             -------------------  -----------  ------------  -----------
                                            $         19,734,981  $   153,967  $   (38,725)  $19,850,223
                                  -          ===================  ===========  ============  ===========
  SECURITIES HELD-TO-MATURITY
  DECEMBER 31, 1999:
  U. S. GOVERNMENT AND AGENCY
  SECURITIES                                $            499,965  $         -  $    (4,565)  $   495,400
  MORTGAGE-BACKED SECURITIES                             432,614            -       (5,174)      427,440
                                             -------------------  -----------  ------------  -----------
                                            $            932,579  $         -  $    (9,739)  $   922,840
                                  -          ===================  ===========  ============  ===========

  DECEMBER 31, 1998:
  U. S. Government and agency
  securities                                $            999,029  $     8,421  $         -   $ 1,007,450
  Mortgage-backed securities                             610,777        7,131            -       617,908
                                             -------------------  -----------  ------------  -----------
                                            $          1,609,806  $    15,552  $         -   $ 1,625,358
                                  -          ===================  ===========  ============  ===========
</TABLE>


                                       33
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  2.     SECURITIES  (CONTINUED)

The  amortized  cost  and  fair  value  of securities as of December 31, 1999 by
contractual  maturity  are  shown below.  Maturities may differ from contractual
maturities  of  mortgage-backed  securities because the mortgages underlying the
securities  may  be called or prepaid with or without penalty.  Therefore, these
securities are not included in the maturity categories in the following summary.

<TABLE>
<CAPTION>
                                   SECURITIES             SECURITIES
                                AVAILABLE-FOR-SALE      HELD-TO-MATURITY
                            ------------------------  --------------------
                             AMORTIZED      FAIR      AMORTIZED     FAIR
                               COST         VALUE        COST      VALUE
                            -----------  -----------  ----------  --------
<S>                         <C>          <C>          <C>         <C>

Due from one year to five
years                       $ 9,834,468  $ 9,498,954  $  499,965  $495,400
Due from five years to ten
years                         6,744,350    6,372,825           -         -
Due after ten years           1,456,566    1,279,615           -         -
Mortgage-backed securities    3,955,062    3,758,765     432,614   427,440
                            -----------  -----------  ----------  --------
                            $21,990,446  $20,910,159  $  932,579  $922,840
                            ===========  ===========  ==========  ========
</TABLE>


<TABLE>
<CAPTION>

Securities  with  a  carrying value of $2,922,000 and $1,119,000 at December 31,
1999  and  1998,  respectively,  were  pledged to secure public deposits and for
other  purposes.

Gross  gains and losses on sales of securities available-for-sale consist of the
following:
                                   YEARS ENDED DECEMBER 31,
                                 --------------------------
                                         1999      1998
                                     -----------  -------
<S>                                  <C>          <C>
  Gross gains                        $    7,253   $12,885
  Gross losses                             (164)        -
  Net realized gains                 $    7,089   $12,885
                                      ----------  -------
</TABLE>


                                       34
<PAGE>
<TABLE>
<CAPTION>
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----------------------------------------------------------------------------------

NOTE  3.     LOANS  AND  ALLOWANCE  FOR  LOAN  LOSSES

The  composition  of  loans  is  summarized as follows:

                                                    DECEMBER 31,
                                           ----------------------------
                                                1999           1998
                                           --------------  ------------
<S>                                        <C>             <C>
  Commercial, financial, and agricultural  $   7,520,000   $ 8,590,000
  Real estate - construction                   5,419,000     4,330,000
  Real estate - mortgage                      18,276,000     8,886,000
  Consumer installment and other               7,339,138     5,729,516
                                              38,554,138    27,535,516
                                           --------------  ------------
  Allowance for loan losses                     (481,930)     (360,052)
  Loans, net                               $  38,072,208   $27,175,464
                                           ==============  ============
</TABLE>

<TABLE>
<CAPTION>
                                             YEARS ENDED DECEMBER 31,
                                              --------------------
                                                1999       1998
                                              ---------  ---------
<S>                                           <C>        <C>
BALANCE, BEGINNING OF YEAR                    $360,052   $235,000
  Provision for loan losses                    170,818    127,748
  Loans charged off                            (51,193)    (6,571)
  Recoveries of loans previously charged off     2,253      3,875
                                              ---------  ---------
BALANCE, END OF YEAR                          $481,930   $360,052
                                              =========  =========
</TABLE>


The  total recorded investment in impaired loans was $23,457 and $-- at December
31,  1999 and 1998, respectively.  There were no impaired loans that had related
allowances determined in accordance with SFAS No. 114, ("Accounting by Creditors
for  Impairment of a Loan") at December 31, 1999 and 1998.  The average recorded
investment  in  impaired  loans for 1999 and 1998 was $25,268 and $--.  Interest
income  recognized for cash payments received on impaired loans was not material
for  the  years  ended  December  31,  1999  and  1998.

The  Company  has  granted  loans  to certain directors, executive officers, and
their  related  entities.  The  interest rates on these loans were substantially
the  same as rates prevailing at the time of the transaction and repayment terms
are customary for the type of loan involved.  Changes in related party loans for
the  year  ended  December  31,  1999  are  as  follows:

<TABLE>
<CAPTION>
<S>                                              <C>
  BALANCE, BEGINNING OF YEAR                     $ 1,792,634
  Advances                                         5,981,565
  Repayments                                      (4,342,432)
  Transactions due to change in related parties       (7,751)
                                                 ------------
  BALANCE, END OF YEAR                           $ 3,424,016
                                                 ------------
</TABLE>


                                       35
<PAGE>
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  4.     PREMISES  AND  EQUIPMENT

Premises  and  equipment  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                            -----------------------
                                                                 1999         1998
                                                            ----------  -----------
<S>                                                     <C>             <C>
  Land                                                  $     607,892   $  607,892
  Equipment                                                   482,069      418,165
  Leasehold improvements                                      119,592      112,643
  Construction and equipment installation in progress,
     estimated cost to complete $207,000                      161,909            -
                                                            1,371,462    1,138,700
                                                            ----------  -----------
  Accumulated depreciation                                   (320,326)    (195,493)
                                                        $   1,051,136   $  943,207
                                                            ----------  -----------
</TABLE>

<TABLE>
<CAPTION>

NOTE  5.     DEPOSITS

The  scheduled  maturities of time deposits at December 31, 1999 are as follows:

<S>                                                    <C>
2000                                                   $34,238,842
2001                                                     1,933,161
2002                                                       336,623
2003                                                       186,986
2004                                                        25,000
                                                       -----------
                                                        36,720,612
                                                       ===========
</TABLE>

The  Company had related party deposits of $3,478,000 and $4,832,000 at December
31,  1999  and  1998,  respectively.

NOTE  6.     INCOME  TAXES

Income  tax  expense  consists  of  the  following:

<TABLE>
<CAPTION>
                               YEARS ENDED DECEMBER 31,
                              ------------------------
                                 1999       1998
                               ---------  ---------
<S>                            <C>        <C>
Current                        $255,223    129,777
Deferred                        (34,596)    82,503
Change in valuation allowance    (6,295)  (212,280)
                               ---------  ---------
    Income tax expense         $214,332          -
                               =========  =========
</TABLE>


                                       36
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  6.     INCOME  TAXES  (CONTINUED)

The  Company's  income  tax  expense  differs  from  the  amounts  computed  by
applying the Federal income tax statutory rates to  income before income taxes.
A  reconciliation  of  the differences is as follows:

<TABLE>
<CAPTION>
                                        YEARS ENDED DECEMBER 31,
                                ----------------------------------------
                                         1999                1998
                                -------------------  -------------------
                                 AMOUNT    PERCENT     AMOUNT    PERCENT
                                ---------  --------  ----------  --------
<S>                             <C>        <C>       <C>         <C>
Income taxes at statutory rate  $237,852        34%  $ 161,396        34%
Change in valuation allowance     (6,295)       (1)   (212,280)      (45)
Change in rate assumptions             -         -      49,540        11
Nontaxable interest              (22,481)       (3)          -         -
Other items, net                   5,256         1       1,344         -
Income tax expense              $214,332        31%  $       -         -%
                                ---------  --------  ----------  ---------
</TABLE>

<TABLE>
<CAPTION>

The  components  of  deferred  income  taxes  are  as  follows:


                                                                 DECEMBER 31,
                                                           ------------------------
                                                               1999         1998
                                                           -------------  ---------
<S>                                                        <C>            <C>
  Deferred tax assets:
  Loan loss reserves                                       $     118,191  $ 70,158
  Depreciation                                                    11,259     4,255
  Preopening and organization costs                               38,975    59,752
  Securities available-for-sale                                  367,298         -
  Other                                                            2,243     1,907
                                                           -------------  ---------
                                                                 537,966   136,072
                                                           -------------  ---------
  Valuation allowance                                                  -    (6,295)
                                                                 537,966   129,777
                                                           -------------  ---------

  Deferred tax liabilities; securities available-for-sale              -    39,182
                                                           -------------  ---------
  Net deferred tax assets                                  $     537,966  $ 90,595
                                                           =============  =========
</TABLE>


                                       37
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  7.     COMMITMENTS  AND  CONTINGENT  LIABILITIES

In the normal course of business, the Company has entered into off-balance-sheet
financial  instruments  which  are  not  reflected  in the financial statements.
These  financial  instruments  include  commitments to extend credit and standby
letters  of  credit.  Such  financial  instruments are included in the financial
statements  when  funds  are disbursed or the instruments become payable.  These
instruments  involve,  to  varying degrees, elements of credit risk in excess of
the  amount  recognized  in  the  balance  sheet.

The  Company's  exposure  to  credit  loss in the event of nonperformance by the
other  party  to  the  financial instrument for commitments to extend credit and
standby  letters  of  credit  is  represented by the contractual amount of those
instruments.  A  summary  of  the  Company's  commitments  is  as  follows:

<TABLE>
<CAPTION>
                                      DECEMBER 31,
                              -------------------------
                                   1999         1998
                              -------------  ----------
<S>                           <C>            <C>
Commitments to extend credit  $   6,115,000  $6,771,000
Standby letters of credit            75,000     106,000
                              -------------  ----------
                              $   6,190,000  $6,877,000
                              =============  ==========
</TABLE>

Commitments  to  extend  credit  generally  have fixed expiration dates or other
termination  clauses  and  may  require  payment  of  a  fee.  Since many of the
commitments  are  expected  to  expire  without  being  drawn  upon,  the  total
commitment  amounts  do not necessarily represent future cash requirements.  The
credit  risk  involved in issuing these financial instruments is essentially the
same  as  that  involved in extending loans to customers.  The Company evaluates
each  customer's  creditworthiness  on  a  case-by-case  basis.  The  amount  of
collateral  obtained,  if  deemed  necessary  by  the  Company upon extension of
credit,  is based on management's credit evaluation of the customer.  Collateral
held varies but may include real estate and improvements, marketable securities,
accounts  receivable,  inventory,  equipment,  and  personal  property.

Standby  letters  of credit are conditional commitments issued by the Company to
guarantee  the performance of a customer to a third party.  Those guarantees are
primarily  issued  to  support  public  and private borrowing arrangements.  The
credit  risk  involved  in  issuing letters of credit is essentially the same as
that  involved  in  extending  loans  to  customers.  Collateral  held varies as
specified  above and is required in instances which the Company deems necessary.


                                       38
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  7.     COMMITMENTS  AND  CONTINGENT  LIABILITIES  (CONTINUED)

In  the  normal  course  of  business,  the Company is involved in various legal
proceedings.  In  the  opinion  of  management  of  the  Company,  any liability
resulting  from  such  proceedings  would  not  have  a  material  effect on the
Company's  financial  statements.

The  Company  leases  its  main  office facility under a noncancelable operating
lease  agreement  which  expires  on  August 31, 2000, with options to renew for
three  successive  periods  of  four to five years each.  The lease requires the
payment  of  normal  maintenance  utilities  and insurance on the property.  The
Company  also  leases  various  other  equipment.

The  total  minimum  rental  commitment  at December 31, 1999 is due as follows:

     During  the  year  ending  December  31:
     2000                                                           $     49,173
                                                                    ============

The  total  rental  expense  for  the years ended December 31, 1999 and 1998 was
$73,507  and  $75,232,  respectively.


NOTE  8.     CONCENTRATIONS  OF  CREDIT

The  Company originates primarily commercial, residential, and consumer loans to
customers  in  Forsyth  County  and  surrounding  counties.  The  ability of the
majority  of the Company's customers to honor their contractual loan obligations
is  dependent  on  the  economy  in  these  areas.

Sixty-one  percent  of  the  Company's  loan  portfolio is concentrated in loans
secured by real estate, of which a substantial portion is secured by real estate
in the Company's primary market area.   Accordingly, the ultimate collectibility
of  the  loan  portfolio  is  susceptible to changes in market conditions in the
Company's  primary  market area.  The other significant concentrations of credit
by  type  of  loan  are  set  forth  in  Note  3.

The  Company,  as  a  matter  of policy, does not generally extend credit to any
single  borrower  or  group  of  related borrowers in excess of 25% of statutory
capital,  or  approximately  $1,625,000.


                                       39
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  9.     REGULATORY  MATTERS

The  Bank is subject to certain restrictions on the amount of dividends that may
be  declared  without  prior  regulatory  approval.  At  December  31,  1999,
approximately  $257,000  of  retained  earnings  were  available  for  dividend
declaration  without  regulatory  approval.

The  Company and the Bank are subject to various regulatory capital requirements
administered  by  the federal banking agencies.  Failure to meet minimum capital
requirements  can  initiate  certain  mandatory,  and  possibly  additional
discretionary  actions  by  regulators  that, if undertaken, could have a direct
material  effect on the financial statements.  Under capital adequacy guidelines
and  the regulatory framework for prompt corrective action, the Company and Bank
must  meet specific capital guidelines that involve quantitative measures of the
assets,  liabilities,  and  certain  off-balance sheet items as calculated under
regulatory  accounting  practices.  The  capital  amounts and classification are
also  subject  to qualitative judgments by the regulators about components, risk
weightings,  and other factors.  Prompt corrective provisions are not applicable
to  bank  holding  companies.

Quantitative  measures  established  by  regulation  to  ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of Total
and  Tier  I  capital  to  risk-weighted assets and of Tier I capital to average
assets.  Management  believes, as of December 31, 1999, the Company and the Bank
met  all  capital  adequacy  requirements  to  which  they  are  subject.

As  of  December 31, 1999, the most recent notification from the Federal Deposit
Insurance  Corporation  categorized  the  Bank  as  well  capitalized  under the
regulatory  framework  for  prompt corrective action.  To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based,
and  Tier  I  leverage ratios as set forth in the following table.  There are no
conditions  or  events  since  that  notification  that management believes have
changed  the  Bank's  category.


                                       40
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE  9.     REGULATORY  MATTERS  (CONTINUED)

The  Company  and  Bank's actual capital amounts and ratios are presented in the
following  table:

<TABLE>
<CAPTION>
                                                                          TO BE WELL
                                                        FOR CAPITAL    CAPITALIZED UNDER
                                                         ADEQUACY      PROMPT CORRECTIVE
                                         ACTUAL          PURPOSES      ACTION PROVISIONS
                                    ---------------  ---------------  -------------------
                                    AMOUNT   RATIO   AMOUNT   RATIO      AMOUNT     RATIO
                                    -------  ------  -------  ------  ------------  -----
                                                     (DOLLARS IN THOUSANDS)
                                    -----------------------------------------------------
<S>                                 <C>      <C>     <C>      <C>     <C>            <C>
AS OF DECEMBER 31, 1999:
TOTAL CAPITAL TO RISK WEIGHTED
ASSETS:
     CONSOLIDATED                   $ 8,902  20.60%  $ 3,458      8%  $        N/A    N/A
     BANK                           $ 7,588  17.90%  $ 3,392      8%        $4,240    10%
TIER I CAPITAL TO RISK WEIGHTED
ASSETS:
     CONSOLIDATED                   $ 8,420  19.48%  $ 1,729      4%  $        N/A    N/A
     BANK                           $ 7,106  16.76%  $ 1,696      4%        $2,544     6%
TIER I CAPITAL TO AVERAGE ASSETS:
     CONSOLIDATED                   $ 8,420  12.87%  $ 2,617      4%  $        N/A    N/A
     BANK                           $ 7,106  11.00%  $ 2,584      4%        $3,230     5%

As of December 31, 1998:
Total Capital to Risk Weighted
Assets:
     Consolidated                   $ 8,295  26.00%  $ 2,553      8%  $        N/A    N/A
     Bank                           $ 6,950  21.78%  $ 2,553      8%        $3,191    10%
Tier I Capital to Risk Weighted
Assets:
     Consolidated                   $ 7,935  24.87%  $ 1,277      4%  $        N/A    N/A
     Bank                           $ 6,590  20.66%  $ 1,277      4%        $1,915     6%
Tier I Capital to Average Assets:
     Consolidated                   $ 7,935  14.16%  $ 2,243      4%  $        N/A    N/A
     Bank                           $ 6,590  11.76%  $ 2,243      4%          $2,803   5%
</TABLE>


                                       41
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  10.     FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

The following methods and assumptions were used by the Company in estimating its
fair  value disclosures for financial instruments.  In cases where quoted market
prices  are  not  available, fair values are based on estimates using discounted
cash  flow  models.  Those  models are significantly affected by the assumptions
used,  including the discount rates and estimates of future cash flows.  In that
regard,  the  derived fair value estimates cannot be substantiated by comparison
to  independent  markets  and, in many cases, could not be realized in immediate
settlement  of  the  instrument.  The  use of different methodologies may have a
material  effect  on  the  estimated  fair  value amounts.  Also, the fair value
estimates  presented  herein  are  based  on  pertinent information available to
management  as  of  December  31,  1999  and  1998.  Such  amounts have not been
revalued  for  purposes  of  these  financial  statements since those dates and,
therefore,  current  estimates  of  fair value may differ significantly from the
amounts  presented  herein.

          CASH,  DUE  FROM  BANKS,  AND  FEDERAL  FUNDS  SOLD:

The carrying amounts of cash, due from banks, and Federal funds sold approximate
their  fair  value.

          AVAILABLE-FOR-SALE  AND  HELD-TO-MATURITY  SECURITIES:

Fair  values  for  securities  are  based  on  available  quoted  market prices.

          LOANS:

For  variable-rate  loans that reprice frequently and have no significant change
in  credit risk, fair values are based on carrying values.  For other loans, the
fair  values  are  estimated  using  discounted  cash flow models, using current
market  interest  rates  offered  for  loans  with similar terms to borrowers of
similar  credit  quality.  Fair  values  for  impaired loans are estimated using
discounted  cash  flow  models  or  based  on  the  fair value of the underlying
collateral.



                                       42
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  10.     FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  (CONTINUED)

          DEPOSITS:

The  carrying  amounts  of  demand deposits, savings deposits, and variable-rate
certificates  of  deposit  approximate  their  fair  values.  Fair  values  for
fixed-rate  certificates  of  deposit  are  estimated using discounted cash flow
models, using current market interest rates offered on certificates with similar
remaining  maturities.

          ACCRUED  INTEREST:

The  carrying  amounts  of  accrued  interest  approximate  their  fair  values.

          OFF-BALANCE  SHEET  INSTRUMENTS:

Fair  values  of the Company's off-balance sheet financial instruments are based
on  fees  charged  to  enter  into  similar agreements.  However, commitments to
extend credit and standby letters of credit do not represent a significant value
to  the  Company  until such commitments are funded.  The Company has determined
that  these  instruments  do  not  have a distinguishable fair value and no fair
value  has  been  assigned.

                                       43
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-------------------------------------------------------------------------------

NOTE  10.     FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  (CONTINUED)

The  carrying  amount  and  estimated  fair  values  of  the Company's financial
instruments  are  as  follows:

<TABLE>
<CAPTION>
                                    DECEMBER 31, 1999        DECEMBER 31, 1998
                               ------------------------  ------------------------
                                 CARRYING      FAIR       CARRYING        FAIR
                                 AMOUNT        VALUE       AMOUNT        VALUE
                               -----------  -----------  -----------  -----------
<S>                            <C>          <C>          <C>          <C>
Financial assets:
Cash, due from banks, and
  Federal funds sold           $ 4,018,658  $ 4,018,658  $ 9,506,028  $ 9,506,028
Securities available-for-sale   20,910,159   20,910,159   19,850,223   19,850,223
Securities held-to-maturity        932,579      922,840    1,609,806    1,625,358
Loans                           38,072,208   38,135,379   27,175,464   27,851,726
Accrued interest receivable        659,635      659,635      561,454      561,454

Financial liabilities:
  Deposits                     $58,040,099  $57,894,421  $51,412,444  $51,683,150
  Accrued interest payable         229,413      229,413      262,405      262,405
</TABLE>

NOTE  11.     SUPPLEMENTAL  FINANCIAL  DATA

Components  of  other  operating  expenses  in  excess  of  1% of revenue are as
follows:

<TABLE>
<CAPTION>
                                   YEARS ENDED DECEMBER 31,
                                  -------------------------
                                        1999     1998
                                     ---------  --------
<S>                                   <C>       <C>
  Professional fees                  $ 211,386  $97,772
  Data processing                      154,866   80,799
</TABLE>


                                       44
<PAGE>
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE  12.     PARENT  COMPANY  FINANCIAL  INFORMATION

The  following  information  presents  the  condensed balance sheets, statements
of income,  and  cash  flows of Forsyth Bancshares, Inc. as of and for the years
ended December  31,  1999  and  1998:

<TABLE>
<CAPTION>
                               CONDENSED BALANCE SHEETS

                                                 1999        1998
                                               ---------  -----------
<S>                                           <C>         <C>
  ASSETS
  Cash                                        $  494,075  $  687,421
  Investment in subsidiary                     6,393,053   6,666,295
  Premises and equipment                         769,801     607,892
  Other assets                                    50,158      50,082
                                               ---------  -----------

  TOTAL ASSETS                                $7,707,087  $8,011,690
                                               =========  ==========

  LIABILITIES, OTHER                          $        -  $      786

  STOCKHOLDERS' EQUITY                         7,707,087   8,010,904
                                               ---------  -----------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $7,707,087  $8,011,690
                                               =========  ==========
</TABLE>


                                       45
<PAGE>
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------

NOTE  12.     PARENT  COMPANY  FINANCIAL  INFORMATION  (CONTINUED)

<TABLE>
<CAPTION>

                    CONDENSED STATEMENTS OF INCOME

                                                  1999       1998
                                                --------    -------
<S>                                             <C>        <C>
  INTEREST INCOME                               $ 21,273   $ 35,417
                                                --------    -------

  EXPENSE, OTHER                                  77,140     72,171
                                                --------    -------

  (LOSS) BEFORE INCOME TAX BENEFITS
  AND EQUITY IN UNDISTRIBUTED INCOME
  OF SUBSIDIARY                                  (55,867)   (36,754)

  INCOME TAX BENEFITS                             25,290     50,082
                                                --------    -------

  INCOME (LOSS) BEFORE EQUITY IN UNDISTRIBUTED
  INCOME OF SUBSIDIARY                           (30,577)    13,328

  EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARY   515,809    461,365
                                                --------    -------

  NET INCOME                                    $485,232   $474,693
                                                ========    =======
</TABLE>


                                       46
<PAGE>
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---------------------------------------------------------------------

NOTE  12.     PARENT  COMPANY  FINANCIAL  INFORMATION  (CONTINUED)

<TABLE>
<CAPTION>
                       CONDENSED STATEMENTS OF CASH FLOWS

                                                 1999        1998
                                            -----------  ------------
<S>                                           <C>         <C>
  OPERATING ACTIVITIES
  Net income                                  $ 485,232   $  474,693
  Adjustments to reconcile net income to net
  cash used in operating activities:
      Undistributed income of subsidiary       (515,809)    (461,365)
      Write-off of organization costs                 -       30,695
      Other operating activities                   (860)     (54,298)
                                            -----------  ------------

    NET CASH USED IN OPERATING ACTIVITIES       (31,437)     (10,275)

  INVESTING ACTIVITIES
  Purchase of premises and equipment           (161,909)    (607,892)
                                            -----------  ------------

  NET CASH USED IN INVESTING ACTIVITIES        (161,909)    (607,892)
                                            -----------  ------------


  Net decrease in cash                         (193,346)    (618,167)

  Cash at beginning of year                     687,421    1,305,588
                                            -----------  ------------

  Cash at end of year                         $ 494,075   $  687,421
                                            ===========  ============
</TABLE>


                                       47
<PAGE>