<PAGE>

                UNITED STATES SECURITY AND EXCHANGE COMMISSION
                             Washington D.C. 20549
                                  FORM 10-Q/A

(Mark One)
  X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---- ACT OF 1934
For the quarterly period ended March 31, 2000
                                      OR
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
____ EXCHANGE ACT OF 1934
For the transition period from _____________to ______________.

                          Commission file No. 0-20251

                           Crescent Banking Company
--------------------------------------------------------------------------------
            (Exact Name of Registrant as Specified in its Charter)

         Georgia                                      58-1968323
--------------------------------------------------------------------------------
 (State of Incorporation)                  (I.R.S. Employer Identification No.)


                     251 Highway 515, Jasper, GA      30143
--------------------------------------------------------------------------------
              (Address of principal executive offices) (Zip code)

                                (706) 692-2424
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

                                Not applicable
--------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report)


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

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

  Common stock, $1 par value per share, 1,764,136 shares issued and outstanding
as of May 8, 2000.  6,668 shares are held as treasury stock.
<PAGE>

                           CRESCENT BANKING COMPANY

                                     INDEX

<TABLE>
<CAPTION>
Part 1.  Financial Information                                          Page No.
<S>                                                                     <C>

Item 1.  Consolidated Financial Statements

               Consolidated Balance Sheets                                    3

               Consolidated Statements of Operations and
                    Comprehensive Income (loss)                               4

               Consolidated Statements of Cash Flows                          5

               Notes to Consolidated Financial Statements                     6

Item 2.  Management's Discussion and Analysis
               of Financial Condition and Results of Operations               9

Item 3.  Quantitative and Qualitative Disclosures about Market Risk           19



Part II. Other Information

Item 1.  Legal Proceedings                                                    20

Item 2.  Changes in Securities                                                20

Item 3.  Defaults Upon Senior Securities                                      20

Item 4.  Submission of Matters to a Vote of Security Holders                  20

Item 5.  Other Information                                                    20

Item 6.  Exhibits and Reports on Form 8-K                                     20
</TABLE>

The following financial statements, including the financial statements as of and
for the year ending December 31, 1999, have been restated to reflect the effects
of application of EITF 87-6 B and ABP Opinion No. 25, which requires variable
accounting for the Company's stock options. The Company's cash earnings were not
effected by these restatements. See Note 5 to the financial statements.
<PAGE>

PART I - FINANCIAL INFORMATION


                   CRESCENT BANKING COMPANY AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       March 31       December 31
                                                                         2000            1999
                                                                    -----------------------------
<S>                                                                 <C>              <C>
Assets
Cash and due from banks                                               $  3,917,504   $  5,553,931
Interest bearing deposits in other banks                                   121,757        193,151
Securities available-for-sale                                           10,913,840     10,751,741
Securities held-to-maturity, at cost (fair value of
   $2,448,800 and $1,000,000, respectively)                              2,467,580      1,000,000
Mortgage loans held for sale                                            67,311,212     87,284,155

Loans                                                                   64,309,042     54,077,286
Less allowance for loan losses                                            (947,283)      (864,689)
                                                                    -----------------------------
  Loans, net                                                            63,361,759     53,212,597

Premises and equipment, net                                              5,859,318      6,036,385
Other real estate owned                                                     21,940         21,940
Purchased mortgage servicing rights                                      4,903,022      4,212,261
Cash surrender value of life insurance                                   3,122,971      2,101,068
Premium on deposits purchased                                              685,678        704,210
Accounts receivable-brokers and escrow agents                            3,504,642      3,107,498
Other assets                                                             1,937,869      1,574,368
                                                                    -----------------------------

  Total Assets                                                        $168,129,092   $175,753,305
                                                                    =============================


Liabilities
Deposits
    Noninterest -bearing demand deposits                              $ 26,381,331   $ 20,061,680
    Interest -bearing demand                                            30,977,810     29,983,190
    Savings                                                              3,636,360      3,301,304
    Time, $100,000 and over                                             11,948,630     17,542,304
    Other time                                                          42,173,083     39,418,175
                                                                    -----------------------------
       Total deposits                                                  115,117,214    110,306,653

Drafts payable                                                           3,662,417      2,765,182
Accrued interest and other liabilities                                   1,931,078      2,033,724
Other borrowings                                                        32,795,464     45,786,823
                                                                    -----------------------------
     Total liabilities                                                 153,506,173    160,892,382


Shareholders' equity
Common stock, par value $1.00; 10,000,000 shares
 authorized;1,764,136 and 1,726,708 issued, respectively                 1,764,136      1,760,536
Surplus                                                                  8,838,741      8,774,674
Retained earnings                                                        5,012,861      5,260,457
Less cost of 6,668 shares acquired for the treasury                        (36,091)       (36,091)
Accumulated other comprehensive loss+A19                                  (956,728)      (898,653)
                                                                    -----------------------------
      Total stockholders' equity                                        14,622,919     14,860,923
                                                                    -----------------------------
      Total liabilities and stockholders' equity                      $168,129,092   $175,753,305
                                                                    =============================
</TABLE>

See notes to Consolidated Financial Statements.

<PAGE>

                   CRESCENT BANKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS AND
                          COMPREHENSIVE INCOME (LOSS)


<TABLE>
<CAPTION>
                                                             For the three months ended
                                                                      March 31,
                                                               2000             1999
                                                            ----------------------------
<S>                                                          <C>             <C>
Interest income
Interest and fees on loans                                  $ 1,519,943      $ 1,087,665
Interest and fees on mortgage loans held for sale             1,442,261        3,072,429
Interest on securities:
    Taxable                                                     253,355           68,544
    Nontaxable                                                    3,838            3,838
Interest on deposits in other banks                              30,460           36,017
Interest on Federal funds sold                                   27,721           39,895
                                                            ----------------------------
                                                              3,277,578        4,308,408
                                                            ----------------------------
Interest expense
Interest on deposits                                          1,118,141        1,110,171
interest on other borrowings                                    548,650        1,096,310
                                                            ----------------------------
                                                              1,666,791        2,206,481
                                                            ----------------------------

Net interest income                                           1,610,787        2,101,927
Provision for loan losses                                        95,000           60,000
                                                            ----------------------------
Net interest income after provision for loan losses           1,515,787        2,041,927


Other income
Service charges on deposit accounts                              94,946           64,758
Mortgage servicing fee income                                   270,309          253,531
Gestation fee income                                            345,596          598,440
Gains on sale of mortgage
      servicing rights                                          887,494        4,250,728
Other                                                           205,574          161,934
                                                            ----------------------------
                                                              1,803,919        5,329,391

Other expenses
Salaries and employee benefits                                1,738,488        3,227,299
Occupancy and equipment expense                                 238,880          236,136
Supplies, postage, and telephone                                252,505          442,299
Advertising                                                     149,194          104,074
Insurance expense                                                41,775           39,430
Depreciation and amortization                                   420,812          395,177
Legal and professional                                          243,520          591,911
Director fees                                                    35,325           42,525
Mortgage subservicing expense                                    84,791           94,853
Other                                                           308,757          370,125
                                                            ----------------------------
                                                              3,514,047        5,543,829

Income (loss) before income taxes                             ($194,341)     $ 1,827,489
Applicable income taxes (benefits)                             ($69,965)     $   735,766
                                                            ----------------------------

Net income (loss)                                             ($124,376)     $ 1,091,723
                                                            ----------------------------

Other  comprehensive Income, net of tax
Unrealized losses on securities available-for-sale
  arising during period                                          58,075           14,455
                                                            ----------------------------

Comprehensive Income (loss)                                    (182,451)       1,077,268
                                                            ============================


Basic  earnings (loss) per common share                     $     (0.07)     $      0.63

Diluted earnings (loss) per common share                    $     (0.07)     $      0.61

Cash dividends per share of common stock                    $     0.070      $     0.050
</TABLE>

See Notes to Consolidated Financial Statements
<PAGE>

                   CRESCENT BANKING COMPANY AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                                       For the three months ended
                                                                                March 31,
                                                                          2000          1999
                                                                    -----------------------------
<S>                                                                 <C>              <C>
Operating Activities
Net Income (loss)                                                      ($124,376)    $  1,091,723
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
   Accretion of discount on securities                                  (220,174)         (56,514)
   Amortization of deposit intangible                                     18,532               --
   Amortization of purchased mortgage servicing rights                   163,400          229,500
   Provision for loan loss                                                95,000           60,000
   Depreciation                                                          238,880          165,677
   Increase in stock options outstanding                                  47,867          309,632
   Gains on sales of mortgage servicing rights                          (887,494)      (4,250,728)
   Decrease (Increase) in mortgage loans held for sale                19,972,943      (14,527,328)
   Increase in interest receivable                                      (188,509)         (97,715)
   Increase in accounts receivable                                      (397,144)        (843,146)
   Increase (decrease) in drafts payable                                 897,235       (1,254,460)
   Decrease in interest payable                                         (104,470)          (8,733)
   (Increase) decrease in other assets and liabilities, net             (173,168)         473,268
                                                                    -----------------------------
Net cash provided by (used in) operating activities                   19,338,522      (18,708,824)

Investing Activities
Net (increase) decrease in interest-bearing deposits
   in other banks                                                         71,394          (31,400)
Acquisition of securities held-to-maturity                            (1,467,580)              --
Acquisition of securities available-for-sale                                  --       (1,244,767)
Purchase of life insurance policies                                   (1,021,903)              --
Acquisition of purchased mortgage servicing rights                    (3,527,758)      (6,274,678)
Proceeds from sales of purchased mortgage
    servicing rights                                                   3,561,091        9,974,833
Decrease in Federal funds sold, net                                           --        4,410,000
Net increase in loans                                                (10,244,162)      (2,191,250)
Purchase of premises and equipment                                       (61,813)        (590,850)
                                                                    -----------------------------
Net cash provided by (used in) investing activities                  (12,690,731)       4,051,888

 Financing Activities
Net increase in deposits                                               4,810,561        8,520,585
Net increase (decrease) in other borrowings                          (12,991,359)       5,230,483
Proceeds from the exercies of stock options                               19,800           80,840
Dividends paid                                                          (123,220)         (86,002)
                                                                    -----------------------------
Net cash provided (used in) by financing activities                   (8,284,218)      13,745,906

Net decrease in cash and due from banks                               (1,636,427)        (911,030)
Cash and due from banks at beginning of year                           5,553,931        4,382,047
                                                                    -----------------------------
Cash and due from banks at end of period                            $  3,917,504     $  3,471,017
                                                                    =============================

Supplemental Disclosure of Cash Flow Information
     Cash paid during period for interest                           $  1,771,261     $  2,215,214
</TABLE>


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000



NOTE 1 ---- GENERAL

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulations S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments necessary
for a fair presentation of the financial position and results of operations of
the interim periods have been made. All such adjustments are of a normal
recurring nature. Results of operations for the three months ended March 31,
2000 are not necessarily indicative of the results of operations for the full
year or any interim periods.

NOTE 2 ---- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash flow information: For purposes of the statements of cash flows, cash
equivalents include amounts due from banks.



NOTE 3 --- SERVICING PROTFOLIO

The Company services residential loans for various investors under contract for
a fee.  As of March 31, 2000, the Company had purchased loans for which it
provides servicing with principal balances totaling $457.3 million.



NOTE 4 --- EARNINGS PER SHARE

The following is a reconciliation of net income (the numerator) and weighted
average shares outstanding (the denominator) used in determining basic and
diluted earning per common share (EPS):

                                 Three Months Ended March 31, 2000

                                 Net            Weighted-Average
                                 loss           Shares             Per-Share
                                 (Numerator)    (Denominator)      Amount
                                 ----------------------------------------

Basic EPS                        $(124,376)     1,764,018          $(0.07)

Effect of Dilutive securities
     Stock options                 -------         93,962

Diluted EPS                      $(124,376)     1,857,980          $(0.07)
<PAGE>

                                 Three Months Ended March 31, 1999

                                 Net            Weighted-Average
                                 Income         Shares            Per Share
                                 (Numerator)    (Denominator)     Amount
                                 ---------------------------------------

Basic EPS                        $1,091,723     1,732,730         $0.63

Effect of Dilutive Securities
     Stock Options                ---------        51,297

Diluted EPS                      $1,091,723     1,784,027         $0.61



NOTE 5 --- RESTATEMENT

The Company has restated net income (loss) and earnings (losses) per share for
the three month period ending March 31, 2000 and March 31, 1999 to properly
account for stock option awards in accordance with EITF 87-6 B ("Stock Option
Plan With Tax-Offset Cash Bonus") and ABP Opinion No. 25 ("Accounting for Stock
Issued to Employees"). The effect of the restatement on net income (loss) and
earnings (losses) per share for each period is as follows:



                                      For the three months  For the three months
                                              ended                 ended
                                         March 31, 2000         March 31, 1999

Net income (loss)
as previously reported                      (94,573)            1,284,500

(Increase) decrease in stock options        (29,803)             (192,777)
outstanding, net of tax

                                          ---------            ----------
Net income (loss) as restated              (124,376)            1,091,723
                                          =========            ==========
<PAGE>

                                      For the three months  For the three months
                                             ended                  ended
                                         March 31, 2000         March 31, 1999

Basic earnings (losses) per share
as previously reported                               (0.05)               0.76

(Increase) decrease in stock options                 (0.02)              (0.13)
outstanding, net of tax
                                                  --------             -------
Basic EPS/LPS as restated                            (0.07)               0.63
                                                  ========             =======


                                      For the three months  For the three months
                                              ended                 ended
                                         March 31, 2000        March 31, 1999

Diluted earnings (losses) per share
as previously reported                               (0.05)                0.72

(Increase) decrease in stock options                 (0.02)               (0.11)
outstanding, net of tax
                                                   -------              -------
Diluted EPS/LPS as restated                          (0.07)                0.61
                                                   =======              =======

<PAGE>

Item 2)   MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Special Cautionary Notice Regarding Forward-Looking Statements
--------------------------------------------------------------

     The following discussion and analysis of the consolidated financial
condition and results of operations of Crescent Banking Company and its
subsidiaries (the "Company") should be read in conjunction with the Company's
financial statements and related notes included elsewhere herein. Certain of the
statements made or incorporated by reference herein constitute forward-looking
statements for purposes of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
as such may involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward looking
statements include statements using the words such as "may," "will,"
"anticipate," "should," "would," "believe," "contemplate," "expect," "estimate,"
"consider," "continue," "intend," "possible" or other similar words and
expressions.

     The Company's actual results may differ significantly from these forward-
looking statements because forward-looking statements involve risks and
uncertainties, including, without limitation: the effects of future economic
conditions; governmental monetary and fiscal policies, as well as legislative
and regulatory changes; the risks of changes in interest rates on the level and
composition of deposits, loan demand, and the values of loan collateral,
mortgages, securities, and other interest-sensitive assets and liabilities;
interest rate risks; the effects of competition from other commercial banks,
thrifts, mortgage banking firms, consumer finance companies, credit unions,
securities brokerage firms, insurance companies, money market and other mutual
funds and other financial institutions operating in the Company's market area
and elsewhere, including institutions operating, regionally, nationally and
internationally, together with such competitors offering banking products and
services by mail, telephone, computer and the Internet; and the failure of
assumptions underlying the establishment of reserves for possible loan losses.
All written or oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by these Cautionary Statements.

General
-------

     The Company is a Georgia corporation that was incorporated on November 19,
1991, to facilitate the Company becoming the parent holding company of Crescent
Bank and Trust Company (the "Bank"). The Bank is a Georgia banking corporation
that has been engaged in the general commercial banking business since it opened
for business in August 1989. The Bank began wholesale mortgage banking
operations in February 1993. The Company provides a broad range of banking and
financial services in the areas surrounding Jasper, Georgia and has recently
expanded through branches and loan production offices in nearby areas of Bartow,
Cherokee and Forsyth Counties, Georgia. The Company also provides wholesale
residential mortgage banking services to correspondents located in the Atlanta,
Georgia metropolitan area and throughout the Southeast United States. In March
1998, the Bank expanded a loan production office in Bartow County, Georgia to a
full service Bank branch. In February 1999, the Bank opened a loan production
office in Canton, Georgia converting it to a full service branch in September
1999. The Bank purchased a branch on Towne Lake Parkway, Woodstock, Georgia in
June 1999. In February 2000, the Bank opened a loan production office in
Cumming, Georgia.

     The Company also owns 100% of Crescent Mortgage Services, Inc. ("CMS"),
which offers wholesale residential mortgage banking services in the Southeast,
Northeast and Midwest United States and provides servicing for residential
mortgage loans. CMS was incorporated on October 11, 1994, and is an approved
servicer of mortgage loans sold to the Federal Home Loan Mortgage Corporation
("Freddie Mac"), the Federal National Mortgage Association ("Fannie Mae") and
private investors. CMS offers wholesale residential mortgage banking services in
Southeastern, Northeastern and Midwestern states and provides servicing for
residential mortgage loans. In February 1998, the Company expanded its mortgage
operations by engaging in Federal Housing Administration and Veterans
Administration mortgage lending. CMS opened a wholesale mortgage banking office
in Chicago, Illinois in December 1998.

     On September 30, 1998, the Company completed a two-for-one split of its
common stock, par value $1.00 per share (the "Common Stock"), and, on January
12, 1999, the Company's Common Stock began trading on the
<PAGE>

Nasdaq SmallCap Market under the symbol "CSNT." All of the information presented
in this quarterly report for the period ended March 31, 2000 reflect the
Company's September 30, 1998 two-for-one stock split.

     The Company's net loss for the three months ended March 31, 2000 was
$124,376 compared to net income of $1,091,723 for the three months ended March
31, 1999. The decrease in net income from the first quarter of 1999 to the first
quarter of 2000 was primarily the result of earnings pressure on the mortgage
banking operations, which had achieved record results in 1998 and the first six
months of 1999. Mortgage banking operation had a net loss of $220,160 for the
first quarter 2000 compared to net income of $1,803,939 in the first quarter
1999. The decrease in mortgage banking earnings was largely due to the
volatility and increases in market interest rates and expectation of additional
rate increases by the Federal Reserve. Rates on 30-year mortgages increased over
150 basis points since May 1999. As a result, mortgage production in the first
quarter totaled $226.9 million, a decrease of $411 million or 64% from the $638
million achieved in the first quarter of 1999. In addition, the Company's spread
on the sale of purchased mortgage servicing rights decreased 31% from 77 basis
points in the first quarter 1999 to 51 basis points in the first quarter 2000.
Management, based upon a number of assumptions about future events, does not
anticipate a significant change in mortgage production volume in the next two
quarters.

     While the mortgage operation experienced a decline in earnings, the Bank's
earnings continued to improve. The Bank had earnings of $191,462 in the first
quarter 2000, 22% greater than earnings of $156,886 in the first quarter 1999.
The Bank experienced loan growth of $10.2 million or 19% for the first quarter
2000. The Bank's loan portfolio totaled $64.3 million at March 31, 2000.

Financial Condition
-------------------

     The Company's assets decreased 4.3% during the first quarter 2000 from
$175.8 million as of December 31, 1999 to $168.1 million as of March 31, 2000.
The decrease in total assets in the first quarter 2000 was the result of a $23.8
million or 37% decrease in residential mortgage loans held for sale, which was
partially offset by increases in commercial banking loans. The decrease in
assets corresponded with a $13 million, or 28%, decrease in other borrowings.
All mortgage production generated by CMS is funded through warehouse lines of
credit from Colonial Bank ("Colonial Bank"), and PaineWebber Incorporated
("PaineWebber"), therefore the decrease in mortgage loans held for sale resulted
in a lower average balance of other borrowings. The decrease in mortgage loans
held for sale from the first quarter 1999 to the first quarter 2000 was the
result of increases in market interest rates, that reduced mortgage loan
originations.

     Interest-earning assets (comprised of commercial banking loans, mortgage
loans held for sale, investment securities, interest-bearing balances in other
banks and temporary investments) totaled $145.1 million, or 86.3%, of total
assets at March 31, 2000. This represents a 5% decrease from December 31, 1999
when earning assets totaled $152.4 million, or 86.7%, of total assets. The
decrease in earning assets resulted primarily from the $23 million decrease of
residential mortgage loans held for sale. Average mortgage loans held for sale
during the first quarter 2000 of $73.7 million constituted 52.3% of average
earning assets and 45.2% of average total assets. Average mortgage loans held
for sale during 1999 of $101.7 million constituted 61.3% of average interest-
earning assets and 54.2% of average total assets.

     During the first quarter 2000, average commercial banking loans were $58.6
million. Such loans constituted 41.5% of average earning assets and 37% of
average total assets. For 1999, average commercial banking loans were $46.8
million, or 28.2% of average earning assets and 25.0% of average total assets.
The 25.2% increase in average commercial banking loans was the result of higher
loan demand in the Bank's service area as well as the expansion of the Bank's
operations in Bartow, Cherokee, and Forsyth Counties, Georgia.

     Commercial banking loans are expected to produce higher yields than
securities and other interest-earning assets. In addition, residential mortgage
loans held for sale generally generate net interest income due to the greater
rates of interest paid to the Bank on the longer term mortgage loans over the
rates of interest paid by the Bank on its shorter term warehouse line of credit,
brokered deposits and core deposits. Therefore, the absolute volume of
commercial banking loans and residential mortgage loans held for sale and the
volume as a percentage of total interest-earning assets are an important
determinant of the net interest margin thereof.
<PAGE>

     The allowance for possible loan losses represents management's assessment
of the risk associated with extending credit and its evaluation of the quality
of the loan portfolio. Management analyzes the loan portfolio to determine the
adequacy of the allowance for loan losses and the appropriate provision required
to maintain a level considered adequate to absorb anticipated loan losses. In
assessing the adequacy of the allowance, management reviews the size, quality
and risk of loans in the portfolio. Management also considers such factors as
the Bank's loan loss experience, the amount of past due and nonperforming loans,
specific known risk, the status and amount of nonperforming assets, underlying
collateral values securing loans, current and anticipated economic conditions
and other factors which affect the allowance for potential credit losses. An
analysis of the credit quality of the loan portfolio and the adequacy of the
allowance for loan losses is prepared by the Bank's credit administration area
and presented to the Loan Committee on a regular basis. In addition, the Bank
has engaged an outside loan review consultant, on a semi-annual basis, to
perform an independent review of the quality of the loan portfolio and adequacy
of the allowance. The provision for loan losses is a charge to earnings in the
current period to maintain the allowance at a level that management estimates to
be adequate.

     The Bank's allowance for loan losses is also subject to regulatory
examinations and determinations as to adequacy, which may take into account such
factors as the methodology used to calculate the allowance for loan losses and
the size of the allowance for loan losses in comparison to a group of peer banks
identified by the regulators. During their routine examinations of banks, the
Federal Reserve and the Georgia Department may require a bank to make additional
provisions to its allowance for loan losses when, in the opinion of the
regulators, credit evaluations and allowance for loan loss methodology differ
materially from those of management.

     While it is the Bank's policy to charge off in the current period loans for
which a loss is considered probable, there are additional risks of future losses
which cannot be quantified precisely or attributed to particular loans or
classes of loans. Because these risks include the state of the economy,
management's judgment as to the adequacy of the allowance is necessarily
approximate and imprecise.

     The allowance for loan losses totaled $947,283 or 1.47% of total commercial
banking loans at March 31, 2000, and $864,689 or 1.60% of total loans at
December 31, 1999. The increase in the allowance for loan losses during the
first quarter 2000 was primarily the result of the provision for loan loss of
$95,000. The increase in the allowance for loan loss corresponds to the 19%
increase in the commercial banking loans in the first quarter 2000. The
determination of the reserve level rests upon management's judgment about
factors affecting loan quality, assumptions about the economy, and historical
experience. The adequacy of the allowance for loan losses is evaluated
periodically based on a review of all significant loans, with a particular
emphasis on past due and other loans that management believes require attention.
Management believes that, based solely upon current projections, the allowance
at March 31, 2000 was adequate to cover possible losses in the loan portfolio;
however, management's judgment is based upon a number of assumptions about
future events which are believed to be reasonable, but which may or may not be
realized. Thus, there is no assurance that charge-offs in future periods will
not exceed the allowance for loan losses or that additional increases in the
allowance for loan losses will not be required.

     The Bank does not maintain a reserve with respect to mortgage loans held
for sale due to the anticipated low risk associated with the loans during the
Bank's expected short holding period, and the firm commitment takeouts from
third parties for such production. The Company does have default and foreclosure
risk during the short-term holding period of the mortgages held for sale, which
is inherent to the residential mortgage industry. However, the Company has not
incurred a loss as a result of this risk and therefore does not maintain a
reserve for this purpose.

     The Bank's policy is to discontinue the accrual of interest on loans which
are 90 days past due unless they are well secured and in the process of
collection. Interest on these non-accrual loans is recognized only when
received. As of March 31, 2000, the Bank had $218,766 of loans contractually
past due more than 90 days, $28,485 of loans accounted for on a non-accrual
basis, and no loans considered to be troubled debt restructurings. As of
December 31, 1999, the Bank had $507,531 contractually past due more than 90
days, $30,193 of loans accounted for on a non-accrual basis, and no loans
considered to be troubled debt restructurings.
<PAGE>

     Non-performing loans are defined as non-accrual and renegotiated loans.
Adding real estate acquired by foreclosure and held for sale of $21,940 with
non-performing loans results in non-performing assets of $50,425 at March 31,
2000. This compares to non-performing assets of $52,133 at December 31,1999. The
Bank is currently holding the foreclosed properties for sale.

     The chart below summarizes those of the Bank's assets that management
believes warrant special attention due to the potential for loss, in addition to
the non-performing loans and foreclosed properties. Potential problem loans
represent loans that are presently performing, but where management has doubts
concerning the ability of the respective borrowers to meet contractual repayment
terms. Potential problem loans totaled $1.1 million at March 31, 2000, a 20%
decrease from December 31, 1999 when potential problem loans totaled $1.4
million.

<TABLE>
<CAPTION>
                                                                 March 31, 2000     December 31, 1999
                                                               ----------------------------------------
<S>                                                            <C>                  <C>
Non-performing loans (1)                                          $   28,485           $   30,193
Foreclosed properties                                                 21,940               21,940
                                                                  ----------           ----------
Total non-performing assets                                           50,425               52,133
                                                                  ==========           ==========

Loans 90 days or more past due on accrual status                  $  218,716           $  507,532
Potential problem loans (2)                                        1,108,073            1,399,926
Potential problem loans/total loans                                     1.72%                2.59%
Non-performing assets/total loans
   and foreclosed properties                                            0.08%                0.10%
Non-performing assets and loans 90 days
     or more past due on accrual status/
     total loans and foreclosed properties                              0.41%                1.03%
</TABLE>

_________________
(1)  Defined as non-accrual loans and renegotiated loans.
(2)  Loans identified by management as potential problem loans (classified and
     criticized loans) but still accounted for on an accrual basis.


     The Bank invests its excess funds in U.S. Government agency obligations,
corporate securities, federal funds sold, and interest-bearing deposits with
other banks. The Bank's investments are managed in relation to loan demand and
deposit growth, and are generally used to provide for the investment of funds
not needed to make loans, while providing liquidity to fund increases in loan
demand or to offset fluctuations in deposits. Investment securities and
interest-bearing deposits with other banks totaled $13.5 million at March 31,
2000 compared to $11.9 million at December 31, 1999. Unrealized losses on
securities amounted to $1.6 million and $1.5 million at March 31, 2000 and
December 31, 1999, respectively. Management has 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 Bank had no federal funds sold at March
31, 2000 or December 31, 1999.

     The Company's Mortgage Division (the "Mortgage Division") acquires
residential mortgage loans from small retail-oriented originators through its
operations of CMS and the mortgage division of the Bank. The Bank acquires
conventional loans in the Southeast United States while CMS acquires
conventional loans in the Northeast and Midwest United States and FHA/VA loans
in the Southeast United States.

     The Bank acquires residential mortgage loans from small retail-oriented
originators in the Southeast United States through various funding sources,
including the Bank's regular funding sources, a $26.5 million warehouse line of
credit from the FHLB-Atlanta and a $45 million repurchase agreement with
PaineWebber. CMS acquires residential mortgage loans from small retail-oriented
originators in the Southeast, Northeast and Midwest United States through
various funding sources, including a $75.0 million line of credit from
PaineWebber, a $35 million line of

<PAGE>

credit from Colonial Bank, a $6.4 million line of credit from Home Federal, and
a $75 million repurchase agreement from PaineWebber. Under the repurchase
agreements, the Mortgage Division sells its mortgage loans and simultaneously
assigns the related forward sale commitments to PaineWebber. Substantially all
of the Mortgage Division loans are currently being resold in the secondary
market to Freddie Mac, Fannie Mae and private investors after being "warehoused"
for 10 to 30 days. The Mortgage Division purchases loans that it believes will
meet secondary market criteria, such as amount limitations and loan-to-value
ratios to qualify for resales to Freddie Mac and Fannie Mae. To the extent that
the Mortgage Division retains the servicing rights on mortgage loans that it
resells, it collects annual servicing fees while the loan is outstanding. The
Mortgage Division sells a portion of its retained servicing rights in bulk form
or on a monthly flow basis. The annual servicing fees and gains on the sale of
servicing rights is an integral part of the Company's mortgage banking operation
and its contribution to net income. The Company currently pays a third party
subcontractor to perform servicing functions with respect to its loans sold with
retained servicing.

     During the first quarter 2000, the Mortgage Division acquired $226.9
million of mortgage loans. The Mortgage Division sold in the secondary market
$246.9 million of mortgage loans. At March 31, 2000, $67.3 million of mortgage
loans were carried as mortgage loans held for sale on the balance sheet pending
sale of such loans, compared to $87.3 million at the end of 1999.

     At March 31, 2000, $4.9 million of purchased mortgage servicing rights were
carried on the balance sheet. At December 31, 1999, the Company carried $4.2
million of purchased mortgage servicing rights on its balance sheet. The Company
is amortizing the purchased mortgage servicing rights over an accelerated
period. At March 31, 2000, the Company held servicing rights with respect to
loans with unpaid principal balances totaling $457.3 million compared to $420.8
at December 31, 1999. During the first quarter 2000, the Company sold servicing
rights with respect to $172.6 million of mortgage loans carried on its balance
sheet at costs of $2.0 million for a gain of $887,494. During 1999, the Company
sold servicing rights with respect to $1.8 billion of mortgage loans carried on
its balance sheet at costs of $21.2 million for a gain of $9.8 million The
market value of the servicing portfolio is contingent upon many factors,
including, without limitation, the interest rate environment and changes in such
rates, the estimated life of the servicing portfolio, the loan quality of the
servicing portfolio and the coupon rate of the loan portfolio. There can be no
assurance that the Company will continue to experience a market value of the
servicing portfolio in excess of the cost to acquire the servicing rights, nor
can there be any assurance as to the expected life of the servicing portfolio.

     The Bank's other borrowings consist of borrowings from the Federal Home
Loan Bank of Atlanta (the "FHLB-Atlanta") which is priced at the FHLB-Atlanta
daily rate plus 25 basis points (6.84% as of March 31, 2000). All mortgage
production generated by CMS is funded through warehouse lines of credit from
Colonial Bank, priced at LIBOR plus 90 basis points (7.28% at March 31, 2000)
and PaineWebber, priced at LIBOR plus 80 basis points (7.61% at March 31, 2000).

     The Company had fixed assets, consisting of land, building and
improvements, and furniture and equipment of $5.9 million at March 31, 2000
compared to fixed assets of $6.0 million at December 31, 1999. In 1999, the Bank
provided a supplemental retirement plan to its Banking officers funded with life
insurance. At December 31, 1999, the Company had on its balance sheet $2.1
million of cash surrender value of life insurance related to the retirement
plan. In the first quarter 2000, the Company added the Directors to the
supplemental retirement plan, resulting in $3.1 million of cash value of life
insurance at March 31, 2000.

     The Bank's deposits totaled $115.1 million and $110.3 million at March 31,
2000 and December 31, 1999, respectively, an increase of 4.4%. Deposits averaged
$105.3 million and $94.5 million during the periods ended March 31, 2000 and
December 31, 1999, respectively. Interest-bearing deposits represented 77% of
total deposits at both March 31, 2000 and December 31, 1999. Certificates of
deposit composed 61% of total interest-bearing deposits for March 31, 2000
compared to 63% at December 31, 1999. The decrease of certificates of deposits
as a percentage of total interest-bearing deposits was the result of the $1.3
million increase in interest-bearing demand deposits. The composition of these
deposits is indicative of the interest rate-conscious market in which the Bank
operates and increases in interest rates, generally. There is no assurance that
the Bank can maintain or increase its market share of deposits in its highly
competitive service area.
<PAGE>

Capital
-------

     Capital adequacy is measured by risk-based capital guidelines as well as
against leverage ratios. The risk-based capital guidelines developed by
regulatory authorities assign weighted levels of risk to asset categories to
establish capital requirements. The guidelines currently require a minimum of
8.0% of total capital to risk-adjusted assets. One half of the required capital
must consist of Tier 1 Capital, which includes tangible common shareholders'
equity and qualifying perpetual preferred stock. The leverage guidelines specify
a ratio of Tier 1 Capital to total assets of 3.0% if certain requirements are
met, including having the highest regulatory rating, and 4.0% to 5.0% otherwise.
The guidelines also provide that bank holding companies experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels without significant
reliance on intangible assets. Furthermore, the guidelines indicate that the
Board of Governors of the Federal Reserve System (the "Federal Reserve") will
continue to consider a "Tangible Tier 1 Leverage Ratio" (deducting all
intangibles) in evaluating proposals for expansion or new activity. The Federal
Reserve has not advised the Company, and the FDIC has not advised the Bank, of
any specific minimum leverage ratio or Tangible Tier 1 Leverage Ratio applicable
to either of them. The Bank had agreed with the Georgia Department of Banking
and Finance (the "Banking Department") to maintain a leverage ratio of 8.0%. At
March 31, 2000 the Bank's leverage ratio was 9.86%.

     At March 31, 2000 the Company's total shareholders' equity was $14.6
million or 8.70% of total assets, compared to $14.9 million or 8.46% of total
assets at December 31, 1999. The increase in shareholders' equity to total asset
ratio in first quarter 2000 was the result of a 4.3% decrease in total assets.
At March 31, 2000, total capital to risk-adjusted assets was 13.07%, with 12.28%
consisting of tangible common shareholders' equity. The Company paid $123,220 of
dividends during the first quarter 2000 or $.07 per share. A quarterly dividend
of $.075 was declared in April 2000 for payment in May 2000.

     In February 1999, the Company entered into a promissory note (the "Note")
with The Bankers Bank for $1.5 million at a rate of "prime" minus 50 basis
points (8.50%) for a 10 year term. The Company pledged 100% of the Bank's common
stock as collateral for the Note. The Company transferred the $1.5 million to
CMS to increase its capital and liquidity. In July 1999, the Company increased
the amount of the promissory note to $4.5 million to facilitate the purchase of
the Towne Lake branch. The Company was not required to provide additional
collateral for the increased borrowings. The Company contributed the additional
$3.0 million borrowings to the Bank as capital.

     During the first quarter 2000, 3,600 shares of Common Stock were issued
pursuant to employee stock option exercises for an aggregate of $19,800. On
March 11, 1998, the Company completed a stock offering for 270,000 shares of
common stock at an issue price of $8.125 per share. The Company effectuated a
two for one stock split on September 30, 1998. On January 12, 1999, the
Company's Common Stock began trading on the Nasdaq SmallCap Market under the
symbol "CSNT".

Liquidity and Interest Rate Sensitivity
---------------------------------------

     Liquidity involves the ability to raise funds to support asset growth, meet
deposit withdrawals and other borrowing needs, maintain reserve requirements,
and otherwise sustain operations. This is accomplished through maturities and
repayments of loans and investments, deposit growth, and access to source of
funds other than deposits, such as the federal funds market, and borrowings from
the Federal Home Loan Bank and other lenders.

     Average liquid assets (cash and amounts due from banks, interest-bearing
deposits in other banks, federal funds sold, mortgage loans held for sale net of
borrowings and drafts payable, investment securities and securities held for
sale) totaled $53.1 million and $56.6 million during the period ending March 31,
2000 and December 31, 1999, representing 50% and 55% of average deposits for
those periods, respectively. The decrease in average liquid assets as a
percentage of average deposits was primarily the result of the decrease in
mortgage loans held for sale. Average non-mortgage loans were 69% and 45% of
average deposits for during the periods ending March 31, 3000 and December 31,
1999, respectively. Average deposits were 74% and 64% of average interest-
earning assets for during the periods ending March 31, 2000 and December 31,
1999, respectively.
<PAGE>

         The Bank actively manages the levels, types and maturities of interest-
earning assets in relation to the sources available to fund current and future
needs to ensure that adequate funding will be available at all times. In
addition to the borrowing sources related to the mortgage operations, the Bank
also maintains federal funds lines of credit totaling $4.1 million. The Bank's
liquidity position has also been enhanced by the operations of the Mortgage
Division due to the investment of funds in short-term assets in the form of
mortgages held for sale. Once funded, mortgages will generally be held by the
Bank for a period of 10 to 30 days. Management believes its liquidity sources
are adequate to meet its operating needs.

         Interest rate sensitivity refers to the responsiveness of interest-
bearing assets and liabilities to changes in market interest rates. The rate-
sensitive position, or gap, is the difference in the volume of rate-sensitive
assets and liabilities, at a given time interval. The general objective of gap
management is to actively manage rate-sensitive assets and liabilities to reduce
the effects of interest rate fluctuations on the net interest margin. Management
generally attempts to maintain a balance between rate-sensitive assets and
liabilities as the exposure period is lengthened to minimize the overall
interest rate risk to the Bank.

         Interest rate sensitivity varies with different types of interest-
earning assets and interest-bearing liabilities. Overnight federal funds, on
which rates are susceptible to change daily, and loans, which are tied to the
prime rate, differ considerably from long-term investment securities and fixed-
rate loans. Similarly, time deposits over $100,000 and certain interest-bearing
demand deposits are much more interest-sensitive than savings deposits. In
addition, brokered deposits, institutional deposits placed by independent
brokers, are more interest sensitive. The Bank had brokered deposits of $1.4
million at December 31, 1999. The Bank had utilized the brokered deposits to
fund its mortgage loans held for sale and had started to discontinue the use of
the brokered deposits following the purchase of the Towne Lake branch which
provided the Bank with excess liquidity. As of March 31, 2000, the Bank no
longer held any brokered deposits.

         The following table shows the interest sensitivity gaps for four
different time intervals as of March 31, 2000.

<TABLE>
<CAPTION>
                                              Interest Rate Sensitivity Gaps
                                                   As of March 31, 2000

                                                   Amounts Repricing In
                            -----------------------------------------------------------------
                                0-90 Days       91-365 Days      1-5 Years     Over 5 Years
                             ----------------  -------------   -------------  ---------------
                                                  (Millions of dollars)
<S>                       <C>                  <C>            <C>             <C>
Interest-earning
   assets                         $93.5             $14.8          $25.4            $11.4
Interest-bearing
   liabilities                     76.3              27.1           15.8              2.3
                            -------------------------------------------------------------------
Interest sensitivity
   gap                            $17.2            $(12.3)          $9.6             $9.1
                            ===================================================================
</TABLE>

         The Company was in an asset-sensitive position for the cumulative
three-month, one-to-five year and over five-year intervals. This means that
during the five-year period, if interest rates decline, the net interest margin
will decline. During the 0-91 day period, which has the greatest sensitivity to
interest rate changes, if rates rise, the net interest margin will improve.
Conversely, if interest rates decrease over this period, the net interest margin
will decline. At March 31, 2000, the Company was within its policy guidelines of
rate-sensitive assets to rate-sensitive liabilities of 80 - 140% at the one-year
interval. Since all interest rates and yields do not adjust at the same time or
rate, this is only a general indicator of rate sensitivity. Additionally, as
described in the following paragraphs, the Company utilizes mandatory
commitments to deliver mortgage loans held for sale, therefore reducing the
interest rate risk. The total excess of interest-bearing assets over interest-
bearing liabilities, based on a five-year time period, was $23.6 million, or 14%
of total assets.
<PAGE>

         At March 31, 2000, the Company's commitments to purchase mortgage loans
(the "Pipeline") totaled approximately $284.2 million, down 47% from the $539
million a year earlier. Of the Pipeline, the Company had, as of March 31, 2000,
approximately $116.3 million for which the Company had interest rate risk. The
remaining $167.9 million of mortgage loans are not subject to interest rate
risk. The mortgages not subject to interest rate risk are comprised of (i) loans
under contract to be placed with a private investor through a "best efforts"
agreement, whereby the investor purchases the loans from the Company at the
contractual loan rate, (ii) loans with floating interest rates which close at
the current market rate, and (iii) loans where the original fixed interest rate
commitment has expired and will be reprice at the current market rate.

         The Mortgage Division has adopted a policy intended to reduce interest
rate risk incurred as a result of market movements between the time commitments
to purchase mortgage loans are made and the time the loans are closed.
Accordingly, commitments to purchase loans will be covered either by a mandatory
sale of such loans into the secondary market or by the purchase of an option to
deliver to the secondary market a mortgage-backed security. The mandatory sale
commitment is fulfilled with loans closed by the Company, through "pairing off"
the commitment, or purchasing loans through the secondary market. Under certain
condition the Company seeks best execution by pairing off the commitment to sell
closed loans and fulfilling that commitment with loans purchased by the Company
through the secondary market. The Company considers the cost of the hedge to be
part of the cost of the Company's servicing rights, and therefore the hedge is
accounted for as part of the cost of the Company's servicing portfolio. As a
result, any gain or loss on the hedge reduces or increases, as appropriate, the
cost basis of the servicing portfolio.

         In hedging the Pipeline, the Company must use a best estimation of the
percentage of the Pipeline that will not close (i.e. loans that "fallout").
Loans generally fallout of the Pipeline for various reasons including, without
limitation, borrowers' failures to qualify for the loan, construction delays,
inadequate appraisal values and changes in interest rates which are substantial
enough for the borrower to seek another financing source. An increasing interest
rate environment provides greater motivation for the consumer to lock and close
loans. Conversely, in a decreasing interest rate environment, the consumer has a
tendency to delay locking and closing loans in order to obtain the lowest rate.
As a result, an increasing interest rate environment generally results in the
Company's fallout ratio to be less than in an average market. Conversely, in a
decreasing rate environment, the Company's fallout ratio tends to be greater
than in an average market. If the Company's fallout ratio is greater than
anticipated, the Company will have more mandatory commitments to deliver loans
than it has loans for which it has closed. In this circumstance, the Company
must purchase the loans to meet the mandatory commitment on the secondary market
and therefore will have interest rate risk in these loans. Conversely, if the
Company's fallout ratio is less than anticipated, the Company will have fewer
mandatory commitments to deliver loans than it has loans for which it has
closed. In this circumstance, the Company must sell the loans on the secondary
market without a mandatory commitment and therefore will have interest rate risk
in these loans.

         The Company's success in reducing its interest rate risk is directly
related to its ability to monitor and estimate its fallout. While other hedging
techniques other than mandatory and optional delivery may be used, speculation
is not allowed under the Mortgage Division's secondary marketing policy. As of
March 31, 2000, the Company had in place purchase commitment agreements
terminating between April and June of 2000 with respect to an aggregate of
approximately $63.3 million to hedge the mortgage pipeline of $116.3 million for
which the Bank had an interest rate risk.

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". This
statement is required to be adopted for fiscal years beginning after June 15,
2000. The Company expects to adopt this statement effective January 1, 2001.
SFAS No. 133 requires the Company to recognize all derivatives as 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. The Company does not anticipate a material effect on its
financial statements as a result of adopting SFAS No. 133.
<PAGE>

         Management continually tries to manage the interest rate sensitivity
gap. Attempting to minimize the gap is a continual challenge in a changing
interest rate environment and one of the objectives of the Bank's
asset/liability management strategy.

Results of Operations
---------------------

         A principal source of revenue for the Bank is net interest income,
which is the difference between income received on interest-earning assets, such
as investment securities and loans, and interest-bearing sources of funds, such
as deposits and borrowings. The level of net interest income is determined
primarily by the average balances ("volume") of interest-earning assets and the
various rate spreads between the interest-earning assets and the Bank's funding
sources. Changes in net interest income from period to period result from
increases or decreases in volume of interest-earning assets and interest-bearing
liabilities, increases or decreases in the average rates earned and paid on such
assets and liabilities, the ability to manage the interest-earning asset
portfolio (which includes loans) and the availability of particular sources of
funds, such as non-interest bearing deposits.

         The Company achieved record mortgage production with interest rates at
historical low levels in the last six months of 1998 and the first six months of
1999. The Federal Reserve Open Market Committee has moved interest rates on four
occasions since May 1999 for a total of 100 basis points. Rates began increasing
mid-second quarter 1999 resulting in an increase in rates on a 30-year mortgage
of over 150 basis points. As a result of the increase in interest rates, the
Company's mortgage production declined. The Company had closed $226.9 million of
mortgage loans during the first quarter 2000 compared to $638 million during the
first quarter 1999.

         The Company had interest income of $3.3 million for the three months
ended March 31, 2000 compared to $4.3 million three months ended March 31, 1999.
The decrease in interest income is attributable to the decrease in
interest-earning assets which is the result of the lower volume of mortgage
loans as well as a lower volume of fee income associated with mortgage loans
which is included in interest income. Fee income associated with mortgage loans
for the first quarter 2000 totaled $548,210 compared to fee income for the first
quarter 1999 of $1.5 million.

         The Company had interest expense of $1.7 million for the three months
ended March 31, 2000 and $2.2 million for the three months ended March 31, 1999.
The decrease resulted from a lower level of other borrowings. All mortgage
production through CMS is funded with a warehouse line of credit; therefore the
lower volume in the Northeast and Midwest mortgage operation resulted in a lower
average balance of other borrowings. In the first quarters 2000 and 1999,
interest expense accounted for 32% and 28% of total expenses, respectively.

         Net interest income for the first quarter 2000 was $1.6 million. The
key performance measure for net interest income is the "net interest margin," or
net interest income divided by average interest-earning assets. The Company's
net interest margin during first quarter 2000 was 5.21%. Interest spread, which
represents the difference between average yields on interest-earning assets and
average rates paid on interest-bearing liabilities, was 4.51%. Net interest
income, interest margin and net interest spread for the first quarter 1999 were
$2.2 million, 5.4%, and 3.8%, respectively. The decrease in net interest income
is related to the fee income related to a lower volume of mortgage loans closed.
Loan fee income, such as processing fees associated with the purchase of
mortgage loans, is included as interest income as the mortgage loans are sold.
The decrease in net interest margin and interest spread is indicative of the
relatively flat yield curve during the first quarter 2000 as well as the
decrease in mortgage production. A flat yield curve is created as the yield on
short term and long-term investments narrows.

         The Company made a provision to the allowance for loan losses of
$95,000 in the first quarter 2000. The Company made provisions to the allowance
for loan losses in the amount of $60,000 in first quarter 1999. During the first
quarter of 2000, the Bank charged-off, net of recoveries, $12,406 of loans to
the allowance for loan losses. During the first quarter of 1999, the Bank
charged-off, net of recoveries, $591 of loans to the allowance for loan losses.

         Other income was $1.8 million in the first quarter 2000 compared to
$5.3 million in the first quarter 1999. The decrease in other income was related
to the decrease of gains on the sale of mortgage servicing rights. During the
first three months of 2000, the Company sold servicing rights with respect to
$172.6 million of mortgage loans for a
<PAGE>

gain of $887,494 or a spread on the sale of servicing of 0.51%. During the first
three months of 1999, the Company sold servicing rights with respect to $553.4
million of mortgage loans for a gain of $4.3 million or a spread on the sale of
servicing of 0.77%. The decrease in the spread on the sale of servicing rights
is indicative of the competitive pricing in the mortgage industry in the first
quarter 2000. The decrease in the spread on the sale of purchased mortgage
rights resulted primarily from the decrease in mortgage production resulting in
greater competition for the reduced volume of production. The Company currently
plans to sell a portion of the servicing rights retained during 2000, although
there can be no assurance as to the volume of the Bank's loan acquisition or
that a premium will be recognized on the sales. Gestation fee income is
generated from the sale of mortgage loans to securities brokers through a
gestation repurchase agreement. Under the agreement, the Company sells mortgage
loans and simultaneously assigns the related forward sale commitments to a
securities broker. The Company continues to receive fee income from the
securities broker until the loan is delivered into the forward commitment.

         Other operating expenses decreased to $3.5 million in the first quarter
2000 from $5.5 million in the first quarter 1999. The Company had increased its
labor and overhead in late 1998 and early 1999 in order to process the
anticipated higher volume of mortgage production, including opening an office in
Chicago during the fourth quarter of 1998. In response to the decline in
mortgage production and spread on the sale of purchased mortgage servicing
rights, the Company has attempted to reduce overhead expenses. CMS closed its
office in Atlanta which primarily processed FHA and VA loans. These products
continue to be offered through the Perimeter Center Circle office. In total, the
Company has reduced mortgage overhead expenses by $1.6 million or 41% form $3.9
million in the first quarter 1999 to $2.3 million in the first quarter 2000.

         The Company had net loss of $124,376 in the first quarter 2000,
compared to net income of $1.1 million in the first quarter 1999. Net income was
adversely effected primarily by the decline in mortgage production and the
reduced gain on the sale of mortgage servicing rights. Income tax as a
percentage of pretax net income was 35% and 39% for the first quarter 2000 and
1999, respectively.

Effects of Inflation
--------------------

         Inflation generally increases the cost of funds and operating overhead,
and to the extent loans and other assets bear variable rates, the yields on such
assets. Unlike most industrial companies, virtually all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates generally have a more significant impact on the performance of a
financial institution than the effects of general levels of inflation. Although
interest rates do not necessarily move in the same direction, or to the same
extent, as the prices of goods and services, increases in inflation generally
have resulted in increased interest rates, and the Federal Reserve has increased
interest rates twice since 1999 in an attempt to prevent inflation. In addition,
inflation results in financial institutions' increased cost of goods and
services purchased, the cost of salaries and benefits, occupancy expense, and
similar items. Inflation and related increases in interest rates generally
decrease the market value of investments and loans held and may adversely affect
liquidity, earnings, and shareholders' equity. Mortgage originations and
refinancings tend to slow as interest rates increase, and likely will reduce the
Company's earnings from such activities and the income from the sale of
residential mortgage loans in the secondary market.
<PAGE>

Item 3)  Quantitative and Qualitative Disclosures about Market Risk



         The Company's primary market risk exposure is interest rate risk and,
to a lesser extent, credit risk and liquidity risk. Interest rate risk is the
exposure of a banking organization's financial condition and earnings ability to
movements in interest rates. Interest rate risk is discussed under "liquidity
and Interest Rate Sensitivity" in Item 2, "Management's Discussion and Analysis
of Financial Condition and Results of Operations", of this report, and in the
same sections of the Company's 1999 Annual Report, as well as under "Effects of
Inflation" in the 1999 Annual Report. Interest rate risk especially affects the
Company's mortgage banking operations.
<PAGE>

                          Part II - OTHER INFORMATION

Item 1.  Legal Proceedings - Not Applicable

Item 2.  Changes in Securities -  None

Item 3.  Defaults Upon Senior Securities - Not Applicable

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

         The annual meeting of Shareholders of the Company was held on April 20,
2000 at which time the following matters were brought before and voted upon by
the shareholders:

         1)   The election of the following persons to the Board of Directors
              to serve for a term expiring on the date indicated below of the
              Annual Meeting of Shareholders:

                                                                   Withhold
              Name                   Term expiring     For         Authority
              ----                   -------------     ---         ---------
              James D. Boggus, Sr.       2003          1,234,267   --
              Michael W. Lowe            2003          1,234,267   --
              Charles Gehrmann           2002          1,234,267   --
              John S. Dean, Sr.          2001          1,234,267   --

         There were no broker non-votes with respect to the election of
directors.

         2)   The approval of the Crescent Banking Company 2000 Employee Stock
Purchase Plan:

              For                    Against                Abstained
              ---                    -------                ---------
              1,096,507              4,600                  2,300

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     3.1      Articles of Incorporation of the Company (incorporated by
              reference from Exhibit 3.1 to the Company's Registration Statement
              on Form S-4 dated January 27, 1992, File No. 33-45254 (the "Form
              S-4")).

     3.2      Bylaws of the Company (incorporated by reference from Exhibit 3.2
              to the Form S-4).

     10.4     Employment Agreement between the Bank and Mr. Robert C. KenKnight
              dated as of May 1, 1997 (incorporated by reference to Exhibit 10.4
              to the December 31, 1997 Form 10K-SB).
<PAGE>

     27       Financial Data Schedule.

(b)  Reports on Form 8-K  -  None


                                  SIGNATURES



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


                                     CRESCENT BANKING COMPANY
                                     ------------------------
                                     (Registrant)



Date:  December 13, 2000             /s/ J. Donald Boggus, Jr.
     -----------------------         -------------------------
                                     J. Donald Boggus, Jr.
                                     President, Chief Executive Officer and
                                     Chief Financial Officer