<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                 FORM 10-KSB/A

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [FEE REQUIRED]

     For the fiscal year ended December 31, 1997

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

     For the transition period from            to

           Commission file number: 33-23062

                EUFAULA BANCCORP, INC. (A DELAWARE CORPORATION)
               I.R.S. EMPLOYER IDENTIFICATION NUMBER 63-0989868
                 218-220 BROAD STREET, EUFAULA, ALABAMA 36027
                       TELEPHONE NUMBER: (334) 687-3581

          Securities registered pursuant to Section 12(b) of the Act

                                     None

          Securities registered pursuant to Section 12(g) of the Act

                     Common Stock, par value $1 per share

Check 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
             --    --

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

The registrant's total revenues for the fiscal year ended December 31, 1997 were
$9,836,000.

As of March 1, 1998, registrant had outstanding 2,097,916 shares of common
stock, $1 par value per share, which is registrant's only class of common stock.
The aggregate market value of the voting stock held by nonaffiliates of the
registrant was approximately $22,639,800.

                      DOCUMENTS INCORPORATED BY REFERENCE

                                   Part III

Portions of the Company's Definitive Proxy Statement for its 1998 Annual Meeting
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), the Registrant has duly caused this
Form 10-KSB to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        EUFAULA BANCCORP, INC.

Date: September 22, 1998                /s/ Gregory B. Faison
                                        -----------------------------------
                                        Gregory B. Faison, President, Chief 
                                        Executive Officer and Director



                                       30
<PAGE>
 
                         INDEPENDENT AUDITOR'S REPORT
 
--------------------------------------------------------------------------------

TO THE BOARD OF DIRECTORS
EUFAULA BANCCORP, INC.
EUFAULA, ALABAMA


          We have audited the accompanying consolidated balance sheets of
EUFAULA BANCCORP, INC. AND SUBSIDIARIES as of December 31, 1997 and 1996, and
the related consolidated statements of income, 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Eufaula BancCorp, Inc. and subsidiaries as of December 31, 1997 and 1996, 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



Albany, Georgia
February 4, 1998

                                      F-2
<PAGE>
 
                            EUFAULA BANCCORP, INC.
                               AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                          DECEMBER 31, 1997 AND 1996

------------------------------------------------------------------------------- 
                 ASSETS                          1997          1996
                 ------                     ------------  ------------ 
Cash and due from banks                     $  6,046,465  $  7,320,627
Interest-bearing deposits in banks                   -         750,000
Federal funds sold                             2,450,000     1,375,000
Securities available for sale, at fair value  16,174,526    26,834,414
Securities held to maturity, at cost
    (fair value $9,667,334 and $10,484,389)    9,281,741    10,062,091
 
Loans                                         78,603,624    52,167,811
Less allowance for loan losses                   762,236       656,256
                                            ------------  ------------
          Loans, net                          77,841,388    51,511,555
                                            ------------  ------------
 
Premises and equipment, net                    3,664,429     2,413,164
Other real estate                                804,435       804,435
Other assets                                   4,678,670     3,744,747
                                            ------------  ------------
                                            $120,941,654  $104,816,033 
                                            ============  ============

    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------ 
Deposits
    Noninterest-bearing demand              $ 18,305,750  $ 18,783,155
    Interest-bearing demand                   31,782,198    26,412,239
    Savings                                    4,930,765     5,530,097
    Time, $100,000 and over                   16,932,656    13,692,689
    Other time                                32,657,315    25,879,298
                                            ------------  ------------
              Total deposits                 104,608,684    90,297,478
    Federal funds purchased                          -       1,200,000
    Securities sold under repurchase 
        agreement                                    -       1,475,000
    Other borrowings                           3,100,000           -
    Other liabilities                          1,291,643     1,128,704
                                            ------------  ------------
              Total liabilities              109,000,327    94,101,182
                                            ------------  ------------
 
COMMITMENTS AND CONTINGENT LIABILITIES
 
STOCKHOLDERS' EQUITY
    Preferred stock, par value $.10; 50,000
        shares authorized, none issued               -             -
    Common stock, par value $1; 5,000,000
        shares authorized, 2,097,916 and
        1,353,204 shares issued, 2,097,916     1,353,204
    Surplus                                      107,779       232,587
    Retained earnings                          9,737,976     9,221,469
    Unrealized (losses) on securities 
        available for sale, net of taxes          (2,344)      (92,409)
                                            ------------  ------------
          Total stockholders' equity          11,941,327    10,714,851
                                            ------------  ------------
                                            $120,941,654  $104,816,033
                                            ============  ============
 
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-3
<PAGE>
 
                            EUFAULA BANCCORP, INC.
                               AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
                    YEARS ENDED DECEMBER 31, 1997 AND 1996
 
--------------------------------------------------------------------------------
                                                   1997         1996
                                              ----------   ----------
INTEREST INCOME
    Interest and fees on loans                $6,683,278   $5,064,734
    Interest on taxable securities             1,464,021    1,776,018
    Interest on nontaxable securities            466,530      473,567
    Interest on deposits in other banks           22,806       26,085
    Interest on Federal funds sold                80,363      105,007
                                              ----------   ----------
                                               8,716,998    7,445,411 
                                              ----------   ----------
INTEREST EXPENSE
    Interest on deposits                       3,502,234    2,950,361 
    Interest on other borrowings                 252,330       48,915
                                              ----------   ----------
                                               3,754,564    2,999,276 
                                              ----------   ----------
 
          Net interest income                  4,962,434    4,446,135 
PROVISION FOR LOAN LOSSES                        173,668       81,000
                                              ----------   ----------
          Net interest income after 
              provision for loan losses        4,788,766    4,365,135
                                              ----------   ----------
 
OTHER INCOME
    Service charges on deposit accounts          744,254      690,746
    Security transactions, net                    19,697       27,470
    Origination fees on mortgage loans           171,994      110,738
    Other                                        182,666      155,558
                                              ----------   ----------
                                               1,118,611      984,512
                                              ----------   ----------
 
OTHER EXPENSES
    Salaries and employee benefits             2,435,131    2,019,949 
    Equipment and occupancy expense              600,493      488,156
    Amortization of intangibles                   78,745       78,745
    Legal and professional expense               162,549       93,714
    Data processing expenses                     101,064       58,859
    Directors fees                                97,983       88,250
    Other operating expense                      997,085      723,407
                                              ----------   ----------
                                               4,473,050    3,551,080 
                                              ----------   ----------
          Income before income taxes           1,434,327    1,798,567 
 
APPLICABLE INCOME TAXES                          426,935      569,478
                                              ----------   ----------
          Net income                          $1,007,392   $1,229,089 
                                              ==========   ==========
 
NET INCOME PER COMMON SHARE
    Basic                                     $     0.48   $     0.61
                                              ==========   ==========
 
    Diluted                                   $     0.45   $     0.56
                                              ==========   ==========
 
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                      F-4
<PAGE>
 
                            EUFAULA BANCCORP, INC.
                               AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    YEARS ENDED DECEMBER 31, 1997 AND 1996
 
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                                  UNREALIZED
                                                                                     GAINS
                                                                                  (LOSSES) ON
                                                                                   SECURITIES
                                     COMMON STOCK                                  AVAILABLE
                                ---------------------    CAPITAL      RETAINED      FOR SALE,
                                  SHARES    PAR VALUE    SURPLUS      EARNINGS    NET OF TAXES      TOTAL
                                ---------  ----------   ---------    ----------   ------------   -----------  
<S>                             <C>        <C>          <C>          <C>           <C>           <C> 
BALANCE, DECEMBER 31, 1995        676,602  $  676,602   $ 909,189    $8,263,021    $  98,972     $ 9,947,784
   Net income                          -           -           -      1,229,089           -        1,229,089
   Cash dividend declared,
       $.13 per                        -           -           -       (270,641)          -         (270,641)
   Net change in unrealized
       (losses) on securities
       available-for-sale,
       net of tax                      -           -           -             -      (191,381)       (191,381)
   Two-for-one common
      stock split                 676,602     676,602    (676,602)           -            -               -
                                ---------  ----------   ---------    ----------    ---------     -----------  
BALANCE, DECEMBER 31, 1996      1,353,204   1,353,204     232,587     9,221,469      (92,409)     10,714,851
   Net income                          -           -           -      1,007,392           -        1,007,392
   Cash dividend declared,
       $.14 per share                  -           -           -       (291,584)          -         (291,584)
   Net change in unrealized
       (losses) on securities
       available-for-sale,
       net of tax                      -           -           -             -        90,065          90,065
   Three-for-two common
       stock split                699,301     699,301    (699,301)           -            -               -
   Proceeds from exercise
       of stock options            45,411      45,411     207,455            -            -          252,866
   Purchase of fractional
       shares                          -           -          (85)           -            -              (85)
   Reduction in income
       taxes payable resulting
       from exercise of
       stock options                   -           -      167,822            -            -          167,822
   Transfer to surplus                 -           -      199,301      (199,301)          -               -
                                ---------  ----------   ---------    ----------    ---------     -----------  
BALANCE, DECEMBER 31, 1997      2,097,916  $2,097,916   $ 107,779    $9,737,976    $  (2,344)    $11,941,327
                                =========  ==========   =========    ==========    =========     ===========  
</TABLE> 
 
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-5
<PAGE>
 
                            EUFAULA BANCCORP, INC.
                               AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED DECEMBER 31, 1997 AND 1996
 
--------------------------------------------------------------------------------

                                              1997            1996
                                           ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                             $  1,007,392   $  1,229,089
                                           ------------   ------------
    Adjustments to reconcile net income 
        to net cash provided by operating
        activities:
        Depreciation                            235,465        184,564
        Amortization                             78,745         78,745
        Provision for loan losses               173,668         81,000
        Provision for deferred taxes            (25,438)          (913)
        Net realized gains on securities
            available for sale                  (19,697)       (27,470)
        (Increase) decrease in interest
            receivable                          146,513        (44,025)
        Increase (decrease) in interest 
            payable                             155,509         (5,939)
        Increase (decrease) in taxes 
            payable                               9,257        (58,413)
        Other prepaids, deferrals and 
            accruals, net                      (960,132)      (620,612)
                                           ------------   ------------
              Total adjustments                (206,110)      (413,063)
                                           ------------   ------------
 
              Net cash provided by 
                  operating activities          801,282        816,026
                                           ------------   ------------
 
CASH FLOWS FROM INVESTING ACTIVITIES
    (Increase) decrease in interest-bearing
        deposits in banks                       750,000       (500,000)
    Increase in Federal funds sold           (1,075,000)      (575,000)
    Purchases of securities available
        for sale                             (5,820,234)   (13,110,890)
    Proceeds from sales of securities 
        available for sale                    6,798,070      6,809,250
    Proceeds from maturities of securities
        available for sale                    9,851,858      3,245,913
    Purchases of securities held to maturity        -         (997,428)
    Proceeds from maturities of securities 
        held to maturity                        780,350        822,506
    Increase in loans, net                  (26,503,501)    (4,547,404)
    Proceeds from sale of assets                 10,000            -
    Purchase of premises and equipment       (1,496,730)      (530,313)
                                           ------------   ------------
              Net cash used in investing
                  activities                (16,705,187)    (9,383,366)
                                           ------------   ------------
 
 

                                      F-6

<PAGE>
 
                            EUFAULA BANCCORP, INC.
                               AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED DECEMBER 31, 1997 AND 1996
 
--------------------------------------------------------------------------------

                                                 1997           1996
                                             -----------     ----------
 
CASH FLOWS FROM FINANCING ACTIVITIES
    Increase in deposits                     $14,243,546     $6,750,906
    Proceeds from the exercise of stock 
        options                                  252,866            -
    Increase (decrease) in securities sold
        under repurchase agreements           (1,475,000)     1,475,000
    Increase (decrease) in Federal funds 
        purchased                             (1,200,000)       650,000 
    Advances from Federal Home Loan Bank       3,100,000            -
    Dividends paid                              (291,584)      (202,981)
    Purchase of fractional shares                    (85)           -
                                             -----------     ----------
 
          Net cash provided by financing 
              activities                      14,629,743      8,672,925
                                             -----------     ----------
 
Net increase (decrease) in cash and due 
    from banks                                (1,274,162)       105,585
 
Cash and due from banks at beginning 
    of year                                    7,320,627      7,215,042
                                             -----------     ----------
 
Cash and due from banks at end of year       $ 6,046,465     $7,320,627
                                             ===========     ==========
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
    INFORMATION
    Cash paid during the year for:
        Interest                             $ 3,599,055   $ 3,005,215
 
        Income taxes                         $   443,116   $   628,804
 
NONCASH TRANSACTIONS
    Unrealized (losses) on securities 
        available for sale                   $  (150,109)  $  (318,966)
 
    Transfer from loans to other real estate $       -     $   804,432
 
 
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-7

<PAGE>
 
                            EUFAULA BANCCORP, INC.
                               AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                                        
NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          NATURE OF BUSINESS

           Eufaula BancCorp, Inc. (the Company) is a bank holding company whose
           business is presently conducted by its wholly-owned subsidiaries,
           Southern Bank of Commerce (formerly Eufaula Bank and Trust Company)
           in Eufaula, Alabama and First American Bank of Walton County (First
           American Bank) in Santa Rosa Beach, Florida.  The Banks provide a
           full range of banking services to individual and corporate customers
           in Eufaula and Montgomery, Alabama and in northwest Florida.  The
           Banks are subject to the regulations of certain Federal and state
           agencies and are periodically examined by certain regulatory
           authorities.

          BASIS OF PRESENTATION

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

           The accounting and reporting policies of the Company conform to
           generally accepted accounting principles and general practices within
           the financial services industry.  In preparing the financial
           statements, management is required to make estimates and assumptions
           that affect the reported amounts of assets and liabilities as of the
           date of the balance sheet and revenues and expenses for the period.
           Actual results could differ from those estimates.

          CASH AND CASH EQUIVALENTS

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

           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.

                                      F-8
<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 reported
           at amortized cost.  All other debt securities are classified as
           available for sale and carried at fair value with net unrealized
           gains and losses included in stockholders' equity net of tax.
           Marketable equity securities are carried at fair value with net
           unrealized gains and losses included in stockholders' equity.

           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 carried at their principal amounts outstanding less
           unearned income and the allowance for loan losses.  Interest income
           on loans is credited to income based on the principal amount
           outstanding.

           Loan origination fees and certain direct costs of most loans are
           recognized at the time the loan is recorded.  Because net origination
           loan 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.  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.  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.

                                      F-9
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          LOANS (CONTINUED)

           The accrual of interest on impaired 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.

           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 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

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

          INTANGIBLE ASSETS

           Cost in excess of net assets acquired resulting from a bank
           acquisition accounted for as a purchase transaction is being
           amortized over twenty-five (25) years on a straight-line basis.

          OTHER REAL ESTATE OWNED

           Other real estate owned represents properties acquired through
           foreclosure.  Other real estate owned is held for sale and is carried
           at the lower of the recorded amount of the loan or fair value of the
           properties less estimated selling costs.  Any write-down to fair
           value at the time of transfer to other real estate owned is charged
           to the allowance for loan losses.  Subsequent gains or losses on sale
           and any subsequent adjustment to the value are recorded as other
           expenses.

                                      F-10
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          PROFIT-SHARING PLAN

           Profit-sharing plan costs are funded as accrued and are based on a
           percentage of individual employee's salary, not to exceed the amount
           that can be deducted for Federal income tax purposes.

          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 tax assets and liabilities are
           recognized on the temporary differences between the bases of assets
           and liabilities as measured by tax laws and their bases as reported
           in the financial statements.  Deferred tax expense or benefit is then
           recognized for the change in deferred tax assets or liabilities
           between periods.

           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, tax operating
           loss carryforwards, and tax credits will be realized.

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

          EARNINGS PER COMMON SHARE

           Basic earnings per share are calculated on the basis of the weighted
           average number of common shares outstanding.  Diluted earnings per
           share are computed by dividing net income by the sum of the weighted
           average number of common shares outstanding and potential common
           shares.  Earnings per common share for the prior periods have been
           restated to reflect the adoption of FASB 128.  All per share data for
           prior years have been adjusted to reflect the three-for-two stock
           split effected in the form of a 50% stock dividend to shareholders of
           record as of November 15, 1997.

                                      F-11
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          CURRENT ACCOUNTING DEVELOPMENTS

           In June 1996, the Financial Accounting Standards Board (the "FASB")
           issued Statement of Financial Accounting Standards No. 125,
           "Accounting for Transfers and Servicing of Financial Assets and
           Extinguishments of Liabilities".  ("SFAS No. 125").  This Statement
           provides standards for distinguishing transfers of financial assets
           that are sales from those that are secured borrowings, and provides
           guidance on the recognition and measurement of asset servicing
           contracts and on debt extinguishments.  As issued, SFAS No. 125 is
           effective for transactions occurring after December 31, 1996.
           However, as a result of an amendment to SFAS No. 125 by the FASB in
           December 1996, certain provisions of SFAS No. 125 are deferred for an
           additional year. Adoption of the new accounting standard is not
           expected to have a material impact on the Company's financial
           statements.

           In February 1997, the FASB issued SFAS No. 128, "Earnings per Share".
           This statement simplifies the standards for computing earnings per
           share previously set forth in APB Opinion No. 15, "Earnings per
           Share", and makes them comparable to international Earnings per Share
           ("EPS") standards.   It replaces the presentation of primary EPS with
           a presentation of basic EPS.  It also requires dual presentation of
           basic and diluted EPS on the face of the income statement for all
           entities with complex capital structures and requires a
           reconciliation of the numerator and denominator of the basic EPS
           computation to the numerator and denominator of the diluted EPS
           computation.  Basic EPS excludes dilution and  is computed  by
           dividing  income  available  to  common  stockholders  by the
           weighted-average number of common shares outstanding for the period.
           Diluted EPS reflects the potential dilution that could occur if
           securities or other contracts to issue common stock were exercised or
           converted into common stock or resulted in the issuance of common
           stock that then shared in the earnings of the entity.  Diluted EPS is
           computed similarly to fully diluted EPS pursuant to APB Opinion No.
           15.  This statement is effective for financial statements issued for
           periods ending after December 15, 1997. The adoption of this
           statement did not have a material impact on the Company's financial
           statements.

                                      F-12
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          CURRENT ACCOUNTING DEVELOPMENTS (CONTINUED)

           In June 1997, the FASB issued SFAS No 130, "Reporting Comprehensive
           Income".  This statement establishes standards for reporting and
           display of comprehensive income and its components (revenues,
           expenses, gains and losses) in a full set of general-purpose
           financial statements.  This statement requires that all items that
           are required to be recognized under accounting standards as
           components of comprehensive income be reported in a financial
           statement that is displayed with the same prominence as other
           financial statements.  This statement does not require a specific
           format for that financial statement but requires that an enterprise
           display an amount representing total comprehensive income for the
           period in that financial statement.  This statement requires that an
           enterprise classify items of other comprehensive income by their
           nature in a financial statement and display the accumulated balance
           or other comprehensive income by their nature in a financial
           statement and display the accumulated balance or other comprehensive
           income separately from retained earnings and additional paid-in
           capital in the equity section of a statement of financial position.
           This statement is effective for fiscal years beginning after December
           15, 1997. The adoption of this statement is not expected to have a
           material impact on the Company's financial statements.

           In June 1997, The FASB issued SFAS No. 131, "Disclosures about
           Segments of an Enterprise and Related Information".  This statement
           requires that a public business enterprise report financial and
           descriptive information about its reportable operating segments.
           Operating segments are components of an enterprise about which
           separate financial information is available that is evaluated
           regularly by the chief operating decision maker in deciding how to
           allocate resources and in assessing performance.  Generally,
           financial information is required to be reported on the basis that it
           is used internally for evaluating segment performance and deciding
           how to allocate resources to segments.  The statement requires that a
           business enterprise report a measure of segment profit or loss,
           certain specific revenue and expense items and segment assets.  It
           requires reconciliations of total segment revenues, total segment
           profit or loss, total segment assets and other amounts disclosed  for
           segments to corresponding amounts in the enterprise's general-
           purpose financial statements.  It requires that the enterprise report
           information about the revenues derived from the enterprise's products
           or services, about the countries in which the enterprise earns
           revenues and hold assets and about major customers.  This Statement
           is effective for financial Statements for periods beginning after
           December 15, 1997.  The adoption of this statement is not expected to
           have a material impact on the Company's financial statements.

                                      F-13
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2.   SECURITIES

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

<TABLE>
<CAPTION>
                                                                    GROSS          GROSS                  
                                                  AMORTIZED       UNREALIZED     UNREALIZED            FAIR       
                                                     COST           GAINS          LOSSES              VALUE
                                                 -----------      ----------     ----------         -----------
<S>                                              <C>              <C>            <C>                <C>           
SECURITIES AVAILABLE FOR SALE
 DECEMBER 31, 1997:
  U. S. GOVERNMENT AND AGENCY SECURITIES         $14,195,851       $ 53,641       $ (61,814)        $14,187,678
  MORTGAGE-BACKED SECURITIES                       1,982,581          8,334          (4,067)          1,986,848
                                                 -----------       --------       ---------         ----------- 
                                                 $16,178,432       $ 61,975       $ (65,881)        $16,174,526
                                                 ===========       ========       =========         ===========
 December 31, 1996:
  U. S. Government and agency securities         $23,516,656       $ 39,018       $(204,262)        $23,351,412
  Mortgage-backed securities                       3,002,140          6,672         (13,860)          2,994,952
  Other securities                                   469,633         18,417               -             488,050
                                                 -----------       --------       ---------         -----------  
                                                 $26,988,429       $ 64,107       $(218,122)        $26,834,414
                                                 ===========       ========       =========         ===========
<CAPTION>
                                                                    GROSS          GROSS                  
                                                  AMORTIZED       UNREALIZED     UNREALIZED            FAIR       
                                                     COST           GAINS          LOSSES              VALUE
                                                 -----------      ----------     ----------         -----------
<S>                                              <C>              <C>            <C>                <C>           
SECURITIES HELD TO MATURITY
 DECEMBER 31, 1997:
  U. S. GOVERNMENT AND AGENCY SECURITIES         $   749,576       $    502       $  (3,380)        $   746,698
  STATE AND MUNICIPAL SECURITIES                   8,110,317        383,651               -           8,493,968
  MORTGAGE-BACKED SECURITIES                         421,848          6,235          (1,415)            426,668
                                                 -----------       --------       ---------         -----------  
                                                 $ 9,281,741       $390,388       $  (4,795)        $ 9,667,334
                                                 ===========       ========       =========         ===========
 December 31, 1996:
  U. S. Government and agency securities         $   750,000       $      -       $ (11,095)        $   738,905
  State and municipal securities                   8,707,202        436,566          (3,415)          9,140,353
  Mortgage-backed securities                         604,889          6,133          (5,891)            605,131
                                                 -----------       --------       ---------         -----------  
                                                 $10,062,091       $442,699       $ (20,401)        $10,484,389
                                                 ===========       ========       =========         ===========
</TABLE>

                                      F-14
<PAGE>
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2.   SECURITIES (CONTINUED)

          The amortized cost and fair value of securities as of December 31,
          1997 by contractual maturity are shown below.  Maturities may differ
          from contractual maturities in mortgage-backed securities because the
          mortgages underlying the securities may be called or prepaid without
          penalty.  Therefore, these securities are not included in the maturity
          categories in the following maturity summary.

<TABLE>
<CAPTION>
                                               SECURITIES AVAILABLE FOR SALE      SECURITIES HELD TO MATURITY
                                               -----------------------------      ---------------------------
                                                AMORTIZED           FAIR           AMORTIZED          FAIR
                                                  COST              VALUE            COST             VALUE
                                               -----------       -----------      ----------       ----------
          <S>                                  <C>               <C>              <C>              <C> 
          Due in one year or less              $ 3,512,404       $ 3,503,595      $1,087,104       $1,093,172
          Due from one year to five years        5,659,953         5,712,425       3,236,884        3,328,435
          Due from five to ten years             5,023,494         4,971,658       4,249,306        4,505,816
          Due after ten years                            -                 -         286,599          313,243
          Mortgage-backed securities             1,982,581         1,986,848         421,848          426,668
                                               -----------       -----------      ----------       ----------
                                               $16,178,432       $16,174,526      $9,281,741       $9,667,334
                                               ===========       ===========      ==========       ==========
</TABLE>

          Securities with a carrying value of $11,787,849 and $15,681,776 at
          December 31, 1997 and 1996, respectively, were pledged to secure
          public deposits and for other purposes.

          Gross realized gains and gross realized losses on sales of securities
          were:

<TABLE>
<CAPTION>
                                                                                    DECEMBER 31,
                                                                                ---------------------
                                                                                  1997         1996
                                                                                -------       -------
          <S>                                                                   <C>           <C>
          Gross realized gains on sales of securities                           $29,555       $34,729
          Gross losses on sales of securities                                    (9,858)       (7,259)
                                                                                -------       -------
          Net realized gains on sales of securities available for sale          $19,697       $27,470
                                                                                =======       =======
</TABLE>

                                      F-15
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3.   LOANS AND ALLOWANCE FOR LOAN LOSSES

          The composition of loans is summarized as follows:

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                               -----------------------------
                                                                   1997             1996
                                                               -----------       -----------
          <S>                                                  <C>               <C>
          Commercial, financial and agricultural               $20,809,399       $11,276,143
          Real estate - construction                             3,253,356         2,896,148
          Real estate - mortgage                                40,046,125        27,691,446
          Consumer                                              14,694,075        10,468,374
          Other                                                     13,498            41,068
                                                               -----------       -----------
                                                                78,816,453        52,373,179
          Unearned income                                         (212,829)         (205,368)
          Allowance for loan losses                               (762,236)         (656,256)
                                                               -----------       -----------
          Loans, net                                           $77,841,388       $51,511,555
                                                               ===========       ===========
</TABLE>


          Changes in the allowance for loan losses for the years ended December
          31 are as follows:

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                               -----------------------
                                                                 1997           1996
                                                               --------       --------
          <S>                                                  <C>            <C>
          BALANCE, BEGINNING OF YEAR                           $656,256       $605,163
            Provision charged to operations                     173,668         81,000
            Loans charged off                                   (82,046)       (45,786)
            Recoveries of loans previously charged off           14,358         15,879
                                                               --------       --------
          BALANCE, END OF YEAR                                 $762,236       $656,256
                                                               ========       ========
</TABLE>

                                      F-16
<PAGE>
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3.   LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

          The Company has granted loans to certain directors, executive
          officers, and related entities of the Company and the Banks.  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 years ended December 31 were as follows:

<TABLE>
<CAPTION>
                                                         1997            1996
                                                     -----------      -----------
          <S>                                        <C>              <C> 
          BALANCE, BEGINNING OF YEAR                 $ 2,630,728      $ 2,642,949
            Advances                                   3,649,877        3,435,657
            Repayments                                (2,397,799)      (3,447,878)
                                                     -----------      -----------
          BALANCE, END OF YEAR                       $ 3,882,806      $ 2,630,728
                                                     ===========      ===========
</TABLE>

NOTE 4.   PREMISES AND EQUIPMENT

          Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                     ----------------------------
                                                         1997             1996
                                                     -----------      -----------
          <S>                                        <C>              <C>
          Land and buildings                         $ 3,027,225      $ 2,265,503
          Equipment                                    1,676,093        1,159,753
          Construction in progress                       336,089          205,207
                                                       5,039,407        3,630,463
          Accumulated depreciation                    (1,374,978)      (1,217,299)
                                                     -----------      -----------
                                                     $ 3,664,429      $ 2,413,164
                                                     ===========      ===========
</TABLE>

          Depreciation expense for the years ended December 31, 1997 and 1996
          was $235,465 and $184,564, respectively.

                                      F-17
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 5.   EMPLOYEE BENEFIT PLANS

          The subsidiary banks have noncontributory profit-sharing plans
          covering all employees, subject to certain minimum age and service
          requirements. The contribution for the years ended December 31, 1997
          and 1996 was $68,000 and $72,383, respectively.

          The Company provides a nonqualified Employee Stock Purchase Plan,
          including employees of both subsidiary banks. The primary purpose is
          to enable the employees to participate in the ownership of the
          Company. An employee who has been employed on a full time basis for
          one year or more is eligible for the Plan. Employees can contribute
          from five to seven percent of their compensation, depending on years
          of service. The banks contribute an amount equal to 50% of the
          employee's contribution. Contributions are used to purchase shares of
          Eufaula BancCorp, Inc. common stock. The contribution for the years
          ended December 31, 1997 and 1996 was $13,732 and $14,813,
          respectively.

          The Company has a nonqualified Stock Purchase Plan for directors. The
          primary purpose is to enable the directors to participate in the
          ownership of the Company. All directors are eligible for the Plan. A
          director can contribute in increments of $50 not to exceed $200 per
          month. The Banks contribute an amount equal to 50 percent of the
          director's contribution. Contributions to the Plan are used to
          purchase shares of Eufaula BancCorp, Inc. common stock. The
          contributions for the years ended December 31, 1997 and 1996 were
          $19,300 and $16,800, respectively.

NOTE 6.   DEFERRED COMPENSATION PLAN

          During 1996, Southern Bank of Commerce modified its indexed deferred
          compensation plan for certain executive officers and directors. The
          Plan is designed to provide supplemental retirement benefits and
          supersedes the existing deferred compensation plan. As a result of the
          modification, transactions resulted in an expense of $16,517 for 1997
          and a net decrease in expense of $32,636 in 1996.

                                      F-18
<PAGE>
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 7.   OTHER BORROWINGS

          Other borrowings consist of the following:

<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                     ----------------------------
                                                                        1997             1996
                                                                     ----------       ----------- 
          <S>                                                        <C>              <C> 
          Advances from Federal Home Loan Bank with interest at a    
            fixed rate of 6.58% due on March 14, 1999.               $2,500,000          $  - 
          Advances from Federal Home Loan Bank with interest at         
            adjustable rates (currently at 6.50% at December 31,
            1997) due on September 23,  1998.                           600,000             -
                                                                     ----------          ----
                                                                     $3,100,000          $  -
                                                                     ==========          ====
</TABLE>

          The advances from the Federal Home Loan Bank are collateralized by the
          pledging of first mortgage loans on one to four family residences.

NOTE 8.   INCOME TAXES

          The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                     -----------------------
                                                                       1997           1996
                                                                     --------       --------
          <S>                                                        <C>            <C> 
          Current                                                    $284,551       $570,391
          Benefit from exercise of stock options                      167,822              -
          Deferred                                                    (25,438)          (913)
                                                                     --------       --------
          Provision for income taxes                                 $426,935       $569,478
                                                                     ========       ========
</TABLE>
                                        

                                      F-19
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 8.   INCOME TAXES (CONTINUED)

          The Company's provision for income taxes 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>
                                                                   DECEMBER 31,                     
                                            --------------------------------------------------------
                                                      1997                            1996
                                            ------------------------        ------------------------
                                              AMOUNT         PERCENT          Amount         Percent
                                            ---------        -------        ---------        -------
          <S>                               <C>              <C>            <C>              <C>
          Tax provision at statutory rate   $ 487,670           34 %        $ 611,513          34 %
          Tax-exempt interest                (136,615)         (10)          (147,057)         (8)
          Amortization                         26,773            2             26,773           1
          State income taxes                   45,748            3             51,454           3
          Other items, net                      3,359            1             26,795           2
                                            ---------          ---          ---------          --
            Provision for income taxes      $ 426,935           30 %        $ 569,478          32 %
                                            =========          ===          =========          ==
</TABLE>

          The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                                     ----------------------
                                                                       1997          1996
                                                                     --------      --------
          <S>                                                        <C>           <C>
          DEFERRED TAX ASSETS:
            Loan loss reserves                                       $101,886      $ 55,031
            Deferred compensation                                      93,989        76,576
            Accounting for other real estate                            1,582         1,582
            Unrealized losses on securities available for sale          1,563        61,607
            Stock options                                               5,574        17,095
                                                                     --------      --------
                                                                      204,594       211,891
                                                                     --------      --------
          DEFERRED TAX LIABILITIES:
            Depreciation and amortization                             110,116        83,969
            Accretion                                                   5,164         4,002
                                                                     --------      --------
                                                                      115,280        87,971
                                                                     --------      --------
          NET DEFERRED TAX ASSETS                                    $ 89,314      $123,920
                                                                     ========      ========
</TABLE>

                                      F-20
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 9.   STOCK OPTIONS

          Prior to 1995, the Company entered into or assumed liability for
          various nonqualified stock option agreements with key employees.
          During 1995, the Company adopted the 1994 Stock Option Plan whereby
          the Company may grant options to certain key employees to purchase up
          to 600,000 shares of the Company's $1 par value common stock at an
          option price of $4 per share.  During 1996, the Plan was amended to
          include the directors of the Company.  As of December 31, 1997,
          options that had been granted to five key employees to purchase a
          total of 297,000 shares of common stock were outstanding.

          A summary of information relating to the stock option plans at
          December 31, 1997 and 1996 and changes during the years ended on those
          dates is as follows:
<TABLE>
<CAPTION>
 
                                                                             DECEMBER 31,
                                                     --------------------------------------------------------
                                                                  1997                         1996
                                                     ----------------------------    ------------------------      
                                                                      WEIGHTED-                   WEIGHTED-
                                                                       AVERAGE                     AVERAGE
                                                                       EXERCISE                    EXERCISE
                                                        NUMBER          PRICE         NUMBER        PRICE
                                                     -----------    ------------    ---------    -----------
<S>                                                  <C>             <C>             <C>          <C>
             Under option, beginning of year            402,000          $3.83        402,000        $3.83
             Granted                                     75,000           9.27              -            -
             Exercised                                  (68,117)          3.27              -            -
             Forfeited                                 (111,883)          4.00              -            -
                                                      ---------                      --------       
             Under option, end of year                  433,234           5.27        402,000         3.83
                                                      =========                      ========               
             Exercisable at end of year                  84,000                       114,000
                                                      =========                      ========               
             Available for grant at end of year         165,000                       240,000
                                                      =========                      ========               
             Weighted average fair value per option
              of options granted during the year      $    3.38                      $      -
                                                      =========                      ========               
</TABLE>

          Additional information about options outstanding at December 31, 1997 
          is as follows:
<TABLE>
<CAPTION>
 
                               OPTIONS OUTSTANDING                           OPTIONS EXERCISABLE
             ----------------------------------------------------------   --------------------------
                                              WEIGHTED-       WEIGHTED-                    WEIGHTED-
              RANGE OF                        AVERAGE         AVERAGE                      AVERAGE
              EXERCISE        NUMBER         CONTRACTUAL      EXERCISE      NUMBER         EXERCISE
               PRICES       OUTSTANDING     LIFE IN YEARS      PRICE      OUTSTANDING       PRICE
             ---------    -------------    --------------    ----------   -----------     ----------
            <S>            <C>             <C>               <C>           <C>             <C>     

              $2.54           12,000             0.5           $2.54        12,000          $2.54
               4.00          120,000             5.0            4.00        45,000           4.00
               4.00           90,000             7.0            4.00        27,000           4.00
               9.00           45,000            10.0            9.00             -              -
               9.67           30,000            10.0            9.67             -              -
                             -------                                        ------       
                             297,000            6.69            5.27        84,000           3.79
                             =======                                        ======       
</TABLE>

                                      F-21
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 9.   STOCK OPTIONS (CONTINUED)

          As permitted by SFAS No. 123, "Accounting for Stock-based
          Compensation", the Company recognizes compensation cost for stock-
          based employee awards in accordance with APB Opinion No. 25,
          "Accounting for Stock Issued to Employees."  The Company recognized no
          compensation cost for stock-based employee compensation for the years
          ended December 31, 1997 and 1996 because the exercise price is equal
          to the fair value of the stock at the grant date. No options were
          granted during the year ended December 31, 1996.  Pro forma net income
          and pro forma earnings per share required by SFAS No. 123 have not
          been presented for the year ended December 31, 1997 because the
          reduction in proforma net income and proforma earnings per share was
          immaterial.

          The fair value of the options granted in 1997 was based upon the
          discounted value of future cash flows of the options using the
          following assumptions:
<TABLE> 
             <S>                                                                 <C>  
             Risk-free interest rate                                                6.13%

             Expected life of the options                                        10 years

             Expected dividends (as a percent of the fair value of the stock)       1.92%

             Expected volatility                                                   23.30%
</TABLE> 

NOTE 10.  EARNINGS PER COMMON SHARE

          The following is a reconciliation of net income (the numerator) and
          the weighted average shares outstanding (the denominator) used in
          determining basic and diluted earnings per share:
<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31, 1997
                                                       ---------------------------------------
                                                         INCOME          SHARES      PER SHARE
                                                       ----------       ---------    ---------
          <S>                                          <C>              <C>          <C> 
          BASIC EARNINGS PER SHARE

           NET INCOME                                  $1,007,392       2,082,715      $ 0.48
                                                                                       ====== 
          EFFECT OF DILUTIVE SECURITIES

           STOCK OPTIONS                                        -         158,464
                                                       ----------       ---------   
          DILUTIVE EARNINGS PER SHARE

           NET INCOME                                  $1,007,392       2,241,179      $ 0.45
                                                       ==========       =========      ====== 
</TABLE>

                                      F-22
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 10.  EARNINGS PER COMMON SHARE (CONTINUED)

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31, 1996
                                                       ---------------------------------------
                                                         INCOME          SHARES      PER SHARE
                                                       ----------       ---------    ---------
<S>                                                    <C>              <C>             <C> 
          Basic earnings per share

           Net income                                  $1,229,089       2,029,806      $ 0.61
                                                                                       ====== 
          Effect of dilutive securities

           Stock options                                        -         181,714
                                                       ----------       ---------   
          Dilutive earnings per share

           Net income                                  $1,229,089       2,211,520      $ 0.56
                                                       ==========       =========      ====== 
</TABLE>

NOTE 11.  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:
 
                                                           DECEMBER 31,
                                                   ----------------------------
                                                       1997            1996
                                                   -----------      -----------
          Commitments to extend credit             $19,518,373      $ 7,971,877

          Loans sold with recourse                   1,646,904        1,908,879

          Standby letters of credit                  1,352,889        1,390,239
                                                   -----------      -----------
                                                   $22,518,166      $11,270,995
                                                   ===========      ===========

                                      F-23
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 11.  COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

          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,
          crops, 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 loan
          facilities to customers.  Collateral held varies as specified above
          and is required in instances which the Company deems necessary.

          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.

          Southern Bank of Commerce leases a small tract of land from the family
          of the former Chairman of the Board.  The lease provides for a monthly
          rental of $2,154.  It was recomputed in 1996 and will be recomputed
          again in 2001 based on the change in the Consumer Price Index.  The
          lease is accounted for as an operating lease and the total rental
          expense included in the consolidated statements of income for each of
          the years ended December 31, 1997 and 1996 was $25,848.

                                      F-24
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 12.  CONCENTRATIONS OF CREDIT

          The Company's subsidiaries make agricultural, agribusiness,
          commercial, residential and consumer loans to customers primarily in
          the market areas described in Note 1.  A substantial portion of the
          Company's customers' abilities to honor their contracts is dependent
          on the business economy in the above areas.

          Fifty-five percent (55%) of the Company's loan portfolio is
          concentrated in real estate loans, of which 4% consists of
          construction loans.  A substantial portion of these loans are secured
          by real estate in the Company's primary market area.  In addition, a
          substantial portion of the other real estate owned is located in those
          same markets.  Accordingly, the ultimate collectibility of the loan
          portfolio and the recovery of the carrying amount of other real estate
          owned are 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.

NOTE 13.  REGULATORY MATTERS

          The Company is subject to certain restrictions on the amount of
          dividends that may be declared without prior regulatory approval.  At
          December 31, 1997, approximately $1,233,722 of retained earnings were
          available for dividend declaration without regulatory approval.

          The Company and the Banks 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 Banks 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 Company and
          Banks capital amounts and classification are also subject to
          qualitative judgments by the regulators about components, risk
          weightings, and other factors.

          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, 1997, the Company and the Banks meet all capital adequacy
          requirements to which it is subject.

                                      F-25
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 13.  REGULATORY MATTERS (CONTINUED)

          As of December 31, 1997, the most recent notification from the FDIC
          categorized the Banks as well capitalized under the regulatory
          framework for prompt corrective action.  To be categorized as well
          capitalized, the Banks 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 Banks' category.

          The Company and Banks' 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
                                  -----------        ------     -------------        -----     --------------     ------
<S>                               <C>                <C>        <C>               <C>          <C>                <C>
AS OF DECEMBER 31, 1997
 TOTAL CAPITAL
 (TO RISK WEIGHTED ASSETS):
 CONSOLIDATED                     $11,208,977        14.03%     $   6,390,898        8.00%     $    7,988,623     10.00%
 SOUTHERN BANK OF
  COMMERCE                        $ 7,848,969        13.91%     $   4,513,819        8.00%     $    5,642,274     10.00%
 FIRST  AMERICAN BANK             $ 2,985,802        12.76%     $   1,871,420        8.00%     $    2,339,274     10.00%
 TIER I CAPITAL
 (TO RISK WEIGHTED ASSETS):
 CONSOLIDATED                     $10,471,419        13.11%     $   3,195,449        4.00%     $    4,793,174      6.00%
 SOUTHERN BANK OF
  COMMERCE                        $ 7,289,534        12.92%     $   2,256,910        4.00%     $    3,385,364      6.00%
 FIRST  AMERICAN BANK             $ 2,807,679        12.00%     $     935,710        4.00%     $    1,403,565      6.00%
 TIER I CAPITAL
 (TO AVERAGE ASSETS):
 CONSOLIDATED                     $10,471,419         9.20%     $   4,611,564        4.00%     $    5,764,455      5.00%
 SOUTHERN BANK OF
  COMMERCE                        $ 7,289,534         8.73%     $   3,339,680        4.00%     $    4,174,600      5.00%
 FIRST AMERICAN BANK              $ 2,807,679         8.44%     $   1,330,680        4.00%     $    1,663,350      5.00%
</TABLE>

                                      F-26
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                                        
NOTE 13.  REGULATORY MATTERS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                      TO BE WELL
                                                                        FOR CAPITAL               CAPITALIZED UNDER
                                                                         ADEQUACY                 PROMPT CORRECTIVE
                                            ACTUAL                       PURPOSES                 ACTION PROVISIONS
                                  -------------------------     --------------------------     ------------------------- 
                                     AMOUNT          RATIO         AMOUNT            RATIO         AMOUNT         RATIO
                                  -----------        ------     -------------        -----     --------------     ------
<S>                               <C>                <C>        <C>               <C>          <C>                <C>
As of December 31, 1996
 Total Capital
 (to Risk Weighted Assets):
 Consolidated                      $   9,887,372     16.60%     $   4,765,970        8.00%      $  5,957,462      10.00%
 Southern Bank of
  Commerce                         $   7,276,250     17.64%     $   3,299,268        8.00%      $  4,124,086      10.00%
 First  American Bank              $   2,453,122     13.40%     $   1,464,864        8.00%      $  1,831,080      10.00%
 Tier I Capital
 (to Risk Weighted Assets):
 Consolidated                      $   9,258,607     15.54%     $   2,382,985        4.00%      $  3,574,477       6.00%
 Southern Bank of
  Commerce                         $   6,806,624     16.50%     $   1,649,634        4.00%      $  2,474,451       6.00%
 First  American Bank              $   2,293,983     12.53%     $     732,432        4.00%      $  1,098,648       6.00%
 Tier I Capital
 (to Average Assets):
 Consolidated                      $   9,258,607      9.42%     $   3,995,359        4.00%      $  4,994,199       5.00%
 Southern Bank of
  Commerce                         $   6,806,624      9.21%     $   2,956,320        4.00%      $  3,695,400       5.00%
 First  American Bank              $   2,293,983      8.32%     $   1,102,560        4.00%      $  1,378,200       5.00%
</TABLE>

                                      F-27
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                                        
NOTE 14.  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 methods.  Those methods
          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, 1997
          and 1996.  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.

          The following methods and assumptions were used by the Company in
          estimating fair values of financial instruments as disclosed 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 quoted market prices.  The
          carrying values of equity securities with no readily determinable
          fair value approximate fair values.

          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 methods, using interest rates currently being
          offered for loans with similar terms to borrowers of similar credit
          quality.  Fair values for impaired loans are estimated using
          discounted cash flow methods or underlying collateral values.

                                      F-28
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                                        
NOTE 14.  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 methods, using interest rates currently
          being offered on certificates.

          OTHER BORROWINGS:

          The carrying amounts of Federal funds purchased and securities sold
          under agreements to repurchase approximate their fair value.

          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.

          The estimated fair values of the Company's financial instruments were
          as follows:

<TABLE>
<CAPTION>
                                                         DECEMBER 31, 1997                        DECEMBER 31, 1996
                                                  --------------------------------        -------------------------------
                                                   CARRYING              FAIR                CARRYING           FAIR
                                                    AMOUNT               VALUE                AMOUNT            VALUE
                                                  ------------        ------------        ------------        -----------
          <S>                                     <C>                 <C>                 <C>                 <C>
          Financial assets:
           Cash and due from banks,
              interest-bearing deposits with
              banks and Federal funds sold        $  8,496,465        $  8,496,465        $  9,445,627       $  9,445,627
           Securities available for sale            16,174,526          16,174,526          26,834,414         26,834,414
           Securities held to maturity               9,281,741           9,667,334          10,062,091         10,484,389
           Loans                                    77,841,388          78,280,325          52,167,811         52,085,279

          Financial liabilities:
           Deposits                                104,608,684         105,192,522          90,495,197         89,059,793
           Securities sold under
              repurchase agreements                          -                   -           1,475,000          1,475,000
           Other borrowings                          3,100,000           3,100,000           1,200,000          1,200,000
</TABLE>

                                      F-29
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 15.  PARENT COMPANY FINANCIAL INFORMATION

          The following information presents the condensed balance sheets,
          statements of income and cash flows of Eufaula BancCorp, Inc. as of
          and for the years ended December 31, 1997 and 1996:


                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                           1997            1996
                                                                       -----------      -----------
          <S>                                                          <C>              <C>
          ASSETS
            Cash                                                       $   114,799      $   197,719
            Investment in subsidiaries                                  10,092,538        9,060,478
            Other assets                                                 1,823,937        1,571,618
                                                                       -----------      -----------
                Total assets                                           $12,031,274      $10,829,815
                                                                       ===========      ===========
          LIABILITIES, other                                           $    89,947      $   114,964
                                                                       -----------      -----------
          SHAREHOLDERS' EQUITY                                          11,941,327       10,714,851
                                                                       -----------      -----------
                Total liabilities and shareholders' equity             $12,031,274      $10,829,815
                                                                       ===========      ===========
</TABLE>

                                      F-30
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 15.  PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

                         CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                           1997            1996
                                                                       -----------      -----------
          <S>                                                          <C>              <C>
          INCOME, dividends from subsidiaries                          $   690,000      $   452,700
                                                                       -----------      -----------
          EXPENSE
            Amortization                                                    78,745           78,745
            Other expense                                                  465,998          253,182
                                                                       -----------      -----------
                Total expense                                              544,743          331,927
                                                                       -----------      -----------
                Income before income tax benefits and equity
                 in undistributed income of subsidiaries                   145,257          120,773
          INCOME TAX BENEFITS                                              170,141           90,115
                                                                       -----------      -----------
                Income before equity in undistributed
                 income of subsidiaries                                    315,398          210,888
          EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES                   691,994        1,018,201
                                                                       -----------      -----------
                Net income                                             $ 1,007,392      $ 1,229,089
                                                                       ===========      ===========
</TABLE>

                                      F-31
<PAGE>
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 15.  PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                          1997             1996
                                                                       ----------       -----------
          <S>                                                          <C>              <C>
          CASH FLOWS FROM OPERATING ACTIVITIES
            Net income                                                 $1,007,392       $ 1,229,089
                                                                       ----------       -----------
            Adjustments to reconcile net income to net
             cash provided by operating activities:
              Amortization                                                 78,745            78,745
              Undistributed income of subsidiaries                       (691,994)       (1,018,201)
              Increase (decrease) in taxes payable                       (166,763)           76,574
              Provision for deferred taxes                                 11,521                 -
              Other prepaids, deferrals and accruals, net                 (33,018)                -
                                                                       ----------       -----------
                  Total adjustments                                      (801,509)         (862,882)
                                                                       ----------       -----------
                  Net cash provided by operating activities               205,883           366,207
                                                                       ----------       -----------
          CASH FLOWS FROM INVESTING ACTIVITIES
            Contribution of capital to subsidiary bank                   (250,000)                -
                                                                       ----------       -----------
              Net cash used in investing activities                      (250,000)                -
                                                                       ----------       -----------
          CASH FLOWS FROM FINANCING ACTIVITIES
            Proceeds from exercise of stock options                       252,866                 -
            Purchase of fractional shares                                     (85)                -
            Dividends paid                                               (291,584)         (202,981)
                                                                       ----------       -----------
                  Net cash used in financing activities                   (38,803)         (202,981)
                                                                       ----------       -----------
          Net increase (decrease) in cash                                 (82,920)          163,226
          Cash at beginning of year                                       197,719            34,493
                                                                       ----------       -----------
          Cash at end of year                                          $  114,799       $   197,719
                                                                       ==========       ===========
</TABLE>

                                      F-32