SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934.

                   For the fiscal year ended December 31, 1999


                         Commission file number: 0-25505


                             ATLANTIC BANCGROUP,INC.
                        ------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


              Florida                                  59-3543956
        --------------------                          -------------
   (State or Other Jurisdiction of       (I.R.S. Employer Identification Number)
   Incorporation or Organization)


   710 North Third Street, Jacksonville Beach, Florida          32250
   ----------------------------------------------------       ---------
          (Address of Principal Executive Offices)            (Zip Code)


Securities registered under Section 12(b) of the Exchange Act: None
                                                               ----

Securities registered under Section 12(g) of the Exchange Act:

                      Common Stock, par value $.01 per share
              Warrants to Purchase Common Stock at $10.00 per share
                                (Title of Class)

                                 (904) 247-9494
                               ------------------
                (Issuer's Telephone Number, Including Area Code)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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  pursuant to Item
405 of Regulation S-B is not contained in this form,  and no disclosure  will be
contained to the best of the  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 Issuer's  revenues for its most recent fiscal year were $4,066,000.

         The  aggregate  market  value of the common stock of the issuer held by
non-affiliates   of  the  issuer   (469,365   shares)  on  March  1,  2000,  was
approximately  $4.7 million  based on the initial bid quoted price of $10.00 per
share as quoted on the "Over the Counter  Bulletin  Board." For the  purposes of
this response,  directors,  executive officers, and holders of 5% or more of the
issuer's common stock are considered the affiliates of the issuer at that date.

As of March 1, 2000,  there were issued and  outstanding  595,350  shares of the
issuer's common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy  Statement for the Annual  Meeting of  Shareholders  to be
held on April 27, 2000, filed as Exhibit 22.1 herein, are incorporated into Part
III, Items 10 through 13 of this Annual Report on Form 10-KSB.


<PAGE>
                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS
                                                                           Page

PART I.......................................................................1

Item 1.       Description of Business........................................1
              General........................................................1
              Lending Activities.............................................2
              Deposit Activities.............................................3
              Investments....................................................4
              Correspondent Banking..........................................4
              Interest and Usury.............................................4
              Primary Service Area...........................................4
              Competition....................................................5
              Supervision and Regulation.....................................5
              Common Stock..................................................10
              Warrants......................................................10
              Preferred Stock...............................................11
              Indemnification of Directors and Officers.....................11
              Employees.....................................................12
              Statistical Profile and Other Financial Data..................12

Item 2.       Description of Properties.....................................13

Item 3.       Legal Proceedings.............................................13

Item 4.       Submission of Matters to a Vote of Security Holders...........13

PART II.....................................................................14

Item 5.       Market Price for the Registrant's Common Equity and

                  Related Stockholder Matters...............................14
              Dividends.....................................................14

Item 6.       Management's Discussion and Analysis of Financial

                  Condition and Results of Operations.......................15
              Selected Financial Data.......................................15
              General.......................................................16
              Forward-Looking Statements....................................16
              Results of Operations.........................................17
              Net Income (Loss).............................................17
              Comparison of Years Ended December 31, 1999 and 1998..........19
              Net Interest Income...........................................19
              Provision for Credit Losses...................................19
<PAGE>
                                                                           Page

              Other Income..................................................19
              Other Expenses................................................19
              Loans Receivable..............................................20
              Classification of Assets......................................21
              Allowance for Credit Losses...................................22
              Securities....................................................23

              Deposits......................................................24
              Capital Requirements/Ratios...................................27
              Interest Rate Sensitivity.....................................29
              Liquidity.....................................................30
              Other Borrowings..............................................31
              Contingencies and Uncertainties - Year 2000 Compliance
              Matters.......................................................31
              Future Accounting Requirements................................32
              Impact of Inflation...........................................32

Item 7.       Financial Statements..........................................33

Item 8.       Changes in and Disagreements with Accountants

                      on Accounting and Financial Disclosure................52

PART III      ..............................................................52

Item 9.       Directors, Executive Officers, Promoters and Control Persons;
                      Compliance with Section 16(a) of the Exchange Act.....52

Item 10.      Executive Compensation........................................52

Item 11.      Security Ownership of Certain Beneficial Owners and
              Management....................................................52

Item 12.      Certain Relationships and Related Transactions................52

Item 13.      Exhibits, Financial Statement Schedules, and Reports of
              Form 8-K......................................................53

SIGNATURES..................................................................54

EXHIBIT INDEX...............................................................55

<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

General

Bank Holding  Company  Reorganization.  On April 3, 1999,  the  shareholders  of
Oceanside Bank  ("Oceanside")  approved the Agreement and Plan of Reorganization
("Reorganization")   whereby  Oceanside  became  a  wholly-owned  subsidiary  of
Atlantic BancGroup,  Inc. ("Atlantic").  The Reorganization was completed on May
5, 1999, and was reported under the pooling-of-interests method of accounting.

Atlantic  conducts  holding company  operations  from facilities it owns.  These
facilities are located at 710 North Third Street,  Jacksonville Beach,  Florida.
See "Description of Properties." Atlantic and its wholly-owned  subsidiaries are
referred to hereinafter as Atlantic.

Oceanside Mortgage. On July 20, 1999, Oceanside Mortgage Group, Inc. ("Oceanside
Mortgage") was  incorporated  as a  wholly-owned  subsidiary of Atlantic for the
purpose of conducting mortgage banking  operations.  Oceanside Mortgage conducts
its operations from  facilities  leased from Atlantic at 710 North Third Street,
Jacksonville Beach, Florida. See "Description of Properties."

Oceanside Bank. Oceanside Bank, a Florida state bank, was formed in March, 1997,
and operates as a community bank in its primary service area ("PSA"),  providing
general  commercial  banking  services  to  businesses  and  individuals  in the
community it serves.  The principal  business of Oceanside is to receive  demand
and time  deposits  from the  public  and to make  loans and other  investments.
Oceanside  operates  from a main  office  located  at 1315 South  Third  Street,
Jacksonville  Beach,  Florida,  and a  branch  office  located  at 560  Atlantic
Boulevard,  Neptune Beach,  Florida. See "Description of Properties."  Oceanside
draws most of its customer  deposits and conducts a  significant  portion of its
lending  transactions  from  and  within  its  PSA  in  the  "beaches  area"  of
Jacksonville, Florida. See "Description of Business/Primary Service Area."

Oceanside  operates as a locally-owned and operated  institution that emphasizes
providing prompt, efficient, and personalized service to individuals,  small and
medium-sized businesses, professionals and other local organizations. Generally,
customers have one account  officer to serve all of their banking needs and have
ready access to senior  management when necessary.  In addition,  a committee of
the board of directors is  responsible  for  maintaining  a visible  profile for
Oceanside  in the local  community.  Because the  officers  and  directors  have
established  reputations in the local  community,  they believe they are able to
actively promote Oceanside within the PSA.

Oceanside's principal strategy is to:

o        Expand its commercial and small business customer base within the PSA;

o        To  make  real  estate  mortgage  loans  within  the  PSA,  as  well as
         throughout Duval County; and

o        Expand its consumer loan base within the PSA.

                                       1
<PAGE>

Oceanside   believes  that  the  most  profitable   deposit   relationships  are
characterized  by high deposit  balances,  low frequency of transactions and low
distribution  requirements.  Oceanside believes that a community bank with local
management is  well-positioned  to establish  these  relationships  with smaller
commercial  customers and households.  Oceanside  aggressively  markets its high
quality and innovative services to the customer.

The principal  sources of funds for Oceanside's  loans and other investments are
demand, time, savings, and other deposits, amortization and prepayment of loans,
sales to other lenders or institutions of loans or participations in loans, fees
received from other  lenders or  institutions  for servicing  loans sold to such
lenders or  institutions  and  borrowings.  The principal  sources of income for
Oceanside are interest and fees collected on loans,  including fees received for
servicing loans sold to other lenders or  institutions,  and to a lesser extent,
interest and dividends collected on other investments. The principal expenses of
Oceanside  are interest  paid on savings and other  deposits,  interest  paid on
other borrowings of Oceanside, employee compensation, office expenses, and other
overhead and operational  expenses.  Oceanside offers several deposit  accounts,
including  demand  deposit  accounts,  negotiable  order of withdrawal  accounts
("NOW"  and  "Super-NOW"  accounts),  money  market  accounts,  certificates  of
deposit, and various retirement accounts.  In addition,  Oceanside has joined an
electronic  banking  network so that its customers may use the automated  teller
machines (the "ATMs") of other  financial  institutions  and operates a drive-in
teller service and 24-hour depository.

Management  of Oceanside  focuses its efforts on filling the void created by the
increasing  number of  locally-owned  community banks that have been acquired by
large regional holding  companies,  negatively  impacting the personal nature of
the delivery, quality, and availability of banking services available in the PSA
and surrounding areas.

Lending Activities

Atlantic  offers a wide range of loans to individuals  and small  businesses and
other  organizations  that are located in, or conduct a  substantial  portion of
their business in, Atlantic's market area.  Atlantic's  consolidated total loans
at December 31, 1999 were $41.0 million, or 75.8% of total Atlantic consolidated
assets.  The  interest  rates  charged  on loans  vary with the  degree of risk,
maturity,  and  amount of the  loan,  and are  further  subject  to  competitive
pressures,   money  market  rates,   availability   of  funds,   and  government
regulations.  Atlantic  has no  foreign  loans or  loans  for  highly  leveraged
transactions.

Atlantic's loans are concentrated in three major areas:  commercial  loans, real
estate loans,  and consumer loans. A majority of Atlantic's  loans are made on a
secured  basis.  As of December  31,  1999,  approximately  56.7% of  Atlantic's
consolidated  loan  portfolio  consisted  of loans  secured by mortgages on real
estate, of which  approximately  33.2% of the total loan portfolio is secured by
commercial real estate properties.

Atlantic's  real estate loans are secured by mortgages and consist  primarily of
loans to individuals and businesses for the purchase,  improvement of, refinance
of, or  investment  in real  estate and for the  construction  of  single-family
residential units or the development of single-family residential building lots.
These  real  estate  loans  may be made at fixed  or  variable  interest  rates.
Atlantic  generally does not make  fixed-rate  commercial  real estate loans for
terms  exceeding  three  years.  Loans in  excess of three  years are  generally
adjustable rate loans.  Atlantic's  residential  real estate

                                       2
<PAGE>
loans generally are repayable in monthly installments,  based on up to a 30-year
amortization schedule, with variable interest rates.

Atlantic's   commercial  loan  portfolio   includes  loans  to  individuals  and
small-to-medium-sized  businesses  located  primarily  in  Duval  and St.  Johns
counties for working capital,  equipment  purchases,  and various other business
purposes. A majority of commercial loans are secured by real estate,  equipment,
or  similar  assets,  but these  loans may also be made on an  unsecured  basis.
Commercial loans may be made at variable or fixed rates of interest.  Commercial
lines of credit are typically  granted on a one-year basis, with loan covenants.
Other commercial  loans with terms or amortization  schedules of longer than one
year will  normally be made at interest  rates which vary with the prime lending
rate and will become  payable in full in three to five years.  Commercial  loans
not secured by real estate amounted to  approximately  30.5% of Atlantic's total
loan portfolio as of December 31, 1999.

Atlantic's  consumer loan portfolio  consists  primarily of loans to individuals
for various  consumer  purposes,  but includes some business purpose loans which
are payable on an installment  basis.  The majority of these loans are for terms
of less than five years and are secured by liens on various  personal  assets of
the borrowers;  however,  consumer loans may also be made on an unsecured basis.
Consumer  loans are made at fixed and  variable  interest  rates,  and are often
based on up to a five-year amortization schedule.

For  additional   information   regarding   Atlantic's   loan   portfolio,   see
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

Loan originations are derived from a number of sources. Loan originations can be
attributed  to  direct  solicitation  by  Atlantic's  loan  officers,   existing
customers and borrowers,  advertising, walk-in customers and, in some instances,
referrals from brokers.

Certain  credit risks are inherent in making  loans.  These  include  prepayment
risks,  risks  resulting from  uncertainties  in the future value of collateral,
risks  resulting  from changes in economic and  industry  conditions,  and risks
inherent in dealing with individual borrowers. In particular,  longer maturities
increase the risk that  economic  conditions  will change and  adversely  affect
collectibility.  Atlantic  attempts to minimize  credit losses  through  various
means. In particular,  on larger loans,  Atlantic  generally  relies on the cash
flow of a debtor as the source of repayment and  secondarily on the value of the
underlying  collateral.  In addition,  Atlantic attempts to utilize shorter loan
terms in order to reduce the risk of a decline in the value of such collateral.

Deposit Activities

Deposits are the major source of Atlantic's funds for loans and other investment
activities.  Atlantic considers the majority of its regular savings, demand, NOW
and money market deposit accounts to be core deposits.  These accounts comprised
approximately  68.7% of Atlantic's  consolidated  total deposits at December 31,
1999.  Approximately 31.3% of Atlantic's  consolidated  deposits at December 31,
1999, were certificates of deposit. Generally, Atlantic attempts to maintain the
rates paid on its deposits at a competitive level. Time deposits of $100,000 and
over made up approximately  10.3% of Atlantic's  consolidated  total deposits at
December 31, 1999.  For  additional  information  regarding  Atlantic's  deposit
accounts,  see "Management's  Discussion and Analysis of Financial Condition and
Results of Operations."

                                       3
<PAGE>
Investments

Atlantic invests a portion of its assets in U.S.  Government agency obligations,
certificates of deposit,  collateralized  mortgage  obligations  ("CMO's"),  and
federal  funds  sold.  Atlantic's  investments  are  managed in relation to loan
demand and deposit growth,  and are generally used to provide for the investment
of excess funds at minimal risks while providing  liquidity to fund increases in
loan demand or to offset fluctuations in deposits.

Atlantic's  total  investment  portfolio  may be invested in U.S.  Treasury  and
general obligations of its agencies because such securities  generally represent
a minimal  investment risk.  Occasionally,  Atlantic  purchases  certificates of
deposits of national and state banks.  These  investments may exceed $100,000 in
any one institution  (the limit of FDIC insurance for deposit  accounts).  CMO's
are secured  with Federal  National  Mortgage  Association  ("FNMA") and General
National Mortgage Association ("GNMA") mortgage-backed  securities and generally
have a shorter life than the stated  maturity.  Federal funds sold is the excess
cash  Atlantic  has  available  over and above daily cash  needs.  This money is
invested on an overnight basis with approved correspondent banks.

Atlantic   monitors  changes  in  financial   markets  affecting  its  portfolio
investments.  Atlantic  also monitors its daily cash position to ensure that all
available funds earn interest at the earliest possible date.

Correspondent Banking

Correspondent banking involves one bank providing services to another bank which
cannot provide that service for itself from an economic or practical standpoint.
Atlantic is required to purchase correspondent services offered by larger banks,
including check collections,  purchase of federal funds,  security  safekeeping,
investment  services,  coin and currency  supplies,  overline and liquidity loan
participations and sales of loans to or participation with correspondent  banks.
Atlantic sells loan  participations to correspondent banks with respect to loans
which exceed Atlantic's lending limit.

Interest and Usury

Atlantic is subject to state and federal statutes that affect the interest rates
that  may be  charged  on  loans.  These  laws  do  not,  under  present  market
conditions, deter Atlantic from continuing the process of originating loans.

Primary Service Area

Atlantic's  PSA,  which  encompasses  the  easternmost  portion of Duval County,
Florida,  and the  northeasternmost  portion of St. Johns  County,  Florida,  is
bounded by the St. Johns River to the north,  State Road 210 in St. Johns County
to the south, the Atlantic Ocean to the east, and the  Intracoastal  Waterway in
Duval  County and the  Duval/St.  Johns  County line in St.  Johns County to the
west. The PSA includes the communities and  municipalities of Ponte Vedra Beach,
Jacksonville Beach,  Atlantic Beach, Neptune Beach, Florida, and that portion of
the City of  Jacksonville  known as Mayport (the home of the Mayport U.S.  Naval
Air Station).  Duval and St. Johns  Counties enjoy an abundant and educated work
force,  attractive  business costs, and a good relationship  between the private
and public sectors.

                                       4
<PAGE>
In general, commercial real estate in the PSA consists of small shopping centers
and office buildings. The type of residential real estate within the PSA varies,
with a number of  condominiums  and  townhouses  located  along the  beaches,  a
greater  concentration  of  apartments  in the  Mayport  area and  single-family
housing dispersed throughout the PSA. New residential growth in the PSA consists
primarily of working professionals with families. Over half of the population of
the PSA is between the ages of 15 and 44.

Atlantic caters to a base of local  stockholders and customers.  Because it is a
local organization, all policies and procedures are tailored to the local market
instead  of to  statewide  or  regional  markets.  This is not the  case for the
majority of the financial institutions currently operating in the PSA.

Atlantic  believes  that the PSA is a  desirable  market in which to  operate an
independent,  locally-owned  bank.  Atlantic's  broad base of  shareholders  and
customers from the beaches  area of  Jacksonville,  and the  favorable  economic
environment of the PSA,  should provide  Atlantic the opportunity to gain market
share.

Competition

The  business of banking is highly  competitive.  Atlantic  competes  with other
banks and credit unions in the PSA and with banks, savings and loan associations
and credit unions elsewhere in the Jacksonville market. As of December 31, 1999,
management  believed there to be nine banks  operating in the PSA,  comprising a
total of 14 banking offices, and two credit unions.

Atlantic's  competitive  strategy  with  respect to the  financial  institutions
described above consists of:

     o   reviewing loan requests quickly with a locally-based loan committee;

     o   maintaining flexible but prudent lending policies;

     o   personalizing  service by establishing  long-term banking relationships
         with its customers; and

     o   maintaining  a strong  ratio of  employees  to customers to enhance the
         level of service.

Supervision and Regulation

Both   Atlantic  and  Oceanside   are  subject  to   comprehensive   regulation,
examination,  and supervision by the Federal Reserve,  the Florida Department of
Banking  and  Finance  (the  "Department")  and the  Federal  Deposit  Insurance
Corporation ("FDIC") and are subject to other laws and regulations applicable to
banks and bank holding companies.  Such regulations include limitations on loans
to a single  borrower and to  Oceanside's  directors,  officers,  and employees;
restrictions  on the opening and closing of branch  offices;  the maintenance of
required  capital and liquidity  ratios;  the granting of credit under equal and
fair  conditions;  disclosure  of the  costs  and  terms  of  such  credit;  and
restrictions as to permissible  investments.  Both are examined  periodically by
the Federal  Reserve,  or the Department and the FDIC,  each of whom will submit
periodic  reports  regarding its financial  condition and other  matters.  These
agencies  have a broad  range of  powers  to  enforce  regulations  under  their
respective jurisdictions, and to take discretionary actions determined to be for
the protection of the safety and soundness of Atlantic and Oceanside,  including
the  institution  of cease

                                       5
<PAGE>
and desist orders and the removal of directors and officers.

Bank Holding Company Regulation.  Atlantic is a bank holding company, registered
with the Federal Reserve under the BHC Act. As such,  Atlantic is subject to the
supervision,  examination  and  reporting  requirements  of the  BHC Act and the
regulations  of the Federal  Reserve.  The BHC Act requires  that a bank holding
company  obtain the prior  approval of the Federal  Reserve before (i) acquiring
direct or indirect  ownership or control of more than 5% of the voting shares of
any bank,  (ii) taking any action that causes a bank to become a  subsidiary  of
the bank holding company,  or (iii) merging or consolidating with any other bank
holding company.

The  BHC Act  generally  prohibits  a bank  holding  company  from  engaging  in
activities  other  than  banking,  or  managing  or  controlling  banks or other
permissible  subsidiaries,  and from  acquiring or retaining  direct or indirect
control of any company  engaged in any  activities  other than those  activities
determined  by the  Federal  Reserve  to be so  closely  related  to  banking or
managing or controlling banks as to be a proper incident thereto. In determining
whether a particular activity is permissible,  the Federal Reserve must consider
whether  the  performance  of such an  activity  can  reasonably  be expected to
produce  benefits  to  the  public,  such  as  greater  convenience,   increased
competition, or gains in efficiency that outweigh possible adverse effects, such
as undue concentration of resources, decreased or unfair competition,  conflicts
of interest,  or unsound  banking  practices.  For example,  factoring  accounts
receivable,  acquiring or servicing loans, leasing personal property, conducting
securities  brokerage  activities,  performing certain data processing services,
acting as agent or broker in selling  credit life  insurance  and certain  other
types of insurance in connection with credit transactions, and certain insurance
underwriting  activities  have all been determined by regulations of the Federal
Reserve to be permissible  activities of bank holding  companies.  Despite prior
approval,  the Federal  Reserve has the power to order a holding  company or its
subsidiaries  to terminate any activity or terminate its ownership or control of
any  subsidiary,  when it has reasonable  cause to believe that  continuation of
such  activity or such  ownership or control  constitutes  a serious risk to the
financial  safety,  soundness,  or stability of any bank subsidiary of that bank
holding company.

Gramm-Leach-Bliley  Act. On November 12, 1999, President Clinton signed into law
the  Gramm-Leach-Bliley  Act  which  reforms  and  modernizes  certain  areas of
financial  services  regulation.  The law permits the creation of new  financial
services  holding  companies  that can offer a full range of financial  products
under a regulatory  structure  based on the principle of functional  regulation.
The legislation  eliminates the legal barriers to  affiliations  among banks and
securities firms,  insurance companies,  and other financial services companies.
The law also provides financial  organizations with the opportunity to structure
these  new  financial  affiliations  through a holding  company  structure  or a
financial subsidiary. The new law reserves the role of the Federal Reserve Board
as the  supervisor  for bank holding  companies.  At the same time, the law also
provides a system of  functional  regulation  which is  designed  to utilize the
various existing federal and state regulatory bodies.

The law also includes a minimum federal standard of financial privacy. Financial
institutions  are  required  to  have  written  privacy  policies  that  must be
disclosed to  customers.  The  disclosure of a financial  institution's  privacy
policy must take place at the time a customer  relationship  is established  and
not less than annually during the continuation of the relationship. The act also
provides for the functional  regulation of bank securities  activities.  The law
repeals the exemption  that banks were afforded from the definition of "broker,"
and replaces it with a set of limited

                                       6

<PAGE>
exemptions that allow the continuation of some historical  activities  performed
by banks.  In  addition,  the act amends the  securities  laws to include  banks
within the general  definition of dealer.  Regarding new bank products,  the law
provides a procedure for handling  products  sold by banks that have  securities
elements.  In the  area of CRA  activities,  the  law  generally  requires  that
financial  institutions  address  the  credit  needs of  low-to-moderate  income
individuals and  neighborhoods  in the  communities in which they operate.  Bank
regulators  are  required  to take  the  CRA  ratings  of a bank or of the  bank
subsidiaries  of a holding  company into account when acting upon certain branch
and bank merger and acquisition applications filed by the institution. Under the
law,  financial  holding  companies  and  banks  that  desire  to  engage in new
financial  activities  are required to have  satisfactory  or better CRA ratings
when they commence the new activity.

Most of the  provisions  of the law take  effect on March 11,  2000,  with other
provisions  being  phased  in over a one to two year  period  thereafter.  It is
anticipated that the effects of the law, while providing additional  flexibility
to bank holding  companies and banks,  may result in additional  affiliation  of
different  financial  services  providers,  as  well as  increased  competition,
resulting in lower prices, more convenience,  and greater financial products and
services available to consumers.

FDIC Regulations. Oceanside's deposit accounts are insured by the Bank Insurance
Fund ("BIF") of the FDIC up to a maximum of $100,000 per insured depositor.  The
FDIC issues regulations, conducts periodic examinations,  requires the filing of
reports,  and generally  supervises  the  operations of its insured  banks.  The
approval  of the FDIC is  required  prior to a merger  or  consolidation  or the
establishment  or  relocation  of  an  office  facility.  This  supervision  and
regulation  is  intended   primarily  for   protection  of  depositors  and  not
stockholders.

The  Financial  Institutions  Reform,  Recovery  and  Enforcement  Act  of  1989
("FIRREA")  imposed major regulatory  reforms,  stronger  capital  standards for
savings  and loan  associations  and  stronger  civil and  criminal  enforcement
provisions.  FIRREA also provides that a depository  institution  insured by the
FDIC can be held liable for any loss incurred by, or  reasonably  expected to be
incurred by, the FDIC in connection with:

o        the  default  of  a  commonly   controlled   FDIC  insured   depository
         institution; or

o        any  assistance  provided  by the FDIC to a  commonly  controlled  FDIC
         insured institution in danger of default.

Also  important  in terms of its  effect on banks has been the  deregulation  of
interest rates paid by banks on deposits and the types of deposit  accounts that
may be offered by banks. Most regulatory limits on permissible  deposit interest
rates and minimum  deposit  amounts expired several years ago. The effect of the
deregulation of deposit  interest rates generally has been to increase the costs
of  funds  to  banks  and to  make  their  costs  of  funds  more  sensitive  to
fluctuations  in money market rates. A result of the pressure on bank's interest
margins  due to  deregulation  has been a trend  toward  expansion  of  services
offered by banks and an increase in the  emphasis  placed on fee or  noninterest
income.

Banks are subject to the  provisions of the Community  Reinvestment  Act of 1977
(the "CRA"). Under the terms of the CRA, the appropriate federal bank regulatory
agency is required, in connection with its examination of a bank, to assess such
bank's record in meeting the credit needs of the community  served by that bank,
including  low-  and  moderate-income  neighborhoods.  The

                                        7
<PAGE>

regulatory  agency's  assessment of the bank's  record is made  available to the
public. Further, such assessment is required of any bank which has applied to:

o        obtain deposit insurance coverage for a newly chartered institution,

o        establish a new branch office that will accept deposits,

o        relocate an office, or

o        merge or  consolidate  with,  or  acquire  the  assets  or  assume  the
         liabilities of, a federally regulated financial institution

The Federal  Deposit  Insurance  Corporation  Improvement Act of 1991 ("FDICIA")
substantially  revised  the  depository   institution   regulatory  and  funding
provisions of the Federal  Deposit  Insurance Act.  Amount other things,  FDICIA
requires the federal  banking  regulators  to take prompt  corrective  action in
respect of depository institutions that do not meet minimum requirements. FDICIA
establishes five capital tiers: "well  capitalized,"  "adequately  capitalized,"
"undercapitalized,"     "significantly     capitalized,"     and     "critically
undercapitalized."   A  depository   institution  is  well   capitalized  if  it
significantly exceeds the minimum level required by regulation for each relevant
capital  measure,   adequately  capitalized  if  it  meets  each  such  measure,
undercapitalized   if  it  fails  to  meet  any  such   measure,   significantly
undercapitalized  if it is  significantly  below such  measure,  and  critically
undercapitalized  if it fails to meet any  critical  capital  level set forth in
regulations.  A depository  institution may be deemed to be in a  capitalization
category  that is lower than is indicated by its actual  capital  position if it
receives an unsatisfactory examination rating.

FDICIA  generally  prohibits a  depository  institution  from making any capital
distribution  (including  payment of a dividend) if the  depository  institution
would thereafter be undercapitalized.  In addition,  undercapitalized depository
institutions  are  subject  to growth  limitations  and are  required  to submit
capital restoration plans. The federal banking agencies may not accept a capital
plan  without  determining,  among  other  things,  that  the  plan is  based on
realistic  assumptions  and is likely to succeed  in  restoring  the  depository
institution's capital. If a depository fails to submit an acceptable plan, it is
treated as if it is significantly undercapitalized.

Significantly  undercapitalized  depository  institutions  may be  subject  to a
number of requirements  and  restrictions,  including  orders to sell sufficient
voting  stock to become  adequately  capitalized,  requirements  to reduce total
assets and cessation of receipt of deposits from correspondent banks. Critically
undercapitalized  depository  institutions  are  subject  to  appointment  of  a
receiver or conservator.

FDICIA provides authority for special  assessments  against insured deposits and
for the development of a general  risk-based  insurance  assessment  system. The
risk-based  insurance  assessment system would be used to calculate a depository
institution's  semi-annual deposit insurance assessment based on the probability
(as defined in the  statute)  that the BIF will incur a loss with respect to the
institution.  In accordance  with FDICIA,  the FDIC  implemented a  transitional
risk-based insurance premium system. Since  implementation,  average assessments
have  fallen  to the  point  where  most  banks,  including  Oceanside,  paid no
assessments in 1998 or 1999.

FDICIA also contains various  provisions  related to an  institution's  interest
rate risk.  Under  certain  circumstances,  an  institution  may be  required to
provide additional capital or maintain higher capital

                                       8
<PAGE>
levels to address interest rate risks.

In addition,  the FDIC has adopted a minimum  leverage  ratio of 3%. The minimum
leverage ratio is the ratio of common  equity,  retained  earnings,  and certain
amounts of  perpetual  preferred  stock  (after  subtracting  goodwill and after
making  certain  other  adjustments)  to the total  assets  of the  institution.
Generally,  banking organizations are expected to operate well above the minimum
required  capital  level of 3%,  unless they meet  certain  specified  criteria,
including  that  they  have  the  highest  regulatory   ratings.   Most  banking
organizations are required to maintain a leverage ratio of 3% plus an additional
cushion of 1% to 2%. The  guidelines  also provide  that  banking  organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong capital  positions  substantially  above the minimum  supervisory  levels
without significant reliance upon intangible assets.

Dividend Restrictions.  In addition to dividend restrictions placed on Oceanside
by the FDIC based on  Oceanside's  minimum  capital  requirements,  the  Florida
Financial  Institutions  Code prohibits the  declaration of dividends in certain
circumstances.  Section 658.37,  Florida Statutes,  prohibits the declaration of
any  dividend  until a bank has  charged off bad debts,  depreciation  and other
worthless  assets,  and has made  provision  for  reasonably-anticipated  future
losses on loans and other  assets.  Such dividend is limited to the aggregate of
the net profits of the  dividend  period  combined  with a bank's  retained  net
profits of the preceding two years.  A bank may declare a dividend from retained
net profits  accruing  prior to the preceding two years with the approval of the
Department.  However,  a bank will be required,  prior to the  declaration  of a
dividend on its common stock, to carry 20% of its net profits for such preceding
period as is covered by the dividend to its surplus fund, until the surplus fund
equals at least the amount of the bank's common and preferred  stock then issued
and outstanding.  In no event may a bank declare a dividend at any time in which
its net income from the current year, combined with the retained net income from
the preceding  two years is a loss or which would cause the capital  accounts of
the bank to fall below the minimum amount required by law, regulation, order, or
any written agreement with the Department or the FDIC.

Change of Control.  Federal law  restricts  the amount of voting stock of a bank
holding  company and a bank that a person may acquire without the prior approval
of  banking  regulators.  The  overall  effect  of such  laws is to make it more
difficult  to  acquire a bank  holding  company  and a bank by  tender  offer or
similar  means  than  it  might  be  to  acquire  control  of  another  type  of
corporation.  Consequently,  shareholders  of  Atlantic  may be less  likely  to
benefit  from the rapid  increases  in stock  prices that may result from tender
offers or similar  efforts to acquire  control of other  companies.  Federal law
also imposes restrictions on acquisitions of stock in a bank holding company and
a state bank.  Under the federal Change in Bank Control Act and the  regulations
thereunder,  a person or group must give advance  notice to the Federal  Reserve
before  acquiring  control  of any bank  holding  company  and the  FDIC  before
acquiring  control of any state bank (such as  Oceanside).  Upon receipt of such
notice,  the FDIC may approve or disapprove the acquisition.  The Change in Bank
Control Act  creates a  rebuttable  presumption  of control if a member or group
acquires  a certain  percentage  or more of a bank  holding  company's  or state
bank's  voting stock,  or if one or more other control  factors set forth in the
Act are present.

Riegle-Neal  Interstate  Banking and Branching  Efficiency  Act. The Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking
Act") provides that as of June 1, 1997, adequately capitalized and managed banks
will be able to engage in  interstate  branching  by merging  banks in different
states, including Florida.

                                       9
<PAGE>
Effect of  Governmental  Policies.  The earnings and  businesses of Atlantic and
Oceanside are affected by the policies of various regulatory  authorities of the
United States,  especially the Federal Reserve. The Federal Reserve, among other
things,  regulates  the  supply  of  credit  and  deals  with  general  economic
conditions within the United States. The instruments of monetary policy employed
by the Federal Reserve for those purposes  influence in various ways the overall
level of investments,  loans, other extensions of credit, and deposits,  and the
interest rates paid on liabilities and received on assets.

The foregoing is  necessarily  a general  description  of certain  provisions of
federal and state law and does not purport to be  complete.  Proposals to change
the  laws  and  regulations   governing  the  banking  industry  are  frequently
introduced in Congress,  in the state legislatures,  and before the various bank
regulatory  agencies.  The  likelihood  and timing of any such  changes  and the
impact such changes might have on Atlantic or Oceanside  cannot be determined at
this time.

Common Stock

Atlantic has 10,000,000  shares of its $0.01 par value common stock  authorized.
As of March 1, 2000,  595,350  shares  were  outstanding.  The holders of common
stock are  entitled  to one vote for each share held of record on all matters to
be voted on by stockholders.  Upon  liquidation,  dissolution,  or winding-up of
Atlantic,  the  holders of common  stock are  entitled  to receive  pro rata all
assets remaining legally available for distribution to shareholders. The holders
of  common  stock  have no right to  cumulate  their  votes in the  election  of
directors.  The common stock has no preemptive or other subscription rights, and
there are no conversion  rights or redemption  or sinking fund  provisions  with
respect to such  shares.  All the  outstanding  shares of common stock are fully
paid and non-assessable.

The holders of common stock are entitled to receive such  dividends,  if any, as
may be declared  from time to time by the board of directors  in its  discretion
from  funds  legally  available  therefor.  Significant  restrictions  apply  to
Oceanside's ability to pay dividends to Atlantic and, thereby,  limit Atlantic's
ability to pay dividends to its shareholders  under applicable  banking laws and
regulations.  See "Supervision and Regulation,  Dividend Restrictions." Atlantic
and  Oceanside  have not  declared or paid any  dividends on the common stock to
date and do not anticipate  paying any cash dividends on its common stock in the
foreseeable future.  Atlantic  anticipates that the earnings of Atlantic will be
retained  by Atlantic  during the  foreseeable  future and held for  purposes of
enhancing Atlantic's capital.

Warrants

Each  subscriber  to the initial  offering of Atlantic's  common stock  received
warrants to purchase common stock  ("warrants") equal to the number of shares of
common stock purchased.  Each warrant gives the holder the right to purchase one
share of common  stock at $10.00 per share at any time  during the five (5) year
period beginning on the date of the opening of Atlantic; provided, however, that
at any time after one year following the date Atlantic commences  business,  the
board of  directors of Atlantic,  by written  notice to each warrant  holder may
shorten the period  during which the warrant may be exercised to a period ending
no  sooner  than 30 days  after  such  notice is  mailed.  The  warrants  may be
exercised  by  delivery to  Atlantic  of a check for the  purchase  price of the
number of shares of common stock being  purchased or by authorizing  Atlantic to
retain  whole  shares of common  stock which would  otherwise  by issuable  upon
exercise of the warrant having a fair market value equal

                                       10
<PAGE>

to the exercise price. The warrants are separately transferable.  Holders of the
warrants do not have any of the rights or privileges of shareholders of Atlantic
(except to the extent they  otherwise own common stock) prior to the exercise of
the  warrants.  The warrants are entitled to the benefit of  adjustments  in the
exercise price and in the number of shares of common stock  deliverable upon the
exercise  thereof  upon  the  occurrence  of  certain  events,  including  stock
dividends, stock splits, reclassification,  reorganizations, consolidations, and
mergers.  The foregoing is a summary of the principal  terms of the warrants and
does not purport to be complete.

Preferred Stock

In addition to the  10,000,000  shares of authorized  common  stock,  Atlantic's
articles of  incorporation  authorize up to 2,000,000 shares of preferred stock.
The board of directors are further authorized to establish designations, powers,
preferences,  rights,  and other terms for  preferred  stock by  resolution.  No
shares of preferred stock have been issued.

Indemnification of Directors and Officers

Atlantic's Bylaws afford indemnification rights to its officers and directors to
the fullest  extent  permitted or required by the Florida  Business  Corporation
Act.

Under Section  607.0850 of the Florida Business  Corporation  Act,  officers and
directors of a Florida  corporation  may be entitled to  indemnification  by the
corporation  against  liability  incurred  in  connection  with any  threatened,
pending, or completed action, suit, or other type of proceeding,  whether civil,
criminal,  administrative,  or  investigative  and whether  formal or  informal;
provided,  however,  that such officer or director  acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation,  and, with respect to any criminal action or proceeding, had no
reasonable  cause to believe  his  conduct was  unlawful.  Such  indemnification
includes obligations to pay a judgment, settlement,  penalty, fine, and expenses
actually and  reasonably  incurred  with respect to a  proceeding.  In addition,
Florida law provides  that  officers and  directors  shall be  indemnified  by a
Florida  corporation  against expenses actually and reasonably  incurred by such
officer or  director,  to the extent  that such  officer  or  director  has been
successful on the merits or otherwise in defense of any  proceeding  (as defined
in Section 607.0850) or in defense of any claim, issue, or matter therein.

In addition,  Section 607.0831 of the Florida Business  Corporation Act provides
that a director is not personally  liable for monetary  damages to a corporation
or any other  person  for any  statement,  vote,  decision,  or  failure to act,
regarding  corporate  management or policy, by a director,  unless such director
breached  or failed to  perform  his  duties as a  director  and such  breach or
failure to perform constitutes:

o        a violation of the  criminal  law,  unless the director had  reasonable
         cause to believe his conduct was lawful or had no  reasonable  cause to
         believe his conduct was unlawful;

o        a  transaction  from which the  director  derived an improper  personal
         benefit, either directly or indirectly;

o        a   circumstance   involving  a  director's   liability   for  unlawful
         distributions  under  the  Florida  Business   Corporation  Act;

                                       11
<PAGE>

o        in  proceedings  by or in the  right of the  corporation  to  procure a
         judgment or by or in the right of a  shareholder,  conscious  disregard
         for the best interest of the corporation, or willful misconduct; or

o        in a  proceeding  by  or  in  the  right  of  someone  other  than  the
         corporation or a shareholder,  recklessness or an act or omission which
         was  committed  in bad faith or with  malicious  purpose or in a manner
         exhibiting  wanton and willful  disregard of human rights,  safety,  or
         property.

Employees

Atlantic  and its  wholly-owned  subsidiaries  have  approximately  27 full-time
employees and 3 part-time employees. No significant changes in the number of its
full-time employees are currently anticipated.  Because Atlantic believes that a
primary deficiency of large regional banks is the constant turnover of personnel
and therefore a lack of continuing personal  relationships with local customers,
Atlantic's goal is to maintain a competently  trained staff of local bankers who
have settled in the community on a permanent basis.  Atlantic  allocates funding
for continuing on-the-job and educational training, and personnel are encouraged
to enroll in various banking courses and other seminars to improve their overall
knowledge of the banking business.

Statistical Profile and Other Financial Data

Reference is hereby made to the  statistical and financial data contained in the
section captioned  "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations,"  for  statistical  and financial  data  providing a
review of Atlantic's business activities.

                                       12
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES.

On  October  29,  1996,  Oceanside  purchased  from an  unaffiliated  entity the
two-story,  3,100 square-foot building at 1315 South Third Street,  Jacksonville
Beach,  Florida,  as its main office ("Main  Office").  The Main Office includes
three inside teller stations,  four drive-up teller windows, an automated teller
machine,  and on-site  parking.  The Main Office is the former home of a Barnett
Bank branch  office.  Oceanside  purchased  the facility for $850,000 and used a
portion of the proceeds of the initial  offering of  Atlantic's  common stock to
add 2,200 square feet to the Facility.  Oceanside  acquired the Main Office with
funds drawn on a line of credit with Columbus Bank and Trust Company,  which was
repaid out of the proceeds of the offering.

On June 3, 1998,  Oceanside purchased from SouthTrust Bank, N.A., a 1,968 square
foot building located at 560 Atlantic Boulevard,  Neptune Beach,  Florida.  This
facility  was  formerly  a branch  office of  SouthTrust  Bank,  N.A.  Oceanside
purchased  this  building  for  $426,650 and spent  $49,963 on  renovations  and
upgrades.  This  facility  includes two offices,  three inside  teller  windows,
general lobby space, three drive-up teller windows, an ATM, and on-site parking.
The current capital structure of Oceanside supported this purchase.

On August 13, 1999, Atlantic purchased from an unaffiliated  individual, a 4,960
square foot office  building  located at 710 Third  Street  North,  Jacksonville
Beach,  Florida. The building serves as the location for Oceanside's  operations
center, Oceanside Mortgage, and holding company offices. Atlantic purchased this
building  for $540,000  and spent  $50,576 on  renovations  and  upgrades.  This
facility  includes twelve offices and on-site  parking.  Atlantic  acquired this
facility  with funds drawn on an existing  line of credit with Columbus Bank and
Trust Company.

The Main Office and branch facility are centrally located within the PSA and are
within  convenient  travel  distance  to the  concentration  of the  residential
population and to areas of major  commercial  activity within the PSA. Using the
existing road system within the PSA,  residents and daytime  inhabitants  in and
near the PSA are able to access both locations by means of two major north/south
roads and four east/west  roads.  Third  Street/A1A,  on which  Oceanside's Main
Office is located,  stretches north from St. Johns County to Mayport, and is the
main north-south thoroughfare in the PSA. In addition, Beach Boulevard, Atlantic
Boulevard,  and J. Turner  Butler  Boulevard  provide  convenient  travel to the
facilities  for  residents  and  businesses  located west of the PSA,  including
downtown Jacksonville.

ITEM 3.  LEGAL PROCEEDINGS.

There are no material  proceedings  to which Atlantic or its  subsidiaries  is a
party.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were  submitted  to a vote of Atlantic  security  holders  during the
fourth quarter of the year ended December 31, 1999.

                                       13
<PAGE>

                                     PART II

ITEM 5 . MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

Prior to October 28, 1999, the shares of Atlantic common stock were not actively
traded,  and such  trading  activity,  as it  occurred,  took place in privately
negotiated  transactions.  On October  28,  1999,  Atlantic's  common  stock was
approved for trading on the  "Over-the-Counter  Bulletin  Board," with the stock
price quoted on the  "electronic  pink sheets." The initial bid quote was $10.00
per share.

On March 1, 2000,  the first trading  activity for  Atlantic's  common stock was
reported as follows

           Open          High         Low        Close     Volume
           ----          ----         ---        -----     ------

           $11.50     $11.9844      411.50     $11.9844     4,000

Atlantic  has engaged a transfer  agent to maintain  the record  keeping for its
common stock and Atlantic is not aware of the high and low trading prices of its
common  stock  during  1998 and 1999.  As of March 1, 2000,  there were  595,350
shares of common stock and 593,510 warrants  outstanding and  approximately  800
holders of record of common stock.

Dividends

Atlantic anticipates that for the foreseeable future,  earnings will be retained
for the development of its business.  Accordingly,  Atlantic does not anticipate
paying dividends on the common stock in the foreseeable  future.  The payment of
future dividends will be at the sole discretion of Atlantic's board of directors
and will depend on, among other things,  future earnings,  capital requirements,
the general financial condition of Atlantic, and general business conditions.

                                       14
<PAGE>

ITEM 6.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION  AND
         RESULTS OF OPERATIONS.

Management's  discussion and analysis of earnings and related financial data are
presented herein to assist investors in understanding the financial condition of
Atlantic  at, and results of  operations  for Atlantic  for, the periods  ended,
December 31, 1999 and 1998. This discussion  should be read in conjunction  with
the financial  statements and related footnotes of Atlantic presented  elsewhere
herein.

Selected Financial Data (dollars and shares in thousands)
<TABLE>
<CAPTION>
                                                                              At or for the
                                                                         Period Ended December 31,
                                                                  ---------------------------------------
                                                                    1999             1998           1997
                                                                    ----             ----           ----
Statement of Operations Data:
<S>                                                              <C>             <C>             <C>
     Total interest income                                       $  3,704        $  2,287        $    346
     Total interest expense                                         1,210             867              85
     Net interest income before provision for credit losses         2,494           1,420             261
     Provision for credit losses                                      221             334             186
     Net interest income after provision for credit losses          2,273           1,086              75
     Noninterest income                                               362             196              33
     Noninterest expense                                            2,167           1,450             501
     Cumulative effect of a change in accounting principle            (59)             --              --
     Income tax benefit                                               (90)             --              --
     Net income (loss)                                                499            (168)           (393)

Balance Sheet Data:

     Total assets                                                $ 54,161        $ 45,571        $ 18,314
     Earning assets                                                47,144          38,977          14,688
     Investment securities                                          6,109           7,858           2,072
     Loans                                                         40,935          25,998           9,269
     Allowance for credit losses                                      738             520             186
     Deposit accounts                                              43,889          40,374          13,020
     Stockholders' equity                                           5,404           5,050           5,265

Share Data:

     Basic earnings per share                                    $   0.84        $  (0.28)       $  (0.70)
     Book value per share (period end)                           $   9.08        $   8.49            8.85
     Common shares outstanding (period end)                           595             595             595
     Weighted average shares outstanding                              595             595             560

Performance Ratios:

     Return on average assets                                        1.06%          -0.55%          -7.38%
     Return on average equity                                        9.83%          -3.27%         -17.20%
     Interest-rate spread during the period                          5.03%           4.31%           4.46%
     Net interest margin                                             5.96%           5.31%           6.20%
     Noninterest expenses to average assets                          4.59%           4.71%           9.41%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Asset Quality Ratios:
<S>                                                                  <C>             <C>             <C>
     Allowance for credit losses to period end loans                 1.80%           2.00%           2.01%
     Net charge-offs to average loans                                0.01%             --              --
     Nonperforming assets to period end loans                          --              --              --
     Nonperforming assets to period end total assets                   --              --              --

Capital and Liquidity Ratios (Oceanside):

     Average equity to average assets (Consolidated)                10.75%          16.69%          42.92%
     Leverage (4.00% required minimum)                              11.09%          12.92%          35.00%
     Risk-based capital:
         Tier 1                                                     12.54%          17.42%          53.27%
         Total                                                      13.79%          18.68%          54.53%
     Average loans to average deposits                              80.92%          69.30%          66.14%
</TABLE>

                                       15
<PAGE>
General

At December 31, 1999, Atlantic had grown to approximately $54.2 million in total
assets,  $40.9  million in total  loans,  $43.9  million in  deposits,  and $5.4
million in  stockholders'  equity.  The following  discussion  should be read in
conjunction  with  the  preceding   "Selected  Financial  Data"  and  Atlantic's
financial  statements  on pages 33 - 51  herein,  and the other  financial  data
included elsewhere.

Atlantic's   principal  asset  is  its  ownership  of  Oceanside.   Accordingly,
Atlantic's  results of operations  are primarily  dependent  upon the results of
operations  of  Oceanside.   Oceanside  conducts   commercial  banking  business
consisting of attracting  deposits  from the general  public and applying  those
funds  to the  origination  of  commercial,  consumer,  and  real  estate  loans
(including  commercial  loans  collateralized  by  real  estate).  Profitability
depends  primarily  on net  interest  income,  which is the  difference  between
interest  income  generated  from  interest-earning   assets  (i.e.,  loans  and
investments) less the interest expense incurred on interest-bearing  liabilities
(i.e., customer deposits and borrowed funds). Net interest income is affected by
the   relative   amounts  of   interest-earning   assets  and   interest-bearing
liabilities,  and the  interest  rate  earned  and paid on these  balances.  Net
interest income is dependent upon Oceanside's  interest-rate spread which is the
difference between the average yield earned on its  interest-earning  assets and
the average rate paid on its interest-bearing liabilities. When interest-earning
assets approximate or exceed interest-bearing liabilities, any positive interest
rate spread will  generate net  interest  income.  The  interest  rate spread is
impacted by interest rates, deposit flows, and loan demand. Additionally, and to
a lesser extent,  Oceanside's  profitability  is affected by such factors as the
level of noninterest  income and expenses,  the provision for credit losses, and
the effective tax rate. Noninterest income consists primarily of service fees on
deposit  accounts.  Noninterest  expense  consists of compensation  and employee
benefits,  occupancy and equipment expenses,  deposit insurance premiums paid to
the FDIC, and other operating expenses.

Forward-looking Statements

When used in this Form 10-KSB,  the words or phrases "will likely  result," "are
expected  to," "will  continue,"  "is  anticipated,"  "estimate,"  "project," or
similar expressions are intended to identify "forward-looking statements" within
the  meaning of the  Private  Securities  Litigation  Reform  Act of 1995.  Such
statements are subject to certain risks and  uncertainties  including changes in
economic conditions in Atlantic's market area, changes in policies by regulatory
agencies,  fluctuations in interest rates, demand for loans in Atlantic's market
area and competition,  that could cause actual results to differ materially from
those  presently  anticipated  or  projected.  Readers  should  not place  undue
reliance on any such forward-looking statements, which speak only as to the date
made.  Readers are advised that the factors listed above could affect Atlantic's
financial  performance  and could  cause  Atlantic's  actual  results for future
periods to differ  materially  from any opinions or  statements  expressed  with
respect  to  future  periods  in  any  current  statements.  Atlantic  does  not
undertake,  and specifically  disclaims any obligation,  to publicly release the
result of any revisions which may be made to any  forward-looking  statements to
reflect events or circumstances  after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.

                                       16
<PAGE>
                              Results of Operations

Net Income (Loss)

Atlantic  recorded  net losses of  $393,000  (a  negative  $0.70 per share) from
inception  (July 21, 1997) to December 31, 1997,  and $168,000 (a negative $0.28
per  share) in 1998.  The return on  average  assets in 1999 was 1.06%  versus a
negative  7.38% for  1997,  and a  negative  0.55%  for  1998.  Amortization  of
organizational  costs,  the provision for credit losses,  and other overhead and
start-up costs  associated  with a de novo bank operation in its first two years
contributed  to the  losses  recognized  in 1997 and 1998.  In 1999,  Atlantic's
earnings  were  $499,000  (or $0.84 per share),  which bring the total  earnings
since inception to within $62,000 of break-even.

Table 1.1 - Rate/Volume Analysis (in thousands):
<TABLE>
<CAPTION>

                                                                   Years Ended December 31,
                                                          ---------------------------------------
                                                          1999                                  1998
                                            ---------------------------------      --------------------------------
                                                          Interest   Average                    Interest   Average
                                             Average           and    Yield/      Average            and    Yield/
                                             Balance     Dividends      Rate      Balance      Dividends      Rate
                                             -------     ---------      ----      -------      ---------      ----
Earning assets:
<S>                                          <C>          <C>          <C>        <C>           <C>         <C>
     Loans                                   $33,236      $ 3,207      9.65%      $17,688       $ 1,792     10.13%
     Investment securities                     6,903          374      5.42%        5,325           293      5.50%
     Other interest-earning assets (1)         1,720          123      7.15%        3,738           202      5.40%
                                           ---------     --------               ---------      --------

         Total interest-earning assets        41,859        3,704      8.85%       26,751         2,287      8.55%
                                                          -------                               -------

Noninterest-earning assets                     5,344                                4,019
                                           ---------                            ---------

         Total assets                        $47,203                              $30,770
                                             =======                              =======

Interest-bearing liabilities:
     Demand deposits                         $16,618          441      2.65%     $  9,643           247      2.56%
     Savings                                   1,160           27      2.33%          363             7      1.93%
     Certificates of deposit                  13,074          690      5.28%       10,419           613      5.88%
     Other borrowings                            855           52      6.08%            -             -      0.00%
                                          ----------    ---------               ----------   -----------

         Total interest-bearing liabilities   31,707        1,210      3.82%       20,425           867      4.24%
                                                         --------                              --------

Noninterest-bearing liabilities               10,421                                5,211
Stockholders' equity                           5,075                                5,134
                                           ---------                            ---------

         Total liabilities and

           stockholders' equity              $47,203                              $30,770
                                             =======                              =======

Net interest income                                       $ 2,494                               $ 1,420
                                                          =======                               =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                          <C>          <C>          <C>        <C>           <C>         <C>

Interest-rate spread (2)                                               5.03%                                 4.31%
                                                                       =====                                 =====

Net interest margin (3)                                                5.96%                                 5.31%
                                                                       =====                                 =====

Ratio of average interest-earning assets
  to average interest-bearing liabilities    132.02%                              130.97%
                                             =======                              =======
</TABLE>



(1)      Includes  interest-bearing  deposits  due from other  banks and federal
         funds sold.

                                       17
<PAGE>

(2)      Interest-rate  spread  represents  the  difference  between the average
         yield   on   interest-earning   assets   and   the   average   cost  of
         interest-bearing liabilities.

(3)      Net  interest   margin  is  net  interest  income  divided  by  average
         interest-earning assets.


Table 1.2 - Rate/Volume Analysis (in thousands):
<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                                   1999 vs. 1998
                                                              Increase (Decrease) Due to
                                                           -------------------------------
                                                    Rate        Volume          Volume       Total
                                                    ----        ------         ------       -----
Interest-earning assets:
<S>                                              <C>            <C>            <C>            <C>
    Loans                                        $   (85)       $ 1,575        $   (75)       $ 1,415
    Investment securities                             (4)            86             (1)            81
    Other interest-earning assets                     65           (109)           (35)           (79)
                                                 -------        -------        -------        -------

        Total interest-earning assets                (24)         1,552           (111)         1,417
                                                 -------        -------        -------        -------

Interest-bearing liabilities:
    Demand deposits                                    9            179              6            194
    Savings                                            1             16              3             20
    Certificates of deposit                          (63)           156            (16)            77
    Other borrowings                                  --             --             52             52
                                                 -------        -------        -------        -------

        Total interest-bearing liabilities           (53)           351             45            343
                                                 -------        -------        -------        -------

Net interest income                              $    29        $ 1,201        $  (156)       $ 1,074
                                                 =======        =======        =======        =======
</TABLE>

Table 2 - Weighted Average Yield or Rate:
<TABLE>
<CAPTION>
                                                 For the Year Ended December 31,
                                                 -------------------------------
                                                      1999             1998
                                                      ----             ----
Interest-earning assets:
<S>                                                  <C>             <C>
        Loans                                        9.65%           10.13%
        Investment securities                        5.42%            5.50%
        Other interest-earning assets                7.15%            5.40%
        All interest-earning assets                  8.85%            8.55%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                  <C>             <C>
Interest-bearing liabilities:
        NOW deposits                                 0.92%            0.92%
        Money market deposits                        3.96%            3.96%
        Savings                                      2.33%            1.93%
        Certificates of deposit                      5.28%            5.88%
        Other borrowings                             6.08%            0.00%
        All interest-bearing liabilities             3.82%            4.24%
Interest-rate spread                                 5.03%            4.31%
</TABLE>

                                       18
<PAGE>

Comparison of Years Ended December 31, 1999 and 1998

Net Interest Income

Net  interest  income is  Atlantic's  primary  source of operating  income.  Net
interest  income  is  the  difference  between  interest  earned  on  loans  and
securities and interest paid on deposits and other funding sources.  The factors
that influence net interest income include changes in interest rates and changes
in the volume and mix of assets and liability balances.

Net  interest   income  was   $2,494,000  and  $1,420,000  for  1999  and  1998,
respectively,  an increase of 75.6% from 1998 to 1999,  which in part was due to
the increase in average earning assets of 56.5%. The average balances,  interest
income  and  expense,  and the  average  rates  earned  and paid for  assets and
liabilities are found in Tables 1 and 2 on the preceding pages.

During 1999 and 1998,  the average yield on earning  assets was 8.85% and 8.55%,
respectively,  while  the  average  cost of funds was 3.82% in 1999 and 4.24% in
1998.  Atlantic's net interest  margin rose from 5.31% in 1998 to 5.96% in 1999,
reflecting the favorable  trends in interest rates earned versus rates paid. For
1999,  the average  loan-to-interest-earning  deposit  ratio rose 107.7%  versus
86.6% in 1998,  which improved  earnings as the mix of  interest-earning  assets
shifted   towards  the  higher   yielding  loans.  At  December  31,  1999,  the
loan-to-interest-earning deposit ratio was 124.8%.

The favorable shifts in the mix of earning assets as well as the growth in loans
more than offset the  decline in average  yields on loans from 10.13% in 1998 to
9.65% in 1999.

Provision for Credit Losses

The provision  for credit  losses  declined from $334,000 in 1998 to $221,000 in
1999,  which  reflects  management's  assessment  of  the  needed  level  of the
allowance  for credit  losses as the loan growth  begins to slow from the growth
experienced in 1997 and 1998.

Other Income

Other income increased in 1999 to $362,000 from $196,000 for 1998. This increase
reflects  the growth in the  number of deposit  accounts.  Income  from  service
charges on customer  accounts  accounted for  approximately 78% and 68% of total
other income for the years ended 1999 and 1998, respectively.

Other Expenses

Other expenses totaled $2,167,000 for 1999 and $1,450,000 for 1998, or 4.59% and
4.71% of average assets for respective year ends. Salaries and employee benefits
accounted for  approximately  47% of total other expenses for 1999 as opposed to
49% for 1998. Increases in other expenses reflect the opening of a new branch on
September  1, 1998,  and total asset growth  during 1999.  The increase in other
expenses  of  49.4%  from  1998 to 1999 was less  than  the  increases  in total
interest income and other income of 62.0% and 84.7%, respectively,  for the same
periods.

                                       19
<PAGE>
Loans Receivable

Average  loans   receivable,   before  the  allowance  for  credit  losses  were
$33,236,000  for the year ended 1999 as compared  to  $17,688,000  for 1998,  an
increase  of  87.9%.  Management  believes  the  growth  in loans  was  directly
attributable to community  acceptance,  the reputations of our lending team, and
favorable  economic  conditions  in our market area.  Table 3 below  provides an
analysis of  Atlantic's  loan  distribution  at the end of 1999 and 1998.  Loans
which  are  secured  by  real  estate  include  residential  and  nonresidential
mortgages, and home equity loans to individuals.

Table 3 - Loan Portfolio (in thousands)

                                                      For the Year
                                                    Ended December 31,
                                                    ------------------
                                                  1999             1998
                                                  ----             ----

Commercial and agricultural                     $ 12,501        $  6,039
Real estate                                       23,283          16,853
Consumer and other loans                           5,250           3,194
                                                --------        --------
        Total loans                               41,034          26,086
Less:
        Less, unearned income                        (99)            (88)
        Less, allowance for credit losses           (738)           (520)
                                                --------        --------

                                                $ 40,197        $ 25,478
                                                ========        ========

The following table shows the maturity of loans receivable.

Table 4 - Loan Maturities at December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
                                               1 Year         1 Through             After
                                              or Less           5 Years           5 Years           Total
                                              -------           -------           -------           -----
<S>                                          <C>               <C>               <C>               <C>
Commercial and agricultural                  $  5,499          $  3,759          $  3,243          $12,501
Real estate                                     6,944             4,638            11,701           23,283
Consumer and other loans                        1,543             2,828               879            5,250
                                            ---------         ---------        ----------        ---------

        Total loans                           $13,986           $11,225           $15,823          $41,034
                                              =======           =======           =======          =======

Loans with maturities over one year:

        Fixed rate                                                                                 $22,587
        Variable rate                                                                                4,461
                                                                                                 ---------

             Total maturities greater than one year                                                $27,048
                                                                                                   =======
</TABLE>
                                       20
<PAGE>

Table 5 - Loans Originated and Repaid (in thousands):

                                                 Years Ended December 31,
                                                 ------------------------
                                                  1999             1998
                                                  ----             ----
Originations:
        Commercial and agricultural loans       $  6,816        $  7,778
        Real estate loans                         17,418          12,615
        Consumer and other loans                   4,096           5,723
                                                --------        --------

             Total                                28,330          26,116

Principal reductions                             (13,382)         (9,343)
                                                --------        --------

Increase in loans                               $ 14,948        $ 16,773
                                                ========        ========

Classification of Assets

Generally,  interest on loans  accrues and is credited to income  based upon the
principal  balance  outstanding.  It is  management's  policy to discontinue the
accrual of interest  income and classify a loan as nonaccrual  when principal or
interest  is  past  due  90  days  or  more  and  the  loan  is  not  adequately
collateralized,  or when in the opinion of management,  principal or interest is
not likely to be paid in accordance with the terms of the  obligation.  Consumer
installment loans are generally  charged-off after 90 days of delinquency unless
adequately  collateralized  and in the  process  of  collection.  Loans  are not
returned to accrual  status until  principal  and interest  payments are brought
current and future  payments appear  reasonably  certain.  Interest  accrued and
unpaid at the time a loan is  placed on  nonaccrual  status is  charged  against
interest  income.  Subsequent  payments  received are applied to the outstanding
principal balance.

Real estate  acquired by Atlantic as a result of  foreclosure or by deed in lieu
of  foreclosure  is  classified  as  other  real  estate  owned  ("OREO").  OREO
properties  are  recorded  at the  lower of cost or fair  value  less  estimated
selling costs,  and the estimated  loss, if any, is charged to the allowance for
credit losses at the time it is  transferred  to OREO.  Further  allowances  for
losses  in  OREO  are  recorded  at  the  time  management  believes  additional
deterioration in value has occurred.

Management  has adopted  Statement of  Financial  Accounting  Standards  No. 114
("SFAS No.  114"),  Accounting  by Creditors  for  Impairment  of a Loan,  which
considers a loan to be impaired if it is probable  that  Atlantic will be unable
to collect all amounts due under the contractual terms of the loan agreement. If
a loan is considered  impaired,  its value generally should be measured based on
the present  value of expected  cash flows  discounted  at the loan's  effective
interest rate. As a practical expedient,  however, the loan's value may be based
on:

o        the loan's market price; or

o        the fair  value of the loan's  collateral,  less  discounted  estimated
         costs to sell,  if the  collateral is expected to be the sole source of
         repayment.

                                       21
<PAGE>

If the value of the loan is less than the  recorded  investment  in the loan,  a
loss should be recognized by recording a valuation allowance and a corresponding
increase to the provision for credit losses charged to operating expenses.

Situations may occur where:

o        Atlantic receives  physical  possession of a debtor's assets regardless
         of  whether  formal  foreclosure  proceedings  have been  initiated  or
         completed; or

o        the  debtor  has  effectively  surrendered  control  of the  underlying
         collateral in contemplation of foreclosure.

These  situations are referred to as "in-substance  foreclosures."  SFAS No. 114
recognizes  the practical  problems of accounting  for the operation of an asset
the creditor does not possess,  and states that a loan for which  foreclosure is
probable should continue to be accounted for as a loan.

At December  31, 1999 and 1998,  management  had not  observed  any  significant
problem  loans in its  portfolio.  Loans  past due for 30 days or more (but less
than 60 days) at  December  31,  1999,  and 1998,  totaled  $73,800  and $1,200,
respectively.  At December  31,  1999,  management  had  classified  three loans
totaling approximately $29,000 as substandard.

At December 31, 1999 and 1998,  there were no loans  considered by management to
be impaired or in-substance foreclosed.

Allowance for Credit Losses

The amount  charged to operations  and the related  balance in the allowance for
credit  losses is based  upon  periodic  evaluations  of the loan  portfolio  by
management. These evaluations consider several factors including but not limited
to, current economic conditions,  loan portfolio composition,  prior credit loss
experience,  trends in portfolio volume,  and management's  estimation of future
potential  losses.  Management  believes that the allowance for credit losses is
adequate. Table 6 is an analysis of the allowance for credit losses for 1999 and
1998.

Table 6 - Allowance for Credit Losses (in thousands):

                                       1999         1998
                                       ----         ----

Balance, at beginning of period       $ 520        $ 186
Provision for credit losses             221          334
Loans charged off                        (8)          --
Recoveries                                5           --
                                      -----        -----
Balance, at end of period             $ 738        $ 520
                                      =====        =====

The  specific  allocations  of the  allowance  for  credit  losses  are based on
management's evaluation of the risks inherent in the specific portfolios for the
dates indicated.  Amounts in a particular  category may be used to absorb losses
if another  category  allocation  proves to be inadequate.  Table 7 reflects the
allocations of the allowance for the years ended 1999 and 1998.

                                       22
<PAGE>

Table 7 - Allocation of Allowance for Credit Losses (in thousands):

                                                  At December 31,
                                 --------------------------------------------
                                        1999                     1998
                                 -----------------      ---------------------
                                                              % of       % of
                                                            Loans to    Loans to
                                                             Total       Total
                                   Amount       Loans       Amount       Loans

Commercial and agricultural        $ --          30%        $ --           23%
Real estate                          --          57           --           65
Consumer and other loans             --          13           --           12
Unallocated                         738           0          520            0
                                   ----        ----         ----         ----

                                   $738         100%        $520          100%
                                   ====        ====         ====         ====

Highly leveraged  transactions  generally  include loans and commitments made in
connection with  recapitalizations,  acquisitions,  and leveraged  buyouts,  and
result in the borrower's  debt-to-total assets ratio exceeding 75%. Atlantic had
no loans at  December  31, 1999 and 1998,  that  qualified  as highly  leveraged
transactions.

Securities

Banks  classify  their  investment  securities as either  "held-to-maturity"  or
"available-for-sale."  Securities  classified as held-to-maturity are carried at
amortized  cost and  include  those  securities  that a bank has the  intent and
ability to hold to maturity. Securities classified as available-for-sale,  which
are those  securities  that a bank intends to hold for an  indefinite  amount of
time,  but not  necessarily  to  maturity,  are  carried  at fair value with the
unrealized holding gains or losses, net of taxes, reported as a component of the
stockholders'  equity on a bank's balance sheet.  At December 31, 1999 and 1998,
all of Atlantic's securities were classified as available-for-sale.

Tables  8.1 and 8.2 set forth the  carrying  amount of  securities  at the dates
indicated.

Table 8.1 - Carrying Value of Investment Securities (in thousands):

                                                              At December 31,
                                                           --------------------
                                                           1999           1998
                                                           ----           ----
Securities available-for-sale:
        Mortgage-backed securities (GNMA and FNMA)        $5,938        $7,803
        Other                                                171            55
                                                          ------        ------

Balance, end of year                                      $6,109        $7,858
                                                          ======        ======

                                       23
<PAGE>

Table 8.2 - Investment Securities at Amortized Cost (in thousands):

                                                               At December 31,
                                                              ---------------
                                                            1999          1998
                                                            ----          ----
Securities available-for-sale:
        Mortgage-backed securities (GNMA and FNMA)        $ 6,255       $ 7,850
        Other                                                 171            55
                                                          -------       -------

Balance, end of year                                      $ 6,426       $ 7,905
                                                          =======       =======

Table  9  sets  forth  the   maturities   (excluding   principal   paydowns   on
mortgage-backed  securities)  and the weighted  average  yields of securities by
contractual maturities at December 31, 1999 and 1998.

Table 9 - Analysis of Investment Securities (dollars in thousands)
<TABLE>
<CAPTION>
                                                        Due in Ten
                                                       Years or More                   Other
                                                 ---------------------------   ---------------------
                                                                Average                        Average
                                                  Amount         Yield           Amount         Yield
                                                  ------         -----           ------         -----
<S>                                              <C>              <C>           <C>              <C>
At December 31, 1999:
        Mortgage-backed securities
            (GNMA and FNMA)                      $ 5,938          6.22%         $     -             -
        Other                                          -              -             171          6.60%
                                                 -------                        -------
                                                 $ 5,938          6.22%         $   171          6.60%
                                                 =======                        =======

<CAPTION>
                                                     Due in One
                                                    Year or Less                           Other
                                                 --------------------------    ---------------------
                                                                   Average                     Average
                                                  Amount           Yield          Amount        Yield
                                                  ------           -----          ------        -----
<S>                                              <C>              <C>           <C>              <C>
At December 31, 1998:
        Mortgage-backed securities
            (GNMA and FNMA)                      $ 7,803          6.24%         $      -            -
        Other                                         -              -                55         7.25%
                                                 -------                        --------

                                                 $ 7,803          6.24%          $    55         7.25%
                                                 =======                        ========
</TABLE>

Deposits

Deposits  are the  major  source  of  Atlantic's  funds  for  lending  and other
investment purposes.  Deposits are attracted  principally from within Atlantic's
primary  market  area  through  the  offering  of a  broad  variety  of  deposit
instruments including checking accounts, money market accounts,  regular savings
accounts,   term  certificate   accounts  (including  "jumbo"   certificates  in
denominations of $100,000 or more) and retirement savings plans.

                                       24
<PAGE>

Maturity  terms,  service  fees and  withdrawal  penalties  are  established  by
Atlantic on a periodic basis. The determination of rates and terms is predicated
on funds  acquisition  and liquidity  requirements,  rates paid by  competitors,
growth goals and federal regulations.

FDIC regulations limit the ability of certain insured depository institutions to
accept,  renew,  or rollover  deposits by offering  rates of interest  which are
significantly  higher than the prevailing  rates of interest on deposits offered
by other insured depository institutions having the same type of charter in such
depository  institutions'  normal market area.  Under these  regulations,  "well
capitalized"  depository institutions may accept, renew, or rollover deposits at
such rates without restriction, "adequately capitalized" depository institutions
may accept, renew or rollover deposits at such rates with a waiver from the FDIC
(subject to certain  restrictions on payments of rates), and  "undercapitalized"
depository  institutions  may not  accept,  renew or  rollover  deposits at such
rates. The regulations  contemplate that the definitions of "well  capitalized,"
"adequately  capitalized"  and  "undercapitalized"  will  be  the  same  as  the
definitions  adopted by the agencies to implement the prompt  corrective  action
provisions of  applicable  law. See  "Description  of  Business/Supervision  and
Regulation."  As of December 31, 1999,  Oceanside met the  definition of a "well
capitalized" depository institution.

Atlantic's  primary  source of funds is core deposit  accounts that include both
interest- and  noninterest-bearing  demand,  savings,  and time  deposits  under
$100,000.   At  December  31,  1999  and  1998,  core  deposits   accounted  for
approximately  90% and 88%,  respectively,  of all deposits.  For the year ended
1998, the deposit mix had shifted so that  interest-bearing  demand deposits was
the single largest category of core deposits,  with time deposits under $100,000
the second largest category.  At December 31, 1999 and 1998, jumbo  certificates
of deposit (time deposits  $100,000 and greater)  represented  approximately 10%
and 12%,  respectively,  of total deposits.  At December 31, 1999 and 1998, time
deposits  outstanding  in an  individual  amount  of  $100,000  or more  totaled
$4,534,000  and  $4,704,000,  respectively.  The maturity of these  deposits are
reflected in Table 12 herein.

Interest-bearing  demand accounts,  consisting of NOW and money market accounts,
averaged  $16,618,000  for the year ended 1999 and $9,643,000 for the year ended
1998,  or   approximately   54%  and  38%  of  average  total   noninterest  and
interest-bearing  deposits in 1999 and 1998, respectively.  This increase in the
percentage of lower cost deposits to total  deposits in 1999  contributed to the
decline in the average cost of funds from 4.24% in 1998 to 3.82% in 1999.

                                       25

<PAGE>
Table 10 - Distribution of Deposit Accounts by Type (dollars in thousands):
<TABLE>
<CAPTION>
                                                                      At December 31,
                                               ------------------------------------------------------------
                                                           1999                             1998
                                               ----------------------------     ---------------------------
                                                                    % of                               % of
                                                  Amount         Deposits             Amount        Deposits
<S>                                              <C>                <C>             <C>                <C>
Demand deposits                                  $11,084            25.3%           $  7,168           17.8%
NOW deposits                                       7,138            16.3              12,193           30.2
Money market deposits                             10,787            24.6               6,542           16.2
Savings deposits                                   1,159             2.6                 737            1.8
                                               ---------         -------          ----------        -------

        Subtotal                                  30,168            68.8              26,640           66.0
                                                --------          ------            --------         ------

Certificates of deposit:
        3.00% - 3.99%                                124             0.3                 175            0.4
        4.00% - 4.99%                              3,697             8.4               2,458            6.1
        5.00% - 5.99%                              9,370            21.3               7,182           17.8
        6.00% - 6.99%                                530             1.2               3,919            9.7
                                              ----------         -------           ---------         ------

        Total certificates of deposit (1)         13,721            31.2              13,734           34.0
                                                --------          ------            --------         ------

        Total deposits                           $43,889           100.0%            $40,374          100.0%
                                                 =======           =====             =======          =====
</TABLE>

(1)      Includes  individual  retirement  accounts ("IRAs") totaling $1,106,000
         and $1,158,000 in 1999 and 1998, respectively,  all of which are in the
         form of certificates of deposit.

Table 11 - Average Deposits and Average Rates (dollars in thousands)
<TABLE>
<CAPTION>
                                                                      At December 31,
                                                -----------------------------------------------------------
                                                           1999                              1998
                                                -------------------------        --------------------------
                                                 Average          Average             Average       Average
                                                 Balance           Rate               Balance        Rate
Demand, money market
<S>                                             <C>                 <C>              <C>            <C>
    and NOW deposits                            $ 26,840            1.64%            $ 14,742       1.68%
Savings deposits                                   1,160            2.33%                 363       1.93%
Certificates of deposit                           13,074            5.28%              10,419       5.88%
                                               ---------                            ---------

        Total deposits                          $ 41,074            2.82%            $ 25,524       3.40%
                                                ========                             ========
</TABLE>

                                       26
<PAGE>
Table 12 - Maturities of Time Deposits of $100,000 or more (in thousands)

                                                         At December 31,
                                                         ---------------
                                                       1999             1998
                                                       ----             ----
Due in three months or less                        $    829          $ 1,237
Over three through twelve months                      3,597            3,366
Over three years                                        108              101
                                                  ---------        ---------
                                                    $ 4,534          $ 4,704
                                                    =======          =======

Table 13 - Certificates of Deposits by Rate and Maturity Date (in thousands):
<TABLE>
<CAPTION>
                                                                    Year Ending December 31,
                                         -------------------------------------------------------------------------------
                                         2000           2001           2002           2003           2004          Total
                                         ----           ----           ----           ----           ----          -----
At December 31, 1999:
<S>     <C>                            <C>            <C>            <C>            <C>            <C>            <C>
3.00% - 3.99%                          $   124        $    --        $    --        $    --        $    --        $   124
4.00% - 4.99%                            3,673             24             --             --             --          3,697
5.00% - 5.99%                            9,058            123             --            179             10          9,370
6.00% - 6.99%                              387             --              2            141             --            530
                                       -------        -------        -------        -------        -------        -------

  Total certificates of deposit        $13,242        $   147        $     2        $   320        $    10        $13,721
                                       =======        =======        =======        =======        =======        =======


                                                                    Year Ending December 31,
                                         -------------------------------------------------------------------------------
                                         1999           2000           2001           2002           2003          Total
                                         ----           ----           ----           ----           ----          -----
At December 31, 1998:
3.00% - 3.99%                          $   175        $    --        $    --        $    --        $    --        $   175
4.00% - 4.99%                            2,422             14             22             --             --          2,458
5.00% - 5.99%                            6,781            148             80             --            173          7,182
6.00% - 6.99%                            3,804             --             --              2            113          3,919
                                       -------        -------        -------        -------        -------        -------

  Total certificates of deposit        $13,182        $   162        $   102        $     2        $   286        $13,734
                                       =======        =======        =======        =======        =======        =======
</TABLE>
Capital Requirements/Ratios

Atlantic and  Oceanside  place a  significant  emphasis on  maintaining a strong
capital base. The capital resources of Oceanside consist of two major components
of regulatory capital, stockholders' equity and the allowance for credit losses.
Current capital  guidelines issued by federal regulatory  authorities  require a
company  to  meet  minimum  risk-based  capital  ratios  in an  effort  to  make
regulatory  capital more responsive to the risk exposure  related to a company's
on and off-balance sheet items.

Risk-based  capital guidelines  re-define the components of capital,  categorize
assets into risk classes,  and include  certain  off-balance  sheet items in the
calculation of capital  requirements.  The components of risk-based  capital are

<PAGE>

segregated  as Tier I and Tier II  capital.  Tier I capital is composed of total
stockholders'  equity reduced by goodwill and other intangible  assets.  Tier II
capital is comprised of the allowance for credit losses and any qualifying  debt
obligations.  Regulators also have adopted minimum  requirements of 4% of Tier I
capital and 8% of risk-adjusted assets in total capital.

                                       27
<PAGE>

Oceanside is also subject to leverage  capital  requirements.  This  requirement
compares  capital  (using the  definition  of Tier I capital)  to balance  sheet
assets and is intended to supplement the  risk-based  capital ratio in measuring
capital  adequacy.  The  guidelines  set a  minimum  leverage  ratio  of 3%  for
depository  institutions that are highly rated in terms of safety and soundness,
and which are not  experiencing or anticipating  any significant  growth.  Other
depository  institutions  are expected to maintain capital levels of at least 1%
or 2% above the minimum. Oceanside's actual capital amounts, capital ratios, and
leverage ratios at December 31, 1999 and 1998, are reflected in the table below.

Table 14 - Capital Ratios (in thousands):
<TABLE>
<CAPTION>

                                                                 At December 31,
                                                             -----------------------
                                                              1999             1998
                                                              ----             ----
Tier I
<S>                                                         <C>              <C>
    Stockholders' equity                                    $  5,664         $  5,097
    Less, intangible assets                                       --              (95)
                                                            --------         --------
                                                               5,664            5,002
Tier II
    Allowable portion of allowance for credit losses             565              362
                                                            --------         --------

Risk-based capital                                          $  6,229         $  5,364
                                                            ========         ========

Risk adjusted assets                                        $ 45,164         $ 28,722
                                                            ========         ========

    Tier I risk-based capital ratio                            12.54%           17.42%
                                                            ========         ========

    Total risk-based capital ratio                             13.79%           18.68%
                                                            ========         ========

Adjusted assets                                             $ 51,053         $ 38,706
                                                            ========         ========

    Leverage ratio                                             11.09%           12.92%
                                                            ========         ========
</TABLE>

Note:   Any   unrealized    appreciation    and   depreciation   on   securities
available-for-sale was excluded from regulatory capital components of risk-based
capital and leverage ratios.

<PAGE>

Table 15 - Capital Analysis
<TABLE>
<CAPTION>
                                                             At December 31,
                                                             ---------------
                                                          1999             1998
                                                          ----             ----
<S>                                                    <C>               <C>
Average equity as a percentage of average assets       10.75%            16.69%
Equity to total assets at end of year                   9.98%            11.08%
Return on average equity                                9.83%            (3.27)%
Return on average assets                                1.06%            (0.55)%
Noninterest expenses to average assets                  4.59%             4.71%
</TABLE>

In 1996,  Oceanside  commenced  the sale of units  (consisting  of one  share of
common stock and one warrant to purchase one share of common stock at a price of
$10.00 per share) at a price of $10.00 per unit.  During 1996 and 1997,  a total
of  594,430  shares  were  sold.  During  1999 and  1998,  600 and 20  warrants,
respectively, were exercised, the proceeds of which were $6,000 in 1999 and less

                                       28
<PAGE>

than $1,000 in 1998.

Stockholders'  equity is adjusted for the effect of unrealized  appreciation  or
depreciation, net of tax, on securities classified as available-for-sale.  As of
December 31, 1999,  stockholders'  equity  increased  $354,000 from December 31,
1998,  as a result  of the net  income  of  $499,000  and  $5,000  of other  net
adjustments  in 1999 offset by the decline in fair  market  value of  investment
securities  of  $150,000.  The  return on  average  equity  for the years  ended
December  31,  1999  and  1998,  was a  positive  9.83%  and a  negative  3.27%,
respectively.

Interest Rate Sensitivity

The  operations  of Atlantic are subject to risk  resulting  from  interest rate
fluctuations  to the extent  that there is a  difference  between  the amount of
Atlantic's   interest-earning   assets  and  the   amount  of   interest-bearing
liabilities that are prepaid/withdrawn, mature, or reprice in specified periods.

The principal objective of Atlantic's  asset/liability  management activities is
to provide  consistently  higher levels of net interest income while maintaining
acceptable  levels of interest  rate and  liquidity  risk and  facilitating  the
funding needs of Atlantic.  Atlantic utilizes an interest rate sensitivity model
as the primary  quantitative  tool in measuring the amount of interest rate risk
that is present.  The traditional  maturity "gap"  analysis,  which reflects the
volume difference  between interest rate sensitive assets and liabilities during
a given time period, is reviewed regularly by management.  A positive gap occurs
when  the  amount  of  interest  sensitive  assets  exceeds  interest  sensitive
liabilities. This position would contribute positively to net income in a rising
interest rate environment. Conversely, if the balance sheet has more liabilities
repricing  than assets,  the balance sheet is liability  sensitive or negatively
gapped.   Management   continues  to  monitor  sensitivity  in  order  to  avoid
overexposure to changing interest rates.

Another method used by management to review its interest sensitivity position is
through  "simulation." In simulation,  Atlantic projects the future net interest
streams in light of the current gap position.  Various  interest rate  scenarios
are used to measure levels of interest income  associated with potential changes
in  Atlantic's  operating  environment.  Management  cannot  measure  levels  of
interest  income  associated  with  potential  changes in  Atlantic's  operating
environment.  Management  cannot  predict the direction of interest rates or how
the mix of assets and liabilities will change.  The use of this information will
help  formulate  strategies to minimize the  unfavorable  effect on net interest
income caused by interest rate changes.

The  operations  of Atlantic do not subject it to foreign  currency  exchange or
commodity price risk. Also, Atlantic does not utilize interest rate swaps, caps,
or other hedging  transactions.  Atlantic's overall sensitivity to interest rate
risk is low due to its  non-complex  balance  sheet.  Atlantic  has  implemented
several  strategies to manage interest rate risk that include  originating  most
residential  mortgages  for a third  party  lender,  increasing  the  volume  of
variable  rate  commercial  loans,  requiring  interest rate calls on commercial
loans, and maintaining a short repricing  maturity a significant  portion of its
investment portfolio.

                                       29
<PAGE>

The following table provides information about Atlantic's financial  instruments
that are sensitive to changes in interest  rates.  For  securities,  loans,  and
deposits,  the table presents  principal cash flows and related weighted average
interest rates by maturity dates or repricing frequency.  Atlantic has no market
risk sensitive instruments entered into for trading purposes.

Table 16 - Interest Rate Sensitivity at December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
                                                  Under          3 to 12                            Over
                                                3 Months          Months       1 - 5 Years        5 Years            Total
                                                --------          ------       -----------        -------            -----
<S>                                             <C>              <C>              <C>              <C>              <C>
Federal funds sold                              $     --         $     --         $     --         $     --         $     --
Interest-bearing deposits in other banks             100               --               --               --              100
Loans(1)                                          10,971            3,015           11,225           15,724           40,935
Securities(2)                                         --            1,727               --            4,382            6,109
                                                --------         --------         --------         --------         --------

Total rate-sensitive assets                     $ 11,071         $  4,742         $ 11,225         $ 20,106         $ 47,144
                                                ========         ========         ========         ========         ========

Money market and NOW(2)                         $ 10,787         $     --         $     --         $  7,138         $ 17,925
Savings accounts (2)                                  --               --               --            1,159            1,159
Certificates of deposit (2)                        2,773           10,469              149              330           13,721
                                                --------         --------         --------         --------         --------

Total rate-sensitive liabilities                $ 13,560         $ 10,469         $    149         $  8,627         $ 32,805
                                                ========         ========         ========         ========         ========

Gap (repricing differences)                     $ (2,489)        $ (5,727)        $ 11,076         $ 11,479         $ 14,339
                                                ========         ========         ========         ========         ========

Cumulative Gap                                  $ (2,489)        $ (8,216)        $  2,860         $ 14,339
                                                ========         ========         ========         ========

Cumulative Gap/total assets                        -4.60%          -15.17%            5.28%           26.47%
                                                ========         ========         ========         ========

Total assets                                                                                                        $ 54,161
                                                                                                                    ========
</TABLE>

  (1)In preparing  the table above,  adjustable-rate  loans were included in the
     period in which the interest rates are next scheduled to adjust rather than
     in the period in which the loans mature.  Fixed-rate  loans were  scheduled
     according to their contractual maturities.

  (2)Excludes  noninterest-bearing  deposit accounts. Money market deposits were
     regarded as maturing  immediately,  and other core deposits were assumed to
     mature in the over 5-year category.  All other time deposits were scheduled
     through the maturity or repricing dates. Investments were scheduled through
     their contractual, repricing, or principal payment dates.

Management  anticipates  that its one-year gap will remain  negative  during its
initial  growth  period;  however,  management  attempts  to maintain a range of
positive 20% to negative 20%.
<PAGE>

Liquidity

Liquidity  management  involves meeting the funds flow requirements of customers
who may either be depositors  wanting to withdraw  funds,  or borrowers  needing
assurance  that  sufficient  funds will be available to meet their credit needs.
Liquid  assets  consist of vault cash,  securities,  and  maturities  of earning
assets.

Atlantic's  principal  sources of asset liquidity are federal funds sold and the
securities   portfolio,   including  principal  paydowns  from   mortgage-backed
securities.  In 1999 and 1998, such payments totaled  $1,498,000 and $1,227,000,
respectively.

                                       30
<PAGE>

Other  sources  of funds  are  principal  paydowns  and  maturities  in the loan
portfolio.  The loan maturity  schedule  (Table 4) illustrates the maturities of
loans receivable at December 31, 1999.

Oceanside also has sources of liability  liquidity that include core deposits as
previously discussed.

At December 31, 1999 and 1998,  Oceanside's  liquidity ratio of liquid assets to
transaction  deposit  accounts  was 16.1% and  38.5%,  respectively.  Management
believes that Oceanside's liquidity is sufficient to meet its anticipated needs.

Other Borrowings

Atlantic  has lines of credit  with  Columbus  Bank and Trust  Company  totaling
$1,000,000,  which mature on August 11,  2000,  with  principal  and interest at
0.50% below prime.  The purpose of this loan was to provide  working  capital to
Atlantic  and its  wholly-owned  subsidiary,  Oceanside  Mortgage.  The  holding
company  headquarters was purchased using proceeds from these lines. At December
31, 1999, Atlantic had $258,000 available under these lines of credit.

On December 29,  1999,  Oceanside  obtained an advance  from FHLB of  $2,300,000
collateralized  by Oceanside's  FHLB capital stock and a blanket lien consisting
of wholly-owned  residential  (1-4 units) first mortgage loans of  approximately
$4,200,000.  This advance  matures on December  29, 2000,  and carries a current
interest rate of 6.25%.

Oceanside has sold securities under agreements to repurchase with a par value of
approximately  $1,859,000 and a fair value of approximately $1,757,000 to secure
overnight  borrowings totaling  $1,589,000.  The interest rate on this overnight
borrowing was 6.5%.

Contingencies and Uncertainties - Year 2000 Compliance Matters

During  the  periods  leading up to January  1,  2000,  Atlantic  addressed  the
potential  problems  associated  with the  possibility  that the computers  that
control or operate Atlantic's  information  technology system and infrastructure
may not have been  programmed to read four-digit date codes and, upon arrival of
the year 2000,  may have  recognized  the two-digit  code "00" as the year 1900,
causing systems to fail to function or generate erroneous data.

Atlantic expended  approximately  $35,000 through the periods ended December 31,
1999, in connection with its Year 2000 compliance program.  Atlantic experienced
no  significant  problems  related to its  information  technology  systems upon
arrival of the Year 2000, nor was there any reported  interruption in service to
its customers of any kind.

Atlantic could incur losses if Year 2000 issues  adversely affect its depositors
or borrowers. Such problems could include delayed loan payments due to Year 2000
problems affecting any significant borrowers or impairing the payroll systems of
large  employers in Atlantic's  primary market areas.  Because  Atlantic's  loan
portfolio is highly diversified with regard to individual borrowers and types of
businesses,  Atlantic  does  not  expect,  and to  date  has not  realized,  any
significant  or  prolonged  difficulties  that will affect net  earnings or cash
flow.

                                       31
<PAGE>

Future Accounting Requirements

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities"  ("SFAS  133"),  which  addresses  the  accounting  for
derivative  instruments  and  provides  for  matching the timing of gain or loss
recognition  on the  hedging  instrument.  Guidance  on  identifying  derivative
instruments is also provided as well as additional disclosures. SFAS 133 becomes
effective for all fiscal  quarters of all fiscal years beginning after September
15, 1999. Earlier application is permitted with certain  exceptions.  Management
does not anticipate that adoption of SFAS 133 will have a material impact on the
financial condition or results of operations of Atlantic.

Impact of Inflation

The financial statements and related data presented herein have been prepared in
accordance  with generally  accepted  accounting  principles,  which require the
measurements of financial  position and operating results in terms of historical
dollars,  without  considering changes in the relative purchasing power of money
over time due to inflation. Unlike most industrial companies,  substantially all
of the assets and  liabilities of Atlantic are monetary in nature.  As a result,
interest rates have a more significant impact on Atlantic's performance than the
effects of general levels of inflation.  Interest rates do not necessarily  move
in the same  direction  or in the same  magnitude  as the  prices  of goods  and
services,  since such prices are affected by  inflation to a larger  extent than
interest  rates.  As  discussed  previously,  management  seeks  to  manage  the
relationships  between  interest  sensitive  assets and  liabilities in order to
protect against wide interest rate fluctuations,  including those resulting from
inflation.

ITEM 7.  FINANCIAL STATEMENTS.

The  consolidated  financial  statements  of  Atlantic as of and for the periods
ended  December  31, 1999 and 1998,  are set forth on pages 33 - 51 of this Form
10-KSB.

                                       32
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
Atlantic BancGroup, Inc. and Subsidiaries
Jacksonville Beach, Florida

We have audited the consolidated balance sheets of Atlantic BancGroup,  Inc. and
Subsidiaries  ("Atlantic")  as of December  31,  1999 and 1998,  and the related
consolidated  statements of operations and comprehensive  income, cash flows and
changes in stockholders'  equity,  for each of the two years in the period ended
December  31,   1999.   These   consolidated   financial   statements   are  the
responsibility  of Atlantic's  management.  Our  responsibility is to express an
opinion on these consolidated 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  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of Atlantic as of
December 31, 1999 and 1998, and the results of its  consolidated  operations and
its cash flows for each of the two years in the period ended  December 31, 1999,
in conformity with generally accepted accounting principles.

/s/ STEVENS, SPARKS & COMPANY, P.A.
------------------------------------
STEVENS, SPARKS & COMPANY, P.A.
Jacksonville, Florida
February 3, 2000

                                       33
<PAGE>
<TABLE>
<CAPTION>
                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                                                  December 31,
                                                                           -------------------------
                                                                            1999               1998
                                                                            ----               ----

                                                                  (Dollars in Thousands, Except Per Share Data)
                                                      ASSETS

Cash and cash equivalents:
<S>                                                                       <C>             <C>
     Cash and due from banks                                              $ 4,569         $ 4,862
     Federal funds sold                                                        --           4,915
                                                                          -------         -------
         Total cash and cash equivalents                                    4,569           9,777

Interest-bearing deposits in other banks                                      100             206
Securities available-for-sale                                               6,109           7,858
Loans                                                                      40,197          25,478
Facilities                                                                  2,489           1,860
Accrued interest receivable                                                   271             190
Deferred income taxes                                                         312              --
Other assets                                                                  114             202
                                                                          -------         -------

         Total assets                                                     $54,161         $45,571
                                                                          =======         =======

                                                    LIABILITIES

Deposits:
     Noninterest-bearing demand deposits                                  $11,084         $ 7,168
     Demand deposits                                                        7,138          12,193
     Money market accounts                                                 10,787           6,542
     Savings accounts                                                       1,159             737
     Time, $100,000 and over                                                4,534           4,704
     Other time deposits                                                    9,187           9,030
                                                                          -------         -------

         Total deposits                                                    43,889          40,374
                                                                          -------         -------

Other borrowings                                                            4,631              --
Accrued interest payable on deposits                                           53              51
Accounts payable and accrued liabilities                                      184              96
                                                                          -------         -------

         Total liabilities                                                 48,757          40,521
                                                                          -------         -------

Commitments and contingencies                                                  --              --
                                                                          -------         -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                               STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 10,000,000 shares,
<S>                                                                  <C>                <C>
    issued 595,350 shares in 1999 and 594,750 shares in 1998                 6              2,974
Additional paid-in capital                                               4,213              1,243
Retained earnings                                                        1,382                880
Accumulated other comprehensive income
     Net unrealized holding losses on securities                          (197)               (47)
                                                                     ---------          ---------

         Total stockholders' equity                                      5,404              5,050
                                                                     ---------          ---------

         Total liabilities and stockholders' equity                  $  54,161          $  45,571
                                                                     =========          =========

Book value per common share                                          $    9.08          $    8.49
                                                                     =========          =========

Common shares outstanding, adjusted for stock dividend                 595,350            594,750
                                                                     =========          =========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       34
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                   ----------------------
                                                                                 1999                   1998
                                                                                 ----                   ----
                                                                          (Dollars in Thousands, Except Per Share Data)
INTEREST INCOME

<S>                                                                                <C>                <C>
     Interest and fees on loans                                                    $   3,207          $   1,792
     Interest and dividend income from investment securities                             374                293
     Interest on federal funds sold                                                      111                192
     Interest on deposits with other banks                                                12                 10
                                                                                   ---------          ---------
         Total interest income                                                         3,704              2,287
                                                                                   ---------          ---------

INTEREST EXPENSE

     Interest on deposits                                                              1,158                867
     Other                                                                                52                 --
                                                                                   ---------          ---------
         Total interest expense                                                        1,210                867
                                                                                   ---------          ---------

NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES                                 2,494              1,420

PROVISION FOR CREDIT LOSSES                                                              221                334
                                                                                   ---------          ---------

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES                                  2,273              1,086
                                                                                   ---------          ---------

OTHER INCOME

     Service charges on deposit accounts                                                 283                134
     Other fees for customer service and other income                                     79                 62
                                                                                   ---------          ---------
         Total other income                                                              362                196
                                                                                   ---------          ---------

OTHER EXPENSES

     Salaries and employee benefits                                                    1,017                704
     Expenses of bank premises and fixed assets                                          457                313
     Other operating expenses                                                            693                433
                                                                                   ---------          ---------
         Total other expenses                                                          2,167              1,450
                                                                                   ---------          ---------

INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES                                468               (168)

PROVISION (BENEFIT) FOR INCOME TAXES                                                     (90)                --
                                                                                   ---------          ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A CHANGE
<S>                                                                                <C>                <C>
    IN ACCOUNTING PRINCIPLE                                                              558               (168)
                                                                                   ---------          ---------

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE

     (Net of income taxes of $36)                                                        (59)                --

NET INCOME (LOSS)                                                                        499               (168)
                                                                                   ---------          ---------

OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES:

     Unrealized holding gains (losses) on securities arising during period              (150)               (47)
                                                                                   ---------          ---------

COMPREHENSIVE INCOME (LOSS)                                                        $     349          $    (215)
                                                                                   =========          =========


AVERAGE COMMON SHARES OUTSTANDING                                                    594,593            594,735
                                                                                   =========          =========

EARNINGS PER SHARE

     Basic earnings (loss) per share                                               $    0.84          $   (0.28)
                                                                                   =========          =========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       35
<PAGE>
<TABLE>
<CAPTION>
                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                        December 31,
                                                                                  ------------------------
                                                                                 1999                   1998
                                                                                 ----                   ----
                                                                                   (Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                          <C>               <C>
     Net income (loss)                                                       $    499          $   (168)
     Adjustments to reconcile net income (loss) to net cash
        provided by (used in) operating activities:
         Provision for credit losses                                              221               334
         Depreciation and amortization                                            132                69
         Net premium amortization and discount accretion                           96               (27)
         Deferred income taxes                                                   (192)               --
         Amortization of organizational costs                                      --                27
         (Increase) decrease in assets:
              Accrued interest receivable                                         (81)             (191)
              Other assets                                                         88                --
         Increase (decrease) in liabilities:
              Accounts payable and accrued liabilities                             89               118
                                                                             --------          --------

                  Net cash provided by operating activities                       852               162
                                                                             --------          --------

CASH FLOWS FROM INVESTING ACTIVITIES
     Securities available-for-sale:
         Purchases                                                               (115)           (7,033)
         Principal repayments mortgage-backed investment securities             1,498             1,227
     Increase (decrease) in interest-bearing deposits in other banks              106              (106)
     Increase in loans                                                        (14,940)          (16,729)
     Purchases of facilities                                                     (761)             (695)
                                                                             --------          --------

                  Net cash used in investing activities                       (14,212)          (23,336)
                                                                             --------          --------

CASH FLOWS FROM FINANCING ACTIVITIES
     Increase (decrease) in deposits:
         Noninterest-bearing                                                    3,916             4,549
         Interest-bearing                                                        (401)           22,805
     Proceeds from other borrowings                                             4,631                --
     Proceeds from stock warrants exercised                                         6                --
                                                                             --------          --------

                  Net cash provided by financing activities                     8,152            27,354
                                                                             --------          --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           (5,208)            4,180

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                  9,777             5,597
                                                                             --------          --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                          <C>               <C>
CASH AND CASH EQUIVALENTS, END OF PERIOD                                     $  4,569          $  9,777
                                                                             ========          ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     Cash received during the year for interest and dividends                $  3,623          $  2,161
                                                                             ========          ========
     Cash paid during the year for interest                                  $  1,208          $    827
                                                                             ========          ========
     Cash paid during the year for income taxes                              $     80          $     --
                                                                             ========          ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       36
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                 For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>

                                                                                                             Net
                                                                                                         Unrealized
                                                                                                           Holding
                                                  Common Stock            Additional                        Gains           Total
                                           -----------------------         Paid-in        Retained        (Losses) on  Stockholders'
                                              Shares      Amount           Capital        Earnings        Securities       Equity
                                              ------      ------           -------        --------        ----------       ------
                                                                       (Dollars in Thousands)
<S>                                          <C>            <C>             <C>            <C>             <C>             <C>
Balance, December 31, 1997                   594,730        $ 2,974         $ 1,243        $ 1,048         $    --         $ 5,265

Stock warrants exercised                          20             --              --             --              --              --
Comprehensive income:
     Net income (loss)                            --             --              --           (168)             --
     Net change in net unrealized
         holding gains on securities              --             --              --             --             (47)

       Total comprehensive income                 --             --              --             --              --            (215)
                                             -------        -------         -------        -------           -----         -------

Balance, December 31, 1998                   594,750          2,974           1,243            880             (47)          5,050

Bank holding company reorganization               --         (2,968)          2,964              3              --              (1)
Stock warrants exercised                         600             --               6             --              --               6
Comprehensive income:
     Net income                                   --             --              --            499              --
     Net change in net unrealized
         holding losses on securities             --             --              --             --            (150)

       Total comprehensive income                 --             --              --             --              --             349
                                             -------        -------         -------        -------           -----         -------
Balance, December 31, 1999                   595,350        $     6         $ 4,213        $ 1,382         $  (197)        $ 5,404
                                             =======        =======         =======        =======         =======         =======
</TABLE>



          See accompanying notes to consolidated financialstatements.

                                       37
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

General:

The consolidated  financial  statements include the accounts and transactions of
Atlantic  BancGroup,  Inc.  and  its  wholly-owned  subsidiaries   ("Atlantic"),
Oceanside Bank  ("Oceanside"),  which opened July 21, 1997, as a state-chartered
banking organization, and Oceanside Mortgage Group, Inc. ("Oceanside Mortgage").
All significant  intercompany  accounts and transactions have been eliminated in
consolidation.  The  accounting  and  reporting  policies  of  Atlantic  and its
subsidiaries  conform with  generally  accepted  accounting  principles and with
general practices within the banking industry.

Oceanside  provides a wide range of banking services to individual and corporate
customers primarily in Duval and St. Johns County, Florida.

Atlantic and Oceanside are subject to regulations  issued by certain  regulatory
agencies and undergoes periodic examinations by those agencies.

Bank Holding Company Reorganization:

On April 3, 1999, the shareholders of Oceanside  approved the Agreement and Plan
of  Reorganization  ("Reorganization")  whereby  Oceanside became a wholly-owned
subsidiary of Atlantic.  Each  shareholder  of Oceanside owns an equal number of
shares  of  common  stock and  warrants  of  Atlantic.  The  Reorganization  was
completed on May 5, 1999, and was reported under the pooling-of-interests method
of accounting.

Oceanside Mortgage:

On  July  20,  1999,  Oceanside  Mortgage  was  incorporated  as a  wholly-owned
subsidiary  of  Atlantic  for  the  purpose  of  conducting   mortgage   banking
operations.  The  financial  position  and results of  operations  of  Oceanside
Mortgage have been included in the consolidated  financial statements;  however,
such amounts are immaterial since inception.

Use of Estimates:

In preparing the consolidated  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 significantly from those estimates.

Material  estimates that are  particularly  susceptible  to  significant  change
relate to the  determination of the allowance for credit losses,  the fair value
of  financial  instruments,  and  the  valuation  of  real  estate  acquired  in
connection  with  foreclosures  or in  satisfaction of loans ("Other Real Estate
Owned").  In connection  with the  determination  of the  allowances  for credit
losses and foreclosed real estate, management obtains independent appraisals for
significant properties.

Management  believes that the  allowance  for credit  losses is adequate.  While
management uses available  information to recognize  losses on loans,  including

<PAGE>

independent  appraisals  for  significant  properties,  future  additions to the
allowance may be necessary based on changes in economic conditions. In addition,
various regulatory  agencies,  as an integral part of their examination process,
periodically  review the allowance based on their  judgments  about  information
available to them at the time of their examination.

Cash and Due From Banks:

Oceanside is required to maintain  reserve  funds in cash or on deposit with the
Federal  Reserve Bank.  The required  reserve at December 31, 1999 and 1998, was
$251,000 and $175,000, respectively.

Investments:

Statement of Financial  Accounting  Standards  No. 115,  Accounting  for Certain
Investments in Debt and Equity  Securities  ("SFAS No. 115"),  sets the standard
for  classification  of and accounting for investments in equity securities that
have readily  determinable  fair values,  and all investments in debt securities
that are to be classified  as  held-to-maturity  securities,  available-for-sale
securities, or trading securities.

                                       38
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

Debt  securities  that an enterprise has the positive intent and ability to hold
to maturity  are  classified  as  held-to-maturity  securities  and  reported at
amortized cost. Debt and equity  securities that are bought and held principally
for the  purpose  of  selling  them in the near term are  classified  as trading
securities and reported at fair value, with unrealized gains and losses included
in   earnings.   Debt  and   equity   securities   not   classified   as  either
held-to-maturity   securities   or  trading   securities   are   classified   as
available-for-sale  securities and reported at fair value, with unrealized gains
and losses  excluded  from  earnings  and  reported as a separate  component  of
stockholders' equity.

Oceanside classifies its investments at the purchase date in accordance with the
above-described  guidelines.  Premiums or discounts on securities at the date of
purchase are being amortized or accreted,  respectively, over the estimated life
of the security using a method which approximates the level yield method.  Gains
and losses  realized on the  disposition of securities are based on the specific
identification method and are reflected in other income.

Loans:

Loans receivable are stated at unpaid principal balances, less the allowance for
credit  losses  and net  deferred  loan fees and  unearned  discounts.  Unearned
discounts on  installment  loans are  recognized  as income over the term of the
loans using a method that approximates the interest method.

Interest on loans is accounted for on the accrual basis. Generally,  Oceanside's
policy is to discontinue the accrual of interest on loans delinquent over ninety
days unless  fully  secured and in the  process of  collection.  The accrued and
unpaid  interest is reversed  from  current  income and  thereafter  interest is
recognized  only to the extent  payments are received.  A nonaccrual loan may be
restored to accrual basis when  interest and principal  payments are current and
prospects for future recovery are no longer in doubt.

Oceanside  has adopted  Statement of  Financial  Accounting  Standards  No. 114,
Accounting  by Creditors for  Impairment of a Loan ("SFAS No. 114"),  which sets
the standard for recognition of loan impairment and the measurement  methods for
certain  impaired  loans and loans  whose terms are  modified  in troubled  debt
restructurings.

Under SFAS No. 114, a loan is impaired  when it is probable that a creditor will
be unable to collect the full amount of principal  and interest due according to
the contractual terms of the loan agreement. When a loan is impaired, a creditor
has a choice of ways to measure the  impairment.  The  measurement of impairment
may be based on (1) the present  value of the expected  future cash flows of the
impaired loan discounted at the loan's original effective interest rate, (2) the
observable  market  price of the  impaired  loan,  or (3) the fair  value of the
collateral of a collateral-dependent  loan. Creditors may select the measurement
method on a loan-by-loan basis, except that collateral-dependent loans for which
foreclosure is probable must be measured at the fair value of the collateral.  A
creditor in a troubled debt  restructuring  involving a restructured loan should
measure  impairment by discounting  the total expected  future cash flows at the

<PAGE>

loan's  original  effective  rate of interest.  If the value of the loan is less
than the  recorded  investment  in the  loan,  a loss  should be  recognized  by
recording a valuation  allowance and a  corresponding  increase to the provision
for credit losses charged to operating expenses.

Loan Fees:

Loan origination and commitment fees and certain direct loan  origination  costs
are  deferred  and  recognized  over  the term of the  related  loans as a yield
adjustment using the  straight-line  method,  which is not materially  different
from  the  interest   method.   Amortization  of  deferred  fees  and  costs  is
discontinued when  collectibility of the related loan is deemed uncertain.  Fees
and direct loan origination costs for unexercised  commitments are recognized in
income upon expiration of commitment.

Organizational Costs:

As of December 31, 1998, certain costs incurred in organizing Oceanside had been
deferred and were being  amortized to expense on the  straight-line  method over
five years from the date of opening for business.  In 1999, Atlantic changed its
accounting for organizational costs (see Note 17).

                                       39
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

Allowance for Credit Losses:

The  provision  for credit  losses  charged to operating  expenses is based upon
management's  judgment of the adequacy of the allowance giving  consideration to
its loan loss experience and an evaluation of the current loan  portfolio.  Such
provisions, less net charge-offs, comprise the allowance, which is deducted from
loans and is available for future charge-offs.

Facilities:

Facilities are stated at cost, less accumulated  depreciation and  amortization.
Charges  to  income  for  depreciation  and  amortization  are  computed  on the
straight-line method over the assets' estimated useful lives.

When  properties  are sold or otherwise  disposed of, the gain or loss resulting
from the  disposition  is  credited  or  charged  to  income.  Expenditures  for
maintenance  and repairs are charged against income and renewals and betterments
are capitalized.

Other Real Estate Owned:

Real estate properties  acquired through, or in lieu of, loan foreclosure are to
be sold and are  initially  recorded  at fair  value at the date of  foreclosure
establishing a new cost basis.  After  foreclosure,  valuations are periodically
performed by management  and the real estate is carried at the lower of carrying
amount or fair value less cost to sell. Revenue and expenses from operations and
changes in the  valuation  allowance  are  included in loss on  foreclosed  real
estate.

Off-Balance Sheet Instruments:

In the ordinary course of business, Oceanside has entered into off-balance sheet
financial  instruments  consisting of  commitments  to extend credit and standby
letters of credit.  Such financial  instruments are recorded in the consolidated
financial statements when they become payable.

Employee Benefits:

Pension  costs are charged to salaries  and  employee  benefits  expense and are
funded as accrued.

Income Taxes:

Provisions  for income taxes are based on amounts  reported in the statements of
operations,  after exclusion of non-taxable income such as interest on state and
municipal securities, and include deferred taxes on temporary differences in the
recognition of income and expense for tax and financial statement purposes.  The
principal temporary differences are depreciation and amortization, provision for
credit  losses,  and unrealized  holding gains (losses) on securities.  Deferred
taxes are  computed  on the  liability  method as  prescribed  in SFAS No.  109,
Accounting for Income Taxes.
<PAGE>

Computation of Per Share Earnings:

Basic  earnings  (loss) per share  amounts are computed by dividing net earnings
(loss) by the weighted  average number of common shares  outstanding  during the
period.  Diluted earnings per share are computed by dividing net earnings by the
weighted average number of shares and all dilutive  potential shares outstanding
during the period.  At  December  31, 1999 and 1998,  the  outstanding  warrants
totaled  593,510 and  594,110,  respectively;  however,  the  warrants  were not
dilutive.  The following information was used in the computation of earnings per
share on both a basic and diluted  basis for the years ended  December  31, 1999
and 1998 (in thousands except per share data):
<TABLE>
<CAPTION>

                                                                  For the Year Ended December 31,

                                                                      1999                1998
                                                                      ----                ----
     Basic EPS computation:
<S>                                                                  <C>                <C>
         Numerator - Net income (loss)                               $  499             $ (168)
         Denominator - Weighted average shares outstanding              595                595
                                                                     ------             ------
         Basic EPS                                                   $ 0.84             $(0.28)
                                                                     ======             ======
</TABLE>

                                       40
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

Statements of Cash Flows:

For purposes of reporting cash flows, cash and cash equivalents  include cash on
hand,  amounts on deposit in noninterest  bearing accounts with other commercial
banks, and federal funds sold.

Advertising and Business Development:

Atlantic  expenses  advertising  and  business  development  costs as  incurred.
Advertising  and  business  development  costs for 1999 and 1998 as  included in
other operating expenses were $39,000 and $36,000, respectively.

Reclassification of Accounts:

Certain  items in the  consolidated  financial  statements  for 1998  have  been
reclassified to conform to the classifications used for the current year.

NOTE 2 - INVESTMENT SECURITIES

The amortized  cost and estimated  fair value of  instruments in debt and equity
securities at December 31, 1999 and 1998, follow:
<TABLE>
<CAPTION>

                                          December 31, 1998                          December 31, 1999
                                          -----------------                          -----------------
                                            Gross      Gross                               Gross     Gross
                                Amortized Unrealized Unrealized   Fair       Amortized  Unrealized Unrealized   Fair
                                   Cost     Gains     Losses      Value         Cost       Gains     Losses     Value
                                   ----     -----     ------      -----         ----       -----     ------     -----
                                        (Dollars in Thousands)                        (Dollars in Thousands)
Available for sale

<S>                             <C>        <C>       <C>         <C>         <C>         <C>        <C>        <C>
Mortgage-backed securities      $6,255     $  --     $ (317)     $5,938      $7,850      $   --     $  (47)    $7,803
Other                              171        --         --         171          55          --         --         55
                                ------     -----     ------      ------      ------      ------     ------     ------

  Total available-for-sale      $6,426     $  --     $ (317)     $6,109      $7,905      $   --     $  (47)    $7,858
                                ======     =====     ======      ======      ======      ======     ======     ======
</TABLE>

The fair  value of  securities  fluctuates  during  the  investment  period.  No
provision  for loss has been made in  connection  with the decline of fair value
below book value,  because the securities are purchased for investment  purposes
and the decline is not deemed to be other than temporary.  Temporary declines in
fair value of  securities  available-for-sale  at December 31, 1999, of $197,000
(net of deferred  income taxes of $120,000)  are  regarded as an  adjustment  to
stockholders'  equity.  The estimated  fair value of securities is determined on
the basis of  market  quotations.  At  December  31,  1999,  securities  with an
amortized  cost of  $4,578,000  and market value of  $4,338,000  were pledged to
secure deposits and for other operating purposes (see Note 6).
<PAGE>

No investment securities were sold during 1999 or 1998.

The cost and estimated fair value of debt and equity  securities at December 31,
1999, by  contractual  maturities,  are shown below.  Expected  maturities  will
differ from contractual  maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.

                                          Securities Available-for-Sale
                                          -----------------------------
                                            Amortized         Fair
                                              Cost            Value
                                             (Dollars in Thousands)

     Due in ten years or more               $ 6,255         $ 5,938
     Other                                      171             171
                                            -------         -------

                                            $ 6,426         $ 6,109
                                            =======         =======

                                       41
<PAGE>
                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 3 - LOANS

The loan portfolio is classified as follows (dollars in thousands):

                                                 1999             1998
                                                 ----             ----

     Commercial and agricultural               $ 12,501       $  6,039
     Real estate                                 23,283         16,853
     Consumer and other loans                     5,250          3,194
                                               --------       --------
         Total loans                             41,034         26,086
     Less, unearned income                          (99)           (88)
     Less, allowance for credit losses             (738)          (520)
                                               --------       --------

                                               $ 40,197       $ 25,478
                                               ========       ========

The  following  is a summary of the  transactions  in the  allowance  for credit
losses (dollars in thousands):

                                                    1999         1998
                                                    ----         ----

     Balance, beginning of period                 $  520       $  186
     Provisions charged to operating expenses        221          334
     Loans charged-off                                (8)           -
     Recoveries                                        5            -
                                                  ------       ------

     Balance, end of period                       $  738       $  520
                                                  ======       ======

At December 31, 1999 and 1998, and for the periods then ended,  Oceanside had no
loans classified as impaired or nonaccrual.

NOTE 4 - FACILITIES

Facilities are summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                          Accumulated                     Estimated
                                                       Depreciation and   Net Book          Useful
                                               Cost      Amortization      Value            Lives
                                               ----      ------------      -----            -----
December 31, 1999:
<S>                                          <C>           <C>            <C>           <C>
     Land and land improvements              $  946        $   --         $  946
     Bank building and improvements           1,295            90          1,205        5 - 40 years
     Furniture, fixtures, and equipment         469           131            338        3 - 10 years
                                             ------        ------         ------

                                             $2,710        $  221        $ 2,489
                                             ======        ======        =======
</TABLE>
<TABLE>
<CAPTION>

December 31, 1998:
<S>                                          <C>           <C>            <C>           <C>
     Land and land improvements              $  750        $   --         $  750
     Bank building and improvements             897            45            852        5 - 40 years
     Furniture, fixtures, and equipment         302            44            258        3 - 10 years
                                             ------        ------         ------

                                             $1,949         $   89        $1,860
                                             ======         ======        ======
</TABLE>
Depreciation and amortization of facilities totaled $132,000 and $69,000 in 1999
and 1998, respectively.

Atlantic did not have any material  noncancellable  operating leases during 1999
and 1998.

                                       42
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 5 - TIME DEPOSITS

Time  deposits  at  December  31,  1999  and  1998,   totaled   $13,721,000  and
$13,734,000,  respectively.  Maturities  of such  deposits  follow  (dollars  in
thousands):
<TABLE>
<CAPTION>
                                                       December 31, 1999                December 31, 1998
                                             -------------------------------      -----------------------------
                                                Time, $100,000     Other Time      Time, $100,000    Other Time
                                                    And Over       Deposits            And Over       Deposits
                                                    --------       --------            --------       --------
<S>                                               <C>               <C>              <C>              <C>
     Three months or less                         $    829          $ 1,944          $  1,237         $  2,635
     Over three through twelve months                3,597            6,872             3,366            5,924
     Over twelve months through three years              -              149                 -              264
     Over three years                                  108              222               101              207
                                                 ---------        ---------      ------------      -----------

                                                   $ 4,534          $ 9,187           $ 4,704          $ 9,030
                                                   =======          =======           =======          =======
</TABLE>

Interest expense on certificates of deposit of $100,000 or more totaled $242,000
and $210,000 for 1999 and 1998, respectively.

NOTE 6 - OTHER BORROWINGS

A summary follows:

                                                            December 31,
                                                        1999          1998
                                                        ----          ----
                                                      (Dollars In Thousands)

FHLB of Atlanta advances                              $2,300        $     --
Revolving lines of credit                                742              --
Securities sold under agreements to repurchase         1,589              --
                                                      ------        --------

                                                      $4,631        $     --
                                                      ======        ========

FHLB of Atlanta Advances:

On December 29,  1999,  Oceanside  obtained an advance  from FHLB of  $2,300,000
collateralized  by Oceanside's  FHLB capital stock and a blanket lien consisting
of wholly-owned  residential  (1-4 units) first mortgage loans of  approximately
$4,200,000.  This advance  matures on December  29, 2000,  and carries a current
interest rate of 6.25%.

Revolving Lines of Credit:
<PAGE>

On February 11, 1999, Atlantic obtained a revolving line of credit in the amount
of $50,100 from  Columbus  Bank and Trust  Company  ("Columbus").  On August 11,
1999,  Atlantic  obtained two revolving  lines of credit from Columbus  totaling
$1.0  million,  and  repaid  existing  advances  under the line of credit  dated
February 11, 1999. For the remaining two lines of credit, principal and interest
at 0.50% below prime are due on August 11, 2000.  The proceeds from the lines of
credit  are to be used to  acquire  real  estate,  fund  start-up  costs for the
mortgage  banking  operations,   and  provide  additional  working  capital  for
Atlantic. At December 31, 1999, $742,000 had been advanced to Atlantic under the
lines  of  credit,   which  are  secured  by  the  common  stock  of  Atlantic's
wholly-owned banking subsidiary, Oceanside Bank.

Securities Sold Under Agreements to Repurchase:

Oceanside has sold securities under agreements to repurchase with a par value of
approximately  $1,859,000 and a fair value of approximately $1,757,000 to secure
overnight  borrowings totaling  $1,589,000.  The interest rate on this overnight
borrowing was 6.5%.

                                       43
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 7 - INCOME TAXES

The provision (benefit) for income taxes on income is summarized as follows:

                                                       Year Ended December 31,
                                                        1999            1998
                                                        ----            ----
                                                        (Dollars In Thousands)
Current:
     Federal                                            $  56         $     --
     State                                                 10               --
                                                        -----         --------
                                                           66               --
                                                        -----         --------

Deferred:
     Federal                                             (133)              --
     State                                                (23)              --
                                                        -----         --------
                                                         (156)              --
                                                        -----         --------

              Total income tax provision (benefit)      $ (90)        $     --
                                                        =====         ========


A  reconciliation  of the income tax benefit  computed at the federal  statutory
rate of 34% and the income tax  provision  (benefit)  shown on the  statement of
operations, follows:

                                                       Year Ended December 31,
                                                       1999              1998
                                                       ----              ----
                                                       (Dollars In Thousands)

Tax computed at statutory rate                         $ 159         $      --
Increase (decrease) resulting from:
    Utilization of net operating loss carryover         (262)               --
    Other                                                 13                --
                                                       -----         ---------

         Income tax provision (benefit)                $ (90)        $      --
                                                       =====         =========


The components of the net deferred income tax assets are as follows:
<PAGE>

                                                               December 31,
                                                           1999           1998
                                                           ----           ----
                                                          (Dollars In Thousands)
Deferred tax asset:
    Federal                                               $ 293         $    --
    State                                                    50              --
                                                          -----         -------

                                                            343              --
                                                          -----         -------
Deferred tax liability:
    Federal                                                 (26)             --
    State                                                    (5)             --
                                                          -----         -------

                                                            (31)             --
                                                          -----         -------

         Net deferred tax asset                           $ 312         $    --
                                                          =====         =======


                                       44
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 7 - INCOME TAXES (Continued)

Atlantic recorded no provision for income taxes in 1998 due to its net operating
loss,  which was fully  utilized in 1999.  Utilization  of  deferred  income tax
assets in 1998 was dependent on future taxable  profits;  therefore,  management
had recorded a valuation  allowance in 1998 to offset deferred income tax assets
of $259,000. During 1999, management reversed the valuation allowance to reflect
the profitability of Atlantic.

The tax  effects  of each type of  significant  item that gave rise to  deferred
taxes are:

                                                                December 31,
                                                            1999           1998
                                                            ----           ----
                                                          (Dollars In Thousands)

Net unrealized holding losses on securities                 $ 120         $  --
Allowance for credit losses                                   198           135
Depreciation                                                    9            --
Net operating losses                                           --           124
Other                                                         (15)           --
                                                            -----         -----
Deferred income tax asset before valuation allowance          312           259
    Valuation allowance                                        --          (259)
                                                            -----         -----

         Net deferred tax asset                             $ 312         $  --
                                                            =====         =====

NOTE 8 - EMPLOYEE BENEFITS

Atlantic  sponsors  a SIMPLE  Plan  that  covers  substantially  all  employees.
Atlantic matches each participant's contribution,  subject to a maximum of 3% of
the  participant's  salary.  The SIMPLE  Plan is a  prototype  plan and has been
approved by the Internal Revenue Service.

The amount  included in salaries  and employee  benefits as pension  expense for
1999 totaled $22,000.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

The  consolidated  financial  statements do not reflect various  commitments and
contingent  liabilities that may arise in the normal course of business and that
involve  elements of credit risk,  interest rate risk, and liquidity risk. These
commitments  and contingent  liabilities of Oceanside are  commitments to extend
credit and standby letters of credit.  A summary of Oceanside's  commitments and
contingent liabilities follows (dollars in thousands):

                                           At December 31, 1999
                                           --------------------
     Commitments to extend credit                 $ 7,648
     Standby letters of credit                    $   500
<PAGE>

Commitments to extend credit and letters of credit all include  exposure to some
credit loss in the event of non-performance of the customer.  Oceanside's credit
policies and procedures for credit commitments and financial  guarantees are the
same as those for  extension  of credit  instruments  that are  recorded  in the
consolidated  financial  statements.   In  the  opinion  of  management,   these
instruments  do  not  generally  present  any  significant   liquidity  risk  to
Oceanside.   Oceanside's   experience  has  been  that  substantially  all  loan
commitments  are drawn upon by customers.  Oceanside did not incur any losses on
its commitments in either 1999 or 1998.

                                       45
<PAGE>
                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)

Atlantic may become a party to litigation,  outstanding  commitments,  and other
contingent  liabilities arising in the normal course of business. In the opinion
of management, the resolution of such matters will not have a material effect on
the consolidated financial statements.

At December 31, 1999,  Oceanside had  $1,500,000  unfunded  lines of credit from
other banks for the purchase of overnight federal funds.

NOTE 10 - CONCENTRATIONS OF CREDIT

Substantially  all of Oceanside's  loans,  commitments,  and standby  letters of
credit have been granted to customers in north Florida.  The  concentrations  of
credit by type of loan are set forth in Note 3. The  distribution of commitments
to extend credit  approximates  the distribution of loans  outstanding.  Standby
letters of credit were granted primarily to commercial borrowers.

NOTE 11 - RELATED PARTIES

Atlantic has entered into transactions with its directors,  executive  officers,
significant   stockholders,   and  their  affiliates  (Related  Parties).   Such
transactions  were made in the ordinary course of business on substantially  the
same terms and conditions,  including  interest rates and  collateral,  as those
prevailing at the same time for comparable  transactions  with other  customers,
and did not, in the opinion of management,  involve more than normal credit risk
or present other unfavorable  features.  Total loans to related parties amounted
to $646,000 and $1,239,000 at December 31, 1999 and 1998, respectively.

A summary of  activity  for 1999 and 1998 for such  loans  follows  (dollars  in
thousands):


                             Beginning                                  End of
                             of Period     Additions     Reductions     Period
                             ---------     ---------     ----------     ------
     December 31, 1999        $ 1,239      $    226        $  819     $    646
                              =======      ========        ======     ========
     December 31, 1998        $   103      $  1,371        $  235     $  1,239
                              =======      ========        ======     ========

Unfunded  commitments  to the same  parties  totaled  approximately  $954,000 at
December 31, 1999.

Deposits of insiders and their related interests totaled  $5,160,000 at December
31, 1999.

NOTE 12 - STOCKHOLDERS' EQUITY

Preferred Stock:

In addition to the  10,000,000  shares of authorized  common  stock,  Atlantic's
articles of  incorporation  authorize up to 2,000,000 shares of preferred stock.
The board of directors are further authorized to establish designations, powers,
preferences,  rights,  and other terms for  preferred  stock by  resolution.  No
shares of preferred stock have been issued.

Warrants:

In connection with Oceanside's 1997 offering,  each investment unit consisted of
one share of common stock and one transferable  warrant to purchase one share of
common stock at $10.00 per share during the  five-year  period  beginning on the
date  Oceanside  opened for business  (July 21, 1997).  After July 21, 1998, the
board of directors of  Oceanside,  by written  notice to each  stockholder,  may
shorten the period during which the warrants may be exercised to a period ending
no sooner than 30 days after such notice is mailed.

                                       46
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 12 - STOCKHOLDERS' EQUITY (Continued)

A summary of the warrant activity during 1999 and 1998 follows:


                                                                 Weighted
                                                                  Average
                                               Number of         Exercise
                                               Warrants            Price
                                               --------            -----

Outstanding at December 31, 1997               594,130         $   10.00
Warrants exercised, 1998                           (20)        $   10.00
                                               -------
Outstanding at December 31, 1998               594,110         $   10.00
Warrants exercised, 1999                          (600)        $   10.00
                                               -------
Outstanding at December 31, 1999               593,510         $   10.00
                                               =======

All outstanding warrants were fully vested and exercisable at December 31, 1999,
with a remaining contractual life of approximately 31 months.

Dividends:

The ability of Atlantic to pay dividends to  stockholders  depends  primarily on
dividends  received by Atlantic from its  subsidiaries,  Oceanside and Oceanside
Mortgage.  Oceanside's  ability to pay dividends is limited by federal and state
banking  regulations  based upon  Oceanside's  profitability  and other factors.
State banking statutes further require (i) prior approval and (ii) that at least
20% of the prior year's  earnings be transferred to additional  paid-in  capital
(surplus) annually until surplus equals or exceeds Oceanside's common stock.

At December 31, 1999,  state  regulatory  restrictions  prevent  Oceanside  from
paying dividends to Atlantic. For the year ending December 31, 2000, Oceanside's
earnings would have to exceed  approximately  $107,000  before  Oceanside  could
apply for state  approval to pay cash  dividends  to  Atlantic.  At December 31,
1999, Oceanside Mortgage was not profitable.

NOTE 13 - NONINTEREST OPERATING EXPENSES

Other expenses follow (dollars in thousands):

                                                          1999             1998
                                                          ----             ----

         Advertising and business development          $    39          $    36
         Processing and settlement fees                     77               57
         Professional, legal, and audit fees               105               75
         ATM expense                                        41               44
         Stationary, printing, and supplies                 72               50
         Amortization of organizational costs               30               27
         Dues and subscriptions                             14               16
<PAGE>
         Education, training, and conventions               34               14
         Insurance (excluding group insurance)              32               19
         Telephone                                          33               14
         Director fees                                      26                9
         Year 2000 expenses                                 35                -
         Postage and freight                                24               15
         Other miscellaneous expenses                      131               57
                                                       -------         --------

                                                       $   693          $   433
                                                       =======          =======
                                       47
<PAGE>

                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 14 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

     Cash, Cash Equivalents, and Short-term Investments:

         For those short-term  instruments,  the carrying amount is a reasonable
         estimate of fair value.

     Investment Securities:

         For  securities  held as  investments,  fair value equals quoted market
         price,  if available.  If a quoted market price is not available,  fair
         value is estimated using quoted market prices for similar securities.

     Loans Receivable:

         For loans subject to repricing  and loans  intended for sale within six
         months,  fair value is estimated  at the  carrying  amount plus accrued
         interest.

         The fair value of other types of loans is estimated by discounting  the
         future cash flows using the current  rates at which similar loans would
         be made to  borrowers  with  similar  credit  ratings  and for the same
         remaining maturities.

     Deposit Liabilities:

         The fair value of demand deposits,  savings accounts, and certain money
         market  deposits is the amount payable on demand at the reporting date.
         The fair value of long-term  fixed maturity  certificates of deposit is
         estimated  using the rates  currently  offered for  deposits of similar
         remaining maturities.

     Short-term Debt:

         For short-term debt,  including accounts and demand notes payable,  the
         carrying amount is a reasonable estimate of fair value.

     Other Borrowings:

         Since this borrowing is at a recent market  interest rate, the carrying
         amount is a reasonable estimate of fair value.

The estimated  fair values of Atlantic's  financial  instruments at December 31,
1999, follow (dollars in thousands):


<PAGE>

                                                     Carrying        Fair
                                                      Amount         Value
                                                      ------         -----
    Financial Assets

         Cash and deposits in other banks           $   4,669     $   4,669
         Investment securities                          6,109         6,109
         Loans                                         40,197        40,137
                                                    ---------     ---------

              Total assets valued                    $ 50,975      $ 50,915
                                                     ========      ========

     Financial Liabilities

         Deposits                                    $ 43,889      $ 43,895
         Other borrowings                               4,631         4,631
                                                    ---------     ---------

              Total liabilities valued               $ 48,520      $ 48,526
                                                     ========      ========

                                       48
<PAGE>
                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 14 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

While these  estimates of fair value are based on  management's  judgment of the
most  appropriate  factors,  there is no assurance  that,  were Atlantic to have
disposed of such items at December 31,  1999,  the  estimated  fair values would
necessarily  have been  achieved at that date,  since  market  values may differ
depending on various  circumstances.  The estimated  fair values at December 31,
1999, should not necessarily be considered to apply at subsequent dates.

NOTE 15 - REGULATORY CAPITAL MATTERS

The  Federal  Reserve  Board and other bank  regulatory  agencies  have  adopted
risk-based  capital  guidelines for banks and bank holding  companies.  The main
objectives of the risk-based  capital framework are to provide a more consistent
system for comparing capital positions of banking organizations and to take into
account the different risks among banking  organizations'  assets,  liabilities,
and off-balance  sheet items.  Bank regulatory  agencies have  supplemented  the
risk-based  capital  standard with a leverage  ratio for Tier I capital to total
reported assets.

Failure to meet the capital  adequacy  guidelines  and the  framework for prompt
corrective  actions could  initiate  actions by the regulatory  agencies,  which
could have a material effect on the consolidated financial statements.

As of December 31, 1999, the most recent  notification from the FDIC,  Oceanside
was categorized as well  capitalized  under the regulatory  framework for prompt
corrective  action. To remain  categorized as well capitalized,  it will have to
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios
as  disclosed in the table below.  There are no  conditions  or events since the
most  recent  notification  that  management  believes  have  changed the prompt
corrective action category.
<TABLE>
<CAPTION>
                                                                                           To Be Well
                                                                                          Capitalized
                                                                                          Under Prompt
                                                               For Capital              Corrective Action
                                         Actual               Adequacy Purposes            Provisions
                                    ----------------        --------------------       ------------------
                                    Amount     Ratio        > Amount   > Ratio         > Amount   > Ratio
                                    ------     -----        - ------   - -----         - ------   - -----
                                                           (dollars in thousands)
<S>                                <C>         <C>           <C>         <C>            <C>        <C>
As of December 31, 1999:
     Total Risk-Based Capital
     (To Risk-Weighted Assets)     $ 6,229     13.79%        $ 3,613     8.00%          $ 4,516    10.00%
     Tier I Capital
     (To Risk-Weighted Assets)     $ 5,664     12.54%        $ 1,807     4.00%          $ 2,710     6.00%
     Tier I Capital
     (To Adjusted Total Assets)    $ 5,664     11.09%        $ 2,042     4.00%          $ 2,553     5.00%

As of December 31, 1998:
     Total Risk-Based Capital
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

<S>                                <C>         <C>           <C>         <C>            <C>        <C>
     (To Risk-Weighted Assets)     $ 5,364     18.68%         $2,298     8.00%           $2,872    10.00%
     Tier I Capital
     (To Risk-Weighted Assets)     $ 5,002     17.42%         $1,149     4.00%           $1,723     6.00%
     Tier I Capital
     (To Adjusted Total Assets)    $ 5,002     12.92%         $1,548     4.00%           $1,935     5.00%
</TABLE>

                                       49
<PAGE>
                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 16 - PARENT COMPANY FINANCIAL INFORMATION

Presented below are condensed financial statements for Atlantic BancGroup,  Inc.
(parent only):
<TABLE>
<CAPTION>

Condensed Balance Sheets as of December 31:                              1999              1998
                                                                         ----              ----
                                                                         (Dollars In Thousands)
Assets
<S>                                                                   <C>             <C>
     Cash and cash equivalents                                        $    10         $     --
     Investment in and advances to subsidiary bank                      5,467               --
     Investment in mortgage banking subsidiary                             18               --
     Other assets                                                         651               --
                                                                      -------         --------
     Total                                                            $ 6,146         $     --
                                                                      =======         ========
Liabilities and Stockholders' Equity
     Liabilities                                                      $   742         $     --
     Stockholders' equity                                               5,404               --
                                                                      -------         --------
     Total                                                            $ 6,146         $     --
                                                                      =======         ========


                                                                         1999             1998
Condensed Statements of Operations and Stockholders' Equity              ----             ----
Years Ended December 31:                                                 (Dollars In Thousands)

Equity in net income of subsidiary bank                              $   568         $     --
Equity in net loss of mortgage banking subsidiary                         (1)              --
Other income                                                              --
Other expenses                                                           (68)              --
                                                                     -------         --------
Net income                                                               499               --
Stockholders' Equity:
     Beginning of  year                                                5,050               --
     Stock warrants exercised and rounding                                 5               --
     Net change in unrealized holding gains on
         securities in subsidiary bank                                  (150)              --
                                                                     -------         --------

     End of year                                                     $ 5,404         $     --
                                                                     =======         ========
Condensed Statements of Cash Flows
Years Ended December 31:
                                                                         1999             1998
                                                                         ----             ----
                                                                         (Dollars In Thousands)
Operating Activities
Net income                                                             $   499         $     --
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Adjustment to reconcile net income to net cash
     provided by operating activities:
<S>                                                                   <C>             <C>
     Equity in undistributed earnings of subsidiaries                     (567)              --
     Other                                                                 (43)              --
                                                                       -------         --------
Net Cash Used In Operating Activities                                     (111)              --
Net Cash Used by Investing Activities:
     Purchase of facilities                                               (609)              --
Net Cash Provided by Financing Activities:

     Proceeds from other borrowings                                        742               --
     Advances to mortgage banking subsidiary                               (18)              --
     Proceeds from stock warrants exercised                                  6               --
                                                                       -------         --------
Increase in Cash and Cash Equivalents                                       10               --
Cash and Cash Equivalents:
     Beginning of year                                                      --               --
                                                                       -------         --------
     End of year                                                       $    10         $     --
                                                                       =======         ========
</TABLE>

                                       50
<PAGE>


                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 17 - CHANGE IN ACCOUNTING PRINCIPLE

Atlantic  has adopted  Statement  of Position  98-5,  Reporting  on the Costs of
Start-Up  Activities  ("SOP 98-5").  As a result of adopting SOP 98-5,  Atlantic
expensed the unamortized  balance of its  organizational  costs as of January 1,
1999,  which  totaled  $95,000.  This charge to earnings has been  reported as a
cumulative  effect  of a change  in  accounting  principle  on the  consolidated
statement of operations and comprehensive income net of income taxes of $36,000.

                                       51
<PAGE>
55

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE.

Not applicable.

                                    PART III

ITEM  9.  DIRECTORS,   EXECUTIVE  OFFICERS,   PROMOTERS,  AND  CONTROL  PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The information contained under the section captioned "Election of Directors" in
the   registrant's   definitive  Proxy  Statement  for  the  Annual  Meeting  of
Shareholders  to be held on April 27, 2000, to be filed with the SEC pursuant to
Regulation 14A within 120 days of their registrant's fiscal year end (the "Proxy
Statement"), as incorporated herein by reference.

                      SECTION 16(a) REPORTING REQUIREMENTS

Under  Section  16(a) of the  Securities  Exchange  Act of 1934,  directors  and
executive  officers of Atlantic,  and persons who beneficially own more than 10%
of Atlantic Common Stock, are required to make certain filings on a timely basis
with the Securities and Exchange  Commission.  Reporting persons are required by
SEC  regulations  to furnish the Atlantic with copies of all Section 16(a) forms
filed by them. Based on its review of the copies of Section 16(a) forms received
by it, and on written  representations  from  reporting  persons  concerning the
necessity  of  filing a Form 5 -  Annual  Statement  of  Changes  in  Beneficial
Ownership,   Atlantic  believes  that,  during  1999,  all  filing  requirements
applicable to reporting persons were met.

ITEM 10. EXECUTIVE COMPENSATION.

The information  contained in the sections captioned "Committees of the Board of
Directors,"  and  "Executive  Compensation"  and "Benefits"  under  "Election of
Directors" in the Proxy Statement, is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The  information  contained in the section  captioned  "Securities  Ownership of
Management"   under  "Election  of  Directors"  in  the  Proxy   Statement,   is
incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information  contained in the section captioned  "Certain  Relationships and
Related  Transactions"  under  "Election of Directors" in the Proxy Statement is
incorporated herein by reference.

                                       52
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Exhibits

                  2.1      Agreement and Plan of  Reorganization  dated November
                           19, 1998,  approved  April 3, 1999, and completed May
                           5, 1999

                  3.1      Articles of Incorporation of Atlantic BancGroup, Inc.
                           included in the  Registration  Statement  on Form 8-A
                           filed with the Securities and Exchange  Commission on
                           May 17, 1999

                  3.2      Bylaws of Atlantic BancGroup, Inc.

                  4.1      Specimen  Stock  Certificate  of Atlantic  BancGroup,
                           Inc.  included in the Registration  Statement on Form
                           8-A filed with the Securities and Exchange Commission
                           on May 17, 1999

                  4.2      Form of Common Stock Warrant and Agreement

                  10.1     Software  License  Agreement  dated as of  October 6,
                           1997, between Oceanside and File Solutions, Inc.

                  10.2     File Solutions Software  Maintenance  Agreement dated
                           as of July 15,  1997,  between  Oceanside  and SPARAK
                           Financial Systems, Inc.

                  10.3     Remote Data Processing Agreement dated as of March 3,
                           1997,  between  Oceanside and Bankers Data  Services,
                           Inc.

                  11       The computation of per share earnings is shown in the
                           consolidated   financial   statements   of   Atlantic
                           BancGroup,  Inc.  and  Subsidiaries  for December 31,
                           1999, contained in Item 7, on Page 40 of the Notes to
                           Consolidated Financial Statements

                  21.1     Subsidiaries of the Registrant

                  22.1     Atlantic  BancGroup,  Inc.  Proxy  Statement  for the
                           Annual  Meeting of  Shareholders  to be held on April
                           27, 2000

                  27.1     Financial Data Summary

     (b) Reports on Form 8-K

         A Form 8-K was filed by Atlantic on October 28,  1999,  which  reported
         that the common  stock for  Atlantic  BancGroup,  Inc. was approved for
         trading on the "Over the Counter Bulletin Board."

                                       53

<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has caused  this  report to be duly signed on its
behalf  by  the  undersigned,   thereunto  duly  authorized,   in  the  City  of
Jacksonville Beach, State of Florida, on the 15th day of March, 1999.


                                          ATLANTIC BANCGROUP, INC.

                                          /s/ M. Michael Witherspoon
                                          --------------------------
                                          M. Michael Witherspoon
                                          President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the 15th day of March, 1999.
<TABLE>
<CAPTION>

Signature                                   Title
---------                                   -----
<S>                                         <C>
/s/     Donald F. Glisson, Jr.              Chairman of the Board
---------------------------------------
        Donald F. Glisson, Jr.

 /s/    M. Michael Witherspoon              President and Chief Executive Officer
---------------------------------------
        M. Michael Witherspoon

 /s/    David L. Young                      Executive Vice President, Chief Financial Officer,
---------------------------------------     and Corporate Secretary
        David L. Young

 /s/    Frank J. Cervone                    Director
---------------------------------------
        Frank J. Cervone

 /s/    Barry W. Chandler                   Director
---------------------------------------
        Barry W. Chandler

 /s/    Jimmy D. Dubberly                   Director
---------------------------------------
        Jimmy D. Dubberly

 /s/    Robin H. Scheiderman                Director
---------------------------------------
        Robin H. Scheiderman

/s/     G. Keith Watson                     Director
---------------------------------------
        G. Keith Watson

 /s/    Conrad L. Williams                  Director
---------------------------------------
        Conrad L. Williams

 /s/    Dennis M. Wolfson                   Director
---------------------------------------
        Dennis M. Wolfson
</TABLE>
<PAGE>


                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES

                                   Form 10-KSB
                     For Fiscal Year Ended December 31, 1999

                                  EXHIBIT INDEX

Exhibit

                                   No. Exhibit

  2.1          Agreement  and Plan of  Reorganization  dated  November 19, 1998,
               approved April 3, 1999, and completed May 5, 1999

  3.2          Bylaws of Atlantic BancGroup, Inc.

  4.2          Form of Common Stock Warrant and Agreement

  10.1         Software License  Agreement dated as of October 6, 1997,  between
               Oceanside and File Solutions, Inc.

  10.2         File Solutions  Software  Maintenance  Agreement dated as of July
               15, 1997, between Oceanside and SPARAK Financial Systems, Inc.

  10.3         Remote  Data  Processing  Agreement  dated as of  March 3,  1997,
               between Oceanside and Bankers Data Services, Inc.

  21.1         Subsidiaries of the Registrant

  22.1         Atlantic  BancGroup,  Inc. Proxy Statement for the Annual Meeting
               of Shareholders to be held on April 27, 2000

  27.1         Financial Data Summary