SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

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


                   For the Fiscal Year Ended December 31, 2000

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                         Commission File Number 0-25505

                            ATLANTIC BANCGROUP, INC.
             (Exact name of registrant as specified in its charter)

                 Florida                             59-3543956
        (State or other jurisdiction             (I.R.S. Employer
      of incorporation or organization)         Identification No.)


710 North Third Street, Jacksonville Beach, Florida             32250
  (Address of principal executive offices)                     (Zip Code)

       Registrant's telephone number, including area code: (904) 247-9494

        Securities registered pursuant to Section 12(b) of the Act: None

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

                     Common Stock, par value $0.01 per share

              Warrants to Purchase Common Stock at $10.00 per share
                                (Title of Class)

Check  whether  the issuer  has (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such  shorter  period  that the issuer 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 disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of  issuer'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 $5,824,000.

The  aggregate  market  value  of  the  common  stock  of  the  issuer  held  by
non-affiliates  of the  issuer  (525,190  shares)  on  February  28,  2001,  was
approximately  $5.5 million  based on the initial bid quoted price of $10.50 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,
and their holdings include presently exercisable warrants totaling 73,160.

As of February 28, 2001, there were issued and outstanding 597,350 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 26, 2001, filed as Exhibit 99.1 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............................................4
              Investments...................................................4
              Correspondent Banking.........................................5
              Interest and Usury............................................5
              Primary Service Area..........................................5
              Competition...................................................6
              Supervision and Regulation....................................6
              Common Stock.................................................11
              Warrants.....................................................11
              Preferred Stock..............................................12
              Indemnification of Directors and Officers....................12
              Employees....................................................13
              Statistical Profile and Other Financial Data.................13

Item 2.       Description of Properties....................................14

Item 3.       Legal Proceedings............................................14

Item 4.       Submission of Matters to a Vote of Security Holders..........14

PART II....................................................................15

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

                  Related Stockholder Matters..............................15
              Dividends....................................................15

Item 6.       Management's Discussion and Analysis of Financial

                  Condition and Results of Operations......................16
              Selected Financial Data......................................16
              General......................................................17
              Forward-Looking Statements...................................17
              Results of Operations........................................18
              Net Income...................................................18
              Comparison of Years Ended December 31, 2000 and 1999.........21
              Net Interest Income..........................................21
              Provision for Credit Losses..................................22

<PAGE>
                                                                            Page

             Other Income.....................................................22
             Other Expenses...................................................22
             Loans Receivable.................................................22
             Classification of Assets.........................................24
             Allowance for Credit Losses......................................25
             Securities.......................................................26
             Deposits.........................................................29
             Capital Requirements/Ratios......................................31
             Interest Rate Sensitivity........................................33
             Liquidity........................................................35
             Other Borrowings.................................................35
             Future Accounting Requirements...................................36
             Impact of Inflation..............................................36

Item 7.      Financial Statements.............................................37

Item 8.      Changes in and Disagreements with Accountants

                     on Accounting and Financial Disclosure...................59

PART III     .................................................................59

Item 9.      Directors, Executive Officers, Promoters and Control Persons;
                     Compliance with Section 16(a) of the Exchange Act........59

Item 10.     Executive Compensation...........................................59

Item 11.     Security Ownership of Certain Beneficial Owners and Management...59

Item 12.     Certain Relationships and Related Transactions...................60

Item 13.     Exhibits, Financial Statement Schedules, and Reports of Form 8-K.60

SIGNATURES....................................................................62

EXHIBIT INDEX.................................................................63

<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  subsidiary 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. On May 25, 2000, the board of
directors  of  Atlantic  voted to  merge  the  mortgage  banking  operations  of
Oceanside Mortgage into Oceanside.  This transaction was approved by the federal
and state  regulators and was completed  during the quarter ended  September 30,
2000. Oceanside Mortgage, as a department of Oceanside,  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-chartered  commercial 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.  Oceanside has received  federal and state
approval to open a new branch  located at 13799 Beach  Boulevard,  Jacksonville,
Florida.  The  branch is  expected  to open in the second  quarter of 2001.  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,  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.


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<PAGE>

Oceanside's principal strategy is to:

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

o        Make real estate  mortgage  loans within the PSA, as well as throughout
         Duval and surrounding counties; and

o        Expand its consumer loan base within the PSA.

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" 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. As part of Oceanside's strategy to offer innovative services
to its customer base,  Oceanside now offers on-line banking ("Internet Banking")
and Dial-a-Bank ("Telephone Banking").

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, 2000 were $50.1 million, or 67.3% 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.


                                       2
<PAGE>
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, 2000,  approximately  58% of Atlantic's  total
loan  portfolio  consisted of loans secured by mortgages on real estate.  Of the
loans  secured by  mortgages on real  estate,  approximately  63% are 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 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  31% of Atlantic's  total
loan portfolio as of December 31, 2000.

Atlantic's  portfolio of consumer and other loans 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.  Consumer  and
other loans represent  approximately 11% of the total loan portfolio at December
31, 2000.

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,


                                       3
<PAGE>

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  58.2% of Atlantic's  consolidated  total deposits at December 31,
2000.  Approximately 41.8% of Atlantic's  consolidated  deposits at December 31,
2000, 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  14.2% of Atlantic's  consolidated  total deposits at
December 31, 2000.  For  additional  information  regarding  Atlantic's  deposit
accounts,  see "Management's  Discussion and Analysis of Financial Condition and
Results of Operations."

Investments

Atlantic may invest a portion of its assets in U.S.  Government  agency,  state,
county,  and  municipal  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 and state, county, and municipal obligations
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.

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<PAGE>


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 environment,  favorable cost-of-living comparisons to
other metropolitan  areas in the United States, and a good relationship  between
the private and public sectors.  With the planned opening of the Beach Boulevard
branch in the second  quarter of 2001,  Atlantic  will expand its  service  area
covered by its branch network to include the Hodges and San Pablo areas of Duval
County, which extends west of the Intercoastal Waterway. This area is one of the
fastest growing in Atlantic's PSA.

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.

Because  Atlantic 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. Furthermore, since Atlantic has a large base of
local shareholders and communicates frequently with its shareholders, additional
opportunities  exist for marketing that might not be found

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<PAGE>
with  other  financial  institutions  in  the  PSA.  Atlantic's  broad  base  of
shareholders  from the beaches and surrounding  areas 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, 2000,
management  believed  there to be ten banks  operating in the PSA,  comprising a
total of twenty-one banking offices, and three credit unions.

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

o        reviewing  and acting upon 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  Atlantic'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 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.


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<PAGE>
Except  as  authorized  by the  Gramm-Leach-Bliley  Act of  1999,  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. Enacted in 1999, the Gramm-Leach-Bliley Act reforms and
modernizes certain areas of financial services  regulation.  The law permits the
creation of 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 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 sets up a process for  coordination  between the Federal  Reserve Board and
the Secretary of the Treasury regarding the approval of new financial activities
for both bank holding companies and national bank financial subsidiaries.

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  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


                                       7
<PAGE>


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.

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  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.


                                       8
<PAGE>

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    undercapitalized,"    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 2000 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 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


                                       9
<PAGE>

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 1996, provides for nationwide
interstate  banking and branching.  Under the law,  interstate  acquisitions  of
banks or bank holding  companies  in any state by bank holding  companies in any
other state is permissible.  Interstate  branching and consolidation of existing
bank  subsidiaries in different  states is  permissible.  Florida has a law that
allows out-of-state bank holding companies (located in states that allow Florida
bank  holding  companies  to acquire  banks and bank  holding  companies in that
state) to acquire  Florida  banks and Florida  bank holding  companies.  The law
essentially  provides for  out-of-state  entry by  acquisition  only (and not by
interstate  branching)  and requires  the acquired  Florida bank to have been in
existence for at least three years.


                                       10
<PAGE>

Enforcement  Powers.  Congress has provided the federal bank regulatory agencies
with an array of powers to enforce laws,  rules,  regulations and orders.  Among
other things,  the agencies may require that institutions  cease and desist from
certain  activities,  may preclude persons from  participating in the affairs of
insured depository  institutions,  may suspend or remove deposit insurance,  and
may impose  civil money  penalties  against  institution-affiliated  parties for
certain violations.

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 February 28, 2001, there were 597,350 shares  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

                                       11
<PAGE>
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 Oceanside;  provided, however, that at any time after one
year following the date Oceanside commenced 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  be issuable  upon  exercise of the warrant
having a fair  market  value  equal 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.

                                       12
<PAGE>


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;

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  subsidiary  have  approximately  33  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
one of the primary deficiencies 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.

                                       13
<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  originally  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's mortgage department,  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.

On  September  27,  2000,  Oceanside  executed  a lease  for its  future  branch
location.  This branch, which is expected to open in the second quarter of 2001,
will be located at 13799  Beach  Boulevard,  Jacksonville,  Florida.  The lease,
which  commenced  upon  execution,  covers  approximately  9,000 square feet. In
addition to the branch,  other operations of Atlantic and Oceanside are expected
to relocate to this facility in 2001.  Rent  commences one year from the date of
completion of the  landlord's  work and expires ten years  thereafter,  with two
five-year  renewal  options.  No  rent  will be paid  in the  first  year  after
completion of the landlord's work.  Annual rent in years two through ten will be
$148,500 (subject to inflation adjustments).

ITEM 3.  LEGAL PROCEEDINGS.

There are no  material  proceedings  to which  Atlantic or its  subsidiary  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, 2000.

                                       14
<PAGE>


                                     PART II

ITEM 5.  MARKET PRICE FOR REGISTRANTS' 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 ("OTC BB"),  under
the symbol ATBC.OB with the stock price quoted on the "electronic  pink sheets."
The initial bid quote by the OTC BB was $10.00 per share.  During 2000 and 1999,
the reported periodic high, low, and closing quotes during each quarter follow:

<TABLE>
<CAPTION>
                                      2000                                 1999
                    -----------------------------------    ---------------------------------
                    1st Qtr    2nd Qtr 3rd Qtr  4th Qtr    1st Qtr  2nd Qtr  3rd Qtr 4th Qtr
                    -------    ------- -------  -------    -------  -------  ------- -------
<S>                  <C>        <C>      <C>      <C>      <C>      <C>      <C>     <C>
         High        $11.98     $12.50   $9.75    $9.13    $  -     $  -     $  -    $  -
         Low         $10.00     $10.00   $9.13    $9.00    $  -     $  -     $  -    $  -
         Close       $11.25     $11.48   $9.75    $9.00    $  -     $  -     $  -    $  -
</TABLE>

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 1999. As of February 28, 2001,  there were 597,350 shares of
common stock and 591,510 warrants  outstanding and  approximately 750 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.

                                       15
<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, 2000 and 1999. 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,
                                                                       --------------------------------------------
                                                                      2000         1999         1998          1997
                                                                      ----         ----         ----          ----
Statement of Operations Data:
<S>                                                               <C>           <C>          <C>          <C>
     Total interest income                                        $   5,277     $  3,704     $  2,287     $     346
     Total interest expense                                           2,217        1,210          867            85
     Net interest income before provision for credit losses           3,060        2,494        1,420           261
     Provision for credit losses                                          -          221          334           186
     Net interest income after provision for credit losses            3,060        2,273        1,086            75
     Noninterest income                                                 547          362          196            33
     Noninterest expense                                              2,929        2,167        1,450           501
     Cumulative effect of a change in accounting principle                -          (59)           -             -
     Income tax provision (benefit)                                     226          (90)           -             -
     Net income (loss)                                                  452          499        (168)         (393)

Balance Sheet Data:

     Total assets                                                 $  74,375     $ 54,161     $ 45,571     $  18,314
     Earning assets                                                  64,319       47,144       38,977        14,688
     Investment securities                                            7,515        6,109        7,858         2,072
     Loans, net (before allowance for credit losses)                 49,983       40,935       25,998         9,269
     Allowance for credit losses                                        682          738          520           186
     Deposit accounts                                                65,002       43,889       40,374        13,020
     Stockholders' equity                                             6,020        5,404        5,050         5,265

Share Data:

     Basic earnings per share                                     $    0.76     $   0.84     $ (0.28)     $  (0.70)
     Book value per share (period end)                            $   10.09     $   9.08     $   8.49     $    8.85
     Common shares outstanding (period end)                             597          595          595           595
     Weighted average shares outstanding                                596          595          595           560

Performance Ratios:

     Return on average assets                                         0.70%        1.06%       -0.55%        -7.38%
     Return on average equity                                         8.18%        9.83%       -3.27%       -17.20%
     Interest-rate spread during the period                           4.28%        5.03%        4.31%         4.46%
     Net interest margin                                              5.31%        5.96%        5.31%         6.20%
     Noninterest expenses to average assets                           4.56%        4.59%        4.71%         9.41%

Asset Quality Ratios:

     Allowance for credit losses to period end loans                  1.36%        1.80%        2.00%         2.01%
     Net charge-offs to average loans                                 0.12%        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)                  8.59%       10.75%       16.69%        42.92%
     Leverage (4.00% required minimum)                                8.83%       11.09%       12.92%        35.00%
     Risk-based capital:
         Tier 1                                                      10.48%       12.54%       17.42%        53.27%
         Total                                                       11.64%       13.79%       18.68%        54.53%
     Average loans to average deposits                               83.16%       80.92%       69.30%        66.14%

</TABLE>
                                       16
<PAGE>

General

At December 31, 2000, Atlantic had grown to approximately $74.4 million in total
assets,  $49.3  million in total  loans,  $65.0  million in  deposits,  and $6.0
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 38 - 58  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,  data processing  costs, 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.

                                       17
<PAGE>

                             Results of Operations

Net Income

Atlantic recorded net income of $452,000 in 2000 and $499,000 in 1999, a decline
of $47,000. The principal changes in the components of net income follow:

o    Atlantic has  experienced  significant  growth with resulting  increases in
     total income  offset by increased  total  expenses.  Interest and operating
     expenses  have outpaced the growth in average total assets 52% (versus 36%)
     as Atlantic  has  expanded  its  services  through its branch and  mortgage
     operations.  As a result,  full-time staffing levels grew approximately 22%
     at year -end 2000 as compared with 1999.

o    Interest  expense has grown 83% as rates paid on deposits have outpaced the
     yields on earning  assets and the  financing  of real estate  purchased  in
     1999.

o    In 1999,  Atlantic  recorded an income tax  benefit of $90,000  through the
     recognition of deferred income tax assets once Atlantic became  profitable.
     In 2000,  the provision for income taxes of $226,000  represents a swing of
     $316,000 in the components of net income. Offsetting the increase in income
     taxes,  the  provision  for  credit  losses  in  1999 of  $221,000  and the
     cumulative  effect of a change in  accounting  principle of $59,000 (net of
     income taxes of $36,000) with no  corresponding  amounts in 2000 produced a
     favorable result.






                  [Remainder of page intentionally left blank.]




                                       18
<PAGE>
Table 1.1 - Rate/Volume Analysis (dollars in thousands):
<TABLE>
<CAPTION>

                                                             Years Ended December 31,
-----------------------------------------------------------------------------------------------------------------
                                                            2000                                 1999
                                            ---------------------------------     ---------------------------------
                                                          Interest   Average                    Interest   Average
                                             Average           and    Yield/      Average            and    Yield/
                                             Balance     Dividends      Rate      Balance      Dividends      Rate
                                             -------     ---------      ----      -------      ---------      ----
<S>                                          <C>          <C>          <C>        <C>           <C>          <C>
Earning assets:
     Loans                                   $45,915      $ 4,523      9.85%      $33,236       $ 3,207      9.65%
     Investment securities                     6,360          405      6.37%        6,903           374      5.42%
     Other interest-earning assets (1)         5,353          349      6.52%        1,720           123      7.15%
                                             -------      -------                 -------       -------

         Total interest-earning assets        57,628        5,277      9.16%       41,859         3,704      8.85%
                                                          -------                               -------

Noninterest-earning assets                     6,666                                5,344
                                             -------                              -------

         Total assets                        $64,294                              $47,203
                                             =======                              =======

Interest-bearing liabilities:
     Demand deposits                         $19,983          637      3.19%     $ 16,618           441      2.65%
     Savings                                   1,284           32      2.49%        1,160            27      2.33%
     Certificates of deposit                  20,934        1,282      6.12%       13,074           690      5.28%
     Other borrowings                          3,220          266      8.26%          855            52      6.08%
                                             -------      -------                 -------       -------

         Total interest-bearing liabilities   45,421        2,217      4.88%       31,707         1,210      3.82%
                                                          -------                                -------

Noninterest-bearing liabilities               13,349                               10,421
Stockholders' equity                           5,524                                5,075
                                             -------                              -------

         Total liabilities and

           stockholders' equity              $64,294                              $47,203
                                             =======                              =======

Net interest income                                       $ 3,060                               $ 2,494
                                                          =======                               =======

Interest-rate spread (2)                                               4.28%                                 5.03%
                                                                       =====                                 =====

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

Ratio of average interest-earning assets
  to average interest-bearing liabilities    126.88%                              132.02%
                                             =======                              =======

</TABLE>

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

(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.


                                       19
<PAGE>
Table 1.2 - Rate/Volume Analysis (in thousands):

<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                                                   2000 vs. 1999
                                                                            Increase (Decrease) Due to
                                                                 --------------------------------------------------
                                                                                               Rate/
                                                                      Rate        Volume       Volume      Total
                                                                  --------       -------     -------      --------
<S>                                                               <C>            <C>          <C>          <C>
 Interest-earning assets:
     Loans                                                        $     67       $ 1,223      $    26      $ 1,316
     Investment securities                                              66           (30)         (5)           31
     Other interest-earning assets                                     (11)          260         (23)          226
                                                                  --------       -------     -------      --------

         Total interest-earning assets                                 122         1,453          (2)        1,573
                                                                  --------      --------    --------       -------

Interest-bearing liabilities:
     Demand deposits                                                    89            89          18           196
     Savings                                                             2             3           -             5
     Certificates of deposit                                           111           415          66           592
     Other borrowings                                                   19           144          51           214
                                                                 ---------     ---------    --------     ---------

         Total interest-bearing liabilities                            221           651         135         1,007
                                                                  --------     ---------     -------      --------

Net interest income                                                $   (99)      $   802      $ (137)     $    566
                                                                   =======       =======      ======      ========

</TABLE>

Table 2.1 - Weighted Average Yield or Rate:

<TABLE>
<CAPTION>
                                                                                   For the Year Ended December 31,
                                                                                   -------------------------------
                                                                                        2000             1999
                                                                                        ----             ----
<S>                                                                                    <C>              <C>
Interest-earning assets:
         Loans                                                                         9.85%            9.65%
         Investment securities                                                         6.37%            5.42%
         Other interest-earning assets                                                 6.52%            7.15%
         All interest-earning assets                                                   9.16%            8.85%
Interest-bearing liabilities:
         NOW deposits                                                                  0.82%            0.92%
         Money market deposits                                                         4.56%            3.96%
         Savings                                                                       2.49%            2.33%
         Certificates of deposit                                                       6.12%            5.28%
         Other borrowings                                                              8.26%            6.08%
         All interest-bearing liabilities                                              4.88%            3.82%
Interest-rate spread                                                                   4.28%            5.03%

</TABLE>



                                       20
<PAGE>
Comparison of Years Ended December 31, 2000 and 1999

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   $3,060,000  and  $2,494,000  for  2000  and  1999,
respectively,  an  increase  of 22.7%  from  1999 to 2000,  which was due to the
increase  in average  earning  assets of 37.7%  offset by  increases  in average
interest-bearing liabilities of 43.3%. 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 2000 and 1999,  the average yield on earning  assets was 9.16% and 8.85%,
respectively,  while  the  average  cost of funds was 4.88% in 2000 and 3.82% in
1999.  Atlantic's  net interest  margin  declined from 5.96% in 1999 to 5.31% in
2000, reflecting  unfavorable trends in interest rates earned versus rates paid.
For 2000,  the average  loan-to-interest-bearing  deposit ratio rose slightly to
108.8%  from  107.7% in 1999,  which  reflects  the shift in the mix of  average
earning assets and interest-bearing deposits as follows:

Table 2.2 - Change in Deposit Mix (dollars in thousands):
<TABLE>
<CAPTION>

                                                                             At December 31,
                                                       -----------------------------------------------------------
                                                               2000                                 1999
                                                       -----------------------            ------------------------
                                                                     Percent                              Percent
                                                       Average            to              Average             to
                                                       Balance         Total               Balance          Total
                                                       -------     -----------            -------       ----------
<S>                                                    <C>              <C>               <C>               <C>
Interest-earning assets:                               $45,915          79.7%             $33,236           79.4%
     Loans                                               6,360          11.0%               6,903           16.5%
     Investment securities                               5,353           9.3%               1,720            4.1%
                                                     ---------       --------           ---------        --------

         Total interest-earning assets                 $57,628         100.0%             $41,859          100.0%
                                                       =======         ======             =======          ======

Interest-bearing deposits:
     Demand deposits                                   $19,983          36.2%             $16,618           40.5%
     Savings                                             1,284           2.3%               1,160            2.8%
     Certificates of deposit                            20,934          37.9%              13,074           31.8%
                                                     ---------        -------            --------         -------

         Total interest-bearing deposits                42,201          76.4%              30,852           75.1%

Noninterest-bearing deposits                            13,010          23.6%              10,222           24.9%
                                                     ---------        -------            --------         -------

         Total deposits                                $55,211         100.0%             $41,074          100.0%
                                                       =======         ======             =======          ======

</TABLE>

At December 31, 2000, the net loans-to-interest-earning deposit ratio was 96.2%.


                                       21
<PAGE>

Other borrowings  increased from an average of $855,000 in 1999 to $3,220,000 in
2000, and the cost of funds increased from 6.08% to 8.26% during the same period
reflecting the increasing rate environment.

Provision for Credit Losses

No provision for credit losses was recorded in 2000 as compared with $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  since  1997.  Since  Oceanside's  opening  in  1997,  only  nominal
charge-offs and classified  loans have surfaced.  Initial  provisions for credit
losses of 1.75% to 2.00% were recorded until some  experience  with  Oceanside's
underwriting  policies was developed.  Given  management's  estimate of expected
charge-offs  and its level of classified  assets,  no  additional  provision was
considered necessary for 2000.

Other Income

Other income increased in 2000 to $547,000 from $362,000 for 1999. This increase
reflects  the growth in the  number of deposit  accounts.  Income  from  service
charges on customer  accounts  accounted for  approximately 62% and 78% of total
other  income for the years ended 2000 and 1999,  respectively.  Fees  generated
from Oceanside's  mortgage  operations of approximately  $85,000 and earnings of
$54,000 on  Oceanside's  investment  in  insurance  policies to fund  Atlantic's
indexed  retirement plans for key officers and directors  contributed to most of
the increase in other income.

Other Expenses

Other expenses totaled $2,929,000 for 2000 and $2,167,000 for 1999, or 4.56% and
4.59% of average assets for respective year ends. Salaries and employee benefits
accounted for  approximately  48% of total other expenses for 2000 as opposed to
47% for 1999.  Increases  in other  expenses  reflect the growth in personnel to
support Atlantic's overall growth including expansion in its branch and mortgage
operations.  The increase in other  expenses of 35.2% from 1999 to 2000 was less
than the increases in total interest income and other income of 42.5% and 51.1%,
respectively, for the same periods.

Loans Receivable

Average  loans   receivable,   before  the  allowance  for  credit  losses  were
$45,915,000  for the year ended 2000 as compared  to  $33,236,000  for 1999,  an
increase  of  38.1%.  Management  believes  the  growth  in loans  was  directly
attributable to community  acceptance,  the reputations of its lending team, and
favorable  economic  conditions  in the market area.  Table 3 below  provides an
analysis of Atlantic's loan distribution at the end of 2000 and 1999. Loans that
are secured by real estate include residential and nonresidential mortgages, and
home equity loans to individuals.


                                       22
<PAGE>
Table 3 - Loan Portfolio (in thousands):

<TABLE>
<CAPTION>
                                                             For the Year
                                                          Ended December 31,
                                                          ------------------
                                                       2000             1999
                                                     -------          -------
<S>                                                  <C>             <C>
Commercial and agricultural                          $15,665         $ 12,501
Real estate                                           28,773           23,283
Consumer and other loans                               5,651            5,250
                                                     -------          -------
         Total loans                                  50,089           41,034
Less:
         Less, unearned income                         (106)              (99)
         Less, allowance for credit losses             (682)             (738)
                                                     -------          -------

                                                     $49,301          $40,197
                                                     =======          =======

</TABLE>

The following table shows the maturity of loans receivable.

Table 4 - Loan Maturities at December 31, 2000 (in thousands):
<TABLE>
<CAPTION>

                                                  1 Year         1 Through             After
                                                 or Less           5 Years           5 Years            Total
                                                 -------           -------           -------            -----
<S>                                             <C>               <C>               <C>               <C>
Commercial and agricultural                     $  6,906          $  4,051          $  4,708          $15,665
Real estate                                        8,819             4,076            15,878           28,773
Consumer and other loans                           1,428             3,280               943            5,651
                                                 -------           -------           -------          -------

        Total loans                              $17,153           $11,407           $21,529          $50,089
                                                 =======           =======           =======          =======

Loans with maturities over one year:

        Fixed rate                                                                                    $32,382
        Variable rate                                                                                     554
                                                                                                    ---------

             Total maturities greater than one year                                                   $32,936
                                                                                                      =======

</TABLE>
                                       23

<PAGE>
Table 5 - Loans Originated and Repaid (in thousands):
<TABLE>
<CAPTION>

                                                Years Ended December 31,
                                                ------------------------
                                                  2000             1999
                                               ---------         --------
<S>                                            <C>              <C>
Originations:
        Commercial and agricultural loans      $   7,165        $   6,816
        Real estate loans                         14,830           17,418
        Consumer and other loans                   3,222            4,096
                                               ---------         --------

             Total                                25,217           28,330

Principal reductions                             (16,162)         (13,382)
                                               ---------         --------

Increase in total loans                        $   9,055         $ 14,948
                                               =========         ========

</TABLE>

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 the real  estate  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:


                                       24
<PAGE>

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.

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, 2000 and 1999,  management  had not  observed  any  significant
problem  loans in its  portfolio.  Loans  past due for 30 days or more (but less
than 89 days) at  December  31,  2000,  and 1999,  totaled  $15,000  and $1,000,
respectively.  At  December  31,  2000,  management  had  classified  four loans
totaling   approximately   $34,000  as  substandard,   as  compared  with  three
substandard loans totaling $29,000 at December 31, 1999.

At December 31, 2000 and 1999,  there were no loans  considered by management to
be nonaccrual, 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 (see  "Provision for Credit Losses" at page 22). Table 6 is an analysis
of the allowance for credit losses for 2000 and 1999.

Table 6 - Allowance for Credit Losses (in thousands):
<TABLE>
<CAPTION>

                                                              2000             1999
                                                              ----             ----

<S>                                                          <C>              <C>
Balance, at beginning of period                              $ 738            $ 520
Provision for credit losses                                      -              221
Loans charged off                                              (57)              (8)
Recoveries                                                       1                5
                                                             -----            -----

Balance, at end of period                                    $ 682            $ 738
                                                             =====            =====
</TABLE>
                                       25
<PAGE>

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 2000 and 1999.

Table 7 - Allocation of Allowance for Credit Losses (dollars in thousands):
<TABLE>
<CAPTION>

                                                                             At December 31,
                                                       -----------------------------------------------------------
                                                              2000                                 1999
                                                       ----------------------             ------------------------
                                                                      % of                               % of
                                                                     Loans to                           Loans to
                                                                       Total                              Total
                                                       Amount         Loans               Amount          Loans
                                                       ------      -----------            ------       -----------
<S>                                                    <C>               <C>              <C>               <C>
Commercial and agricultural                            $   1             31%              $   3             30%
Real estate                                                -             58                   -             57
Consumer and other loans                                   8             11                   6             13
Unallocated                                              673              0                 729              0
                                                       -----            ---               -----            ---

                                                       $ 682            100%              $ 738            100%
                                                       =====            ===               =====            ===
</TABLE>

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, 2000 and 1999,  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. Tables 8.1 and 8.2 set forth the
carrying amount of securities at the dates indicated.



                                       26
<PAGE>

Table 8.1 - Carrying Value of Investment Securities (in thousands):
<TABLE>
<CAPTION>

                                                                                         At December 31,
                                                                                    -------------------------
                                                                                        2000             1999
                                                                                     -------          -------
<S>                                                                                  <C>              <C>
Securities available-for-sale:
         Mortgage-backed securities (GNMA and FNMA)                                  $ 5,326          $ 5,938
         Other                                                                           171              171
                                                                                     -------          -------

         Total                                                                         5,497            6,109
                                                                                    --------         --------

Securities held-to-maturity:
         State, county, and municipal bonds                                            2,018                -
                                                                                     -------          -------

Balance, end of year                                                                 $ 7,515          $ 6,109
                                                                                     =======          =======

</TABLE>

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

<TABLE>
<CAPTION>
                                                                                           At December 31,
                                                                                    -------------------------
                                                                                        2000             1999
                                                                                        ----             ----
<S>                                                                                 <C>               <C>
Securities available-for-sale:
        Mortgage-backed securities (GNMA and FNMA)                                  $ 5,403           $ 6,255
        Other                                                                           171               171
                                                                                    -------           -------

         Total                                                                         5,574            6,426
                                                                                    --------         --------

Securities held-to-maturity:
         State, county, and municipal bonds                                            2,018                -
                                                                                    --------      -----------

Balance, end of year                                                                 $ 7,592          $ 6,426
                                                                                     =======          =======


</TABLE>
                                       27
<PAGE>


Tables 9.1 and 9.2 set forth the  maturities  (excluding  principal  paydowns on
mortgage-backed  securities)  and the weighted  average  yields of securities by
contractual maturities at December 31, 2000 and 1999.

Table 9.1 - Analysis of  Investment  Securities  Available-for-Sale (dollars  in
thousands):
<TABLE>
<CAPTION>
                                                         Due in Ten
                                                       Years or More                              Other
                                               ---------------------------           -------------------------
                                                                   Average                            Average
                                                  Amount           Yield              Amount          Yield
                                                  ------         ---------            ------        ---------
<S>                                              <C>                 <C>             <C>
At December 31, 2000:
         Mortgage-backed securities

             (GNMA and FNMA)                     $ 5,326             6.32%           $    -                -
         Other                                         -                 -               171            7.11%
                                                 -------                             --------

                                                 $ 5,326             6.32%           $   171            7.11%
                                                 =======                             =======

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%
                                                 =======                             =======

</TABLE>

Table 9.2 - Analysis  of  Investment  Securities  Held-to-Maturity  (dollars  in
thousands):
<TABLE>
<CAPTION>

                                                    Due in Ten
                                                   Years or More                                   Other
                                                 -------------------------           ------------------------
                                                                   Average                            Average
                                                  Amount           Yield              Amount           Yield
                                                  ------           -----              ------           -----

<S>                                              <C>                 <C>            <C>
At December 31, 2000:
         State, county, and
           municipal bonds                       $ 2,018             5.35%          $      -                -
                                                 =======                            ========

At December 31, 1999:
         State, county, and
           municipal bonds                       $    -                 -           $      -                -
                                                  =======                            ========

</TABLE>
                                       28
<PAGE>
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.

Maturity  terms,  service  charges and withdrawal  penalties are  established by
Atlantic on a periodic basis. The determination of rates and terms is predicated
on loan funding 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, 2000,  Oceanside met the  definition of a "well
capitalized" depository institution.

Atlantic's  primary  source  of funds is  deposit  accounts  that  include  both
interest- and  noninterest-bearing  demand,  savings,  and time  deposits  under
$100,000.  At December  31, 2000 and 1999,  these core  deposits  accounted  for
approximately 86% and 90%, respectively,  of all deposits. At December 31, 2000,
the deposit mix had shifted so that noninterest-bearing  demand deposits were no
longer the single  largest  category of core deposits.  At year-end  2000,  time
deposits under $100,000  accounted for  approximately 32% of these core deposits
as compared  with  noninterest-bearing  demand  deposits at 25%. At December 31,
2000 and 1999,  jumbo  certificates  of  deposit  (time  deposits  $100,000  and
greater) represented approximately 14% and 10%, respectively, of total deposits.
At December 31, 2000 and 1999, time deposits outstanding in an individual amount
of  $100,000  or more  totaled  $9,224,000  and  $4,534,000,  respectively.  The
maturity of these deposits are reflected in Table 12 herein.

Interest-bearing  demand accounts,  consisting of NOW and money market accounts,
averaged  $19,983,000 for the year ended 2000 and $16,618,000 for the year ended
1999, or  approximately  36% and 41% of average total deposits in 2000 and 1999,
respectively.  This  decrease in the  percentage of lower cost deposits to total
deposits in 1999  contributed  to the increase in the average cost of funds from
3.82% in 1999 to 4.88% in 2000.


                                       29
<PAGE>


Table 10 - Distribution of Deposit Accounts by Type (dollars in thousands):
<TABLE>
<CAPTION>

                                                                       At December 31,
                                               --------------------------------------------------------------
                                                           2000                                1999
                                               ---------------------------         --------------------------
                                                                    % of                               % of
                                                  Amount         Deposits             Amount        Deposits
                                                  ------        ----------            ------       ----------
<S>                                              <C>                <C>             <C>                <C>
Demand deposits                                  $13,729            21.1%           $ 11,084           25.2%
NOW deposits                                       9,840            15.2               7,138           16.3
Money market deposits                             13,021            20.0              10,787           24.6
Savings deposits                                   1,213             1.9               1,159            2.6
                                               ---------         -------          ----------        -------

        Subtotal                                  37,803            58.2              30,168           68.7
                                                --------          ------            --------         ------

Certificates of deposit:
        3.00% - 3.99%                                 34             0.1                 124            0.3
        4.00% - 4.99%                                308             0.4               3,697            8.4
        5.00% - 5.99%                              1,318             2.0               9,370           21.4
        6.00% - 6.99%                             23,523            36.2                 530            1.2
        7.00% - 7.99%                              2,016             3.1                   -            0.0
                                               ---------         -------        ------------        -------

        Total certificates of deposit (1)         27,199            41.8              13,721           31.3
                                                --------          ------            --------         ------

        Total deposits                           $65,002           100.0%            $43,889          100.0%
                                                 =======           =====             =======          =====
</TABLE>

(1)      Includes  individual  retirement  accounts ("IRAs") totaling $1,693,000
         and $1,106,000 in 2000 and 1999, 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,
                                                --------------------------------------------------------------
                                                           2000                                1999
                                                 -------------------------            -----------------------
                                                 Average           Average            Average        Average
                                                 Balance           Rate               Balance        Rate
                                                 -------        ----------            -------     ----------
<S>                                             <C>                 <C>              <C>            <C>
Demand, money market
    and NOW deposits                            $ 32,993            1.93%            $ 26,840       1.64%
Savings deposits                                   1,284            2.49%               1,160       2.33%
Certificates of deposit                           20,934            6.12%              13,074       5.28%
                                               ---------                            ---------

        Total deposits                          $ 55,211            3.53%            $ 41,074       2.82%
                                                ========                             ========
</TABLE>
                                       30


<PAGE>


Table 12 - Maturities of Time Deposits of $100,000 or more (in thousands):
<TABLE>
<CAPTION>

                                                        At December 31,
                                                     -------------------------
                                                       2000             1999
                                                     -------          --------
<S>                                                 <C>              <C>
Due in three months or less                         $  3,743         $    829
Over three through twelve months                       4,234            3,597
Over twelve months through three years                 1,247                -
Over three years                                           -              108
                                                     -------          --------

                                                     $ 9,224          $ 4,534
                                                     =======          =======

</TABLE>

Table 13 - Certificates of Deposits by Rate and Maturity Date (in thousands):

<TABLE>
<CAPTION>
                                                                        Year Ending December 31,
                                                     -------------------------------------------------------------
                                                        2001      2002        2003       2004      2005      Total
                                                        ----      ----        ----       ----      ----      -----
<S>                                                  <C>          <C>        <C>      <C>         <C>      <C>
At December 31, 2000:

    3.00% - 3.99%                                    $    34      $   -      $   -    $     -     $   -    $    34
    4.00% - 4.99%                                        308          -          -          -         -        308
    5.00% - 5.99%                                      1,040          -        194         11        73      1,318
    6.00% - 6.99%                                     20,604      2,769        150          -         -     23,523
    7.00% - 7.99%                                      1,613        403          -          -         -      2,016
                                                     -------     ------      -----    -------     -----    -------

      Total certificates of deposit                  $23,599     $3,172      $ 344    $    11     $  73    $27,199
                                                     =======     ======      =====    =======     =====    =======
<CAPTION>
                                                                        Year Ending December 31,
                                                     -------------------------------------------------------------
                                                        2000      2001        2002       2003      2004      Total
                                                        ----      ----        ----       ----      ----      -----
<S>                                                  <C>          <C>        <C>      <C>         <C>      <C>
At December 31, 1999:

    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
                                                     =======    =======    =======     ======     =====    =======

</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

                                      31
<PAGE>


components of risk-based  capital are  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.

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, 2000 and 1999, are reflected in the table below.

Table 14 - Capital Ratios (dollars in thousands):

<TABLE>
<CAPTION>
                                                                At December 31,
                                                           -------------------------
                                                               2000             1999
                                                           --------         --------
<S>                                                        <C>              <C>
Tier I
    Stockholders' equity                                   $  6,206         $  5,664
    Less, intangible assets                                       -                -
                                                           --------         --------
                                                              6,206            5,664
Tier II

    Allowable portion of allowance for credit losses            682              565
                                                           --------         --------

Risk-based capital                                         $  6,888         $  6,229
                                                           ========         ========

Risk adjusted assets                                        $59,196          $45,164
                                                           ========         ========

    Tier I risk-based capital ratio                          10.48%           12.54%
                                                           ========         ========

    Total risk-based capital ratio                           11.64%           13.79%
                                                           ========         ========

Adjusted assets                                             $70,255          $51,053
                                                            =======          =======

    Leverage ratio                                            8.83%           11.09%
                                                           ========         ========
</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.



                                       32
<PAGE>
Table 15 - Capital Analysis:

<TABLE>
<CAPTION>
                                                                 At December 31,
                                                            -----------------------
                                                              2000             1999
                                                              ----             ----
<S>                                                         <C>              <C>
Average equity as a percentage of average assets            8.59%            10.75%
Equity to total assets at end of year                       8.09%             9.98%
Return on average equity                                    8.18%             9.83%
Return on average assets                                    0.70%             1.06%
Noninterest expenses to average assets                      4.56%             4.59%
</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. Warrants exercised to purchase common stock totaled
1,500 in 2000,  600 in 1999,  and 20 in 1998, the proceeds of which were $15,000
and $6,000 in 2000 and 1999, respectively, and less 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, 2000,  stockholders'  equity  increased  $616,000 from December 31,
1999,  as a result of the net income of  $452,000,  a decrease  of  $149,000  in
unrealized  holding  losses on  available-for-sale  securities,  and  $15,000 of
proceeds from the exercise of warrants in 2000. The return on average equity for
the years  ended  December  31, 2000 and 1999,  was a positive  8.18% and 9.83%,
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

                                       33
<PAGE>

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 for a significant  portion of
its investment portfolio.

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,  2000  (dollars  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                            $ 6,715       $       -         $     -        $     -       $ 6,715
Interest-bearing deposits in other banks          106               -               -              -           106
Loans(1)                                       12,944           4,209          11,407         21,529        50,089
Securities(2)                                       -           1,221               -          6,294         7,515
                                              -------       ---------         -------        -------       -------

Total rate-sensitive assets                   $19,765       $   5,430         $11,407        $27,823       $64,425
                                              =======       =========         =======        =======       =======

Money market and NOW(2)                       $13,021       $       -         $     -        $ 9,840       $22,861
Savings accounts (2)                                -               -               -          1,213         1,213
Certificates of deposit (2)                     9,106          14,493           3,600              -        27,199
                                              -------       ---------         -------        -------       -------

Total rate-sensitive liabilities              $22,127       $  14,493        $  3,600        $11,053       $51,273
                                              =======       =========         =======        =======       =======

Gap (repricing differences)                   $(2,362)      $ (9,063)        $  7,807        $16,770       $13,152
                                              =======       ========         ========        =======       =======

Cumulative Gap                                $(2,362)      $(11,425)        $ (3,618)       $13,152
                                              =======       ========         ========        =======

Cumulative Gap/total assets                    -3.18%         -15.36%          -4.86%         17.68%
                                              =======       =========         =======        =======

Total assets                                                                                               $74,375
                                                                                                           =======
</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.


                                       34
<PAGE>

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%.

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  principal  paydowns 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 2000 and 1999,  such payments  totaled  $838,000 and $1,498,000,
respectively.

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, 2000.

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

At December 31, 2000 and 1999,  Oceanside's  liquidity ratio of liquid assets to
transaction  deposit  accounts  was 35.7% and  16.1%,  respectively.  Management
believes that Oceanside's liquidity is sufficient to meet its anticipated needs.

Other Borrowings

A summary follows (in thousands):

<TABLE>
<CAPTION>
                                                              December 31,
                                                          2000             1999
                                                        -------           -------
<S>                                                     <C>               <C>
     FHLB of Atlanta advances                           $ 2,300           $ 2,300
     Revolving lines of credit                              744               742
     Securities sold under agreements to repurchase           -             1,589
                                                        -------           -------

                                                        $ 3,044           $ 4,631
                                                        =======           =======
</TABLE>

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  assigned  collateral
consisting  of  wholly-owned  residential  (1-4 units) first  mortgage  loans of
approximately  $2,950,000.  This advance matures on November 17, 2005, and has a
variable interest rate currently at 6.05%.

Revolving Lines of Credit:

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


                                       35
<PAGE>

interest at 0.50% below prime are due on August 11, 2001.  The proceeds from the
lines of credit have been used to acquire real estate,  fund start-up  costs for
the mortgage  banking  operations,  and provide  additional  working capital for
Atlantic.  At December 31, 2000 and 1999,  $744,000 and $742,000,  respectively,
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:

At  December  31,  1999,  Oceanside  had 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%.  During 2000,  all amounts
were repaid.

Future Accounting Requirements

In June 1999,  the Financial  Accounting  Standards  Board amended  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities"  ("SFAS  133"),  which  addressed  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, as
amended, becomes effective for all fiscal quarters of all fiscal years beginning
after June 15, 2000. Earlier  application was permitted with certain exceptions.
Management does not anticipate that adoption of SFAS 133, as amended,  will have
a  material  impact on the  financial  condition  or results  of  operations  of
Atlantic.

In September 2000, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting Standards No. 140, "Accounting for Transfers and Servicing
of Financial Assets and  Extinguishments of Liabilities"  ("SFAS 140"). SFAS 140
revises the standards for securitization and other transfers of financial assets
and collateral, and requires additional disclosures but carries over most of the
provisions  of SFAS  125,  which  has been  replaced  by SFAS  140.  SFAS 140 is
effective for transfers and servicing of financial assets and extinguishments of
liabilities  occurring  after March 31, 2001.  This  Statement is effective  for
recognition and  reclassification of collateral and for disclosures  relating to
securitization  transactions and collateral for fiscal years ending December 15,
2000.  Disclosures  about  securitization  and  collateral  accepted need not be
reported for periods ending on or before  December 15, 2000, for which financial
statements  are  presented  for  comparative   purposes.   Management  does  not
anticipate  that  adoption  of SFAS 140,  when  fully  implemented,  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


                                       36
<PAGE>

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,  2000 and 1999,  are set forth on pages  38-58 of this Form
10-KSB.



                                       37
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

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

We have audited the consolidated balance sheets of Atlantic BancGroup,  Inc. and
Subsidiary  ("Atlantic")  as of  December  31,  2000 and 1999,  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,   2000.   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, 2000 and 1999, and the results of its  consolidated  operations and
its cash flows for each of the two years in the period ended  December 31, 2000,
in conformity with generally accepted accounting principles.

/s/  STEVENS, POWELL & COMPANY, P.A.
-----------------------------------
STEVENS, POWELL & COMPANY, P.A.
Jacksonville, Florida
February 8, 2001

                                       38
<PAGE>
<TABLE>
<CAPTION>
                                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                                          CONSOLIDATED BALANCE SHEETS

                                                                                            December 31,
                                                                                  ----------------------------
                                                                                     2000              1999
                                                                                  -----------      -----------
                                                                      (Dollars in Thousands, Except Per Share Data)
                                     ASSETS

<S>                                                                               <C>              <C>
Cash and cash equivalents:
     Cash and due from banks                                                      $     6,250      $     4,569
     Federal funds sold                                                                 6,715                -
                                                                                  -----------      -----------
         Total cash and cash equivalents                                               12,965            4,569

Interest-bearing deposits in other banks                                                  106              100
Securities available-for-sale                                                           5,497            6,109
Securities held-to-maturity (market value of $2,051)                                    2,018                -
Loans                                                                                  49,301           40,197
Facilities                                                                              2,601            2,489
Accrued interest receivable                                                               346              271
Deferred income taxes                                                                     237              312
Other assets                                                                            1,304              114
                                                                                  -----------      -----------

         Total assets                                                              $   74,375       $   54,161
                                                                                   ==========       ==========

                                   LIABILITIES

Deposits:
     Noninterest-bearing demand deposits                                           $   13,729       $   11,084
     Interest-bearing deposits                                                          9,840            7,138
     Money market deposits                                                             13,021           10,787
     Savings deposits                                                                   1,213            1,159
     Time deposits, $100,000 and over                                                   9,224            4,534
     Other time deposits                                                               17,975            9,187
                                                                                  -----------       ----------

         Total deposits                                                                65,002           43,889
                                                                                  -----------        ---------

Other borrowings                                                                        3,044            4,631
Accrued interest payable on deposits                                                       97               53
Accounts payable and accrued liabilities                                                  212              184
                                                                                  -----------      -----------

         Total liabilities                                                             68,355           48,757
                                                                                  -----------      -----------

Commitments and contingencies                                                               -                -
                                                                                  -----------      -----------

                              STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 10,000,000 shares, issued
    and outstanding 596,850 shares in 2000 and 595,350 shares in 1999                       6                6
Additional paid-in capital                                                              4,228            4,213
Retained earnings                                                                       1,834            1,382
Accumulated other comprehensive income
     Net unrealized holding losses on securities                                        ( 48)             (197)
                                                                                  -----------      -----------

         Total stockholders' equity                                                     6,020            5,404
                                                                                  -----------      -----------

         Total liabilities and stockholders' equity                               $    74,375       $   54,161
                                                                                  ===========       ==========

Book value per common share                                                       $     10.09       $     9.08
                                                                                  ===========       ==========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                       39
<PAGE>
<TABLE>
<CAPTION>
                                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

                                                                                            December 31,
                                                                                    --------------------------
                                                                                      2000             1999
                                                                                    ---------        ---------
                                                                      (Dollars in Thousands, Except Per Share Data)
INTEREST INCOME
<S>                                                                                 <C>              <C>
     Interest and fees on loans                                                     $   4,523        $   3,207
     Interest and dividend income from investment securities                              405              374
     Interest on federal funds sold                                                       343              111
     Interest on deposits with other banks                                                  6               12
                                                                                    ---------        ---------
         Total interest income                                                          5,277            3,704
                                                                                    ---------        ---------

INTEREST EXPENSE
     Interest on deposits                                                               1,951            1,158
     Other                                                                                266               52
                                                                                    ---------        ---------
         Total interest expense                                                         2,217            1,210
                                                                                    ---------        ---------

NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES                                  3,060            2,494

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

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES                                   3,060            2,273
                                                                                    ---------        ---------

OTHER INCOME
     Service charges on deposit accounts                                                  338              283
     Other fees for customer service and other income                                     209               79
                                                                                   ----------      -----------
         Total other income                                                               547              362
                                                                                   ----------       ----------

OTHER EXPENSES
     Salaries and employee benefits                                                     1,395            1,017
     Expenses of bank premises and fixed assets                                           489              460
     Other operating expenses                                                           1,045              690
                                                                                    ---------       ----------
         Total other expenses                                                           2,929            2,167
                                                                                    ---------        ---------

INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES                                        678              468

PROVISION (BENEFIT) FOR INCOME TAXES                                                      226              (90)
                                                                                    ---------        ---------

INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE
    IN ACCOUNTING PRINCIPLE                                                               452              558

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
     (Net of income taxes of $36)                                                           -              (59)
                                                                                    ---------        ---------

NET INCOME                                                                                452              499
                                                                                    ---------        ---------
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES:
     Unrealized holding gains (losses) on securities arising during period                149             (150)
                                                                                    ---------        ---------

COMPREHENSIVE INCOME                                                                $     601        $     349
                                                                                    =========        =========


AVERAGE COMMON SHARES OUTSTANDING                                                     595,510          594,983
                                                                                    =========        =========
EARNINGS PER SHARE
     Basic earnings per share                                                           $0.76            $0.84
                                                                                    =========        =========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       40
<PAGE>
<TABLE>
<CAPTION>
                                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                            December 31,

                                                                                      2000           1999
                                                                                    ---------       ----------
                                                                                      (Dollars in Thousands)
<S>                                                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                                     $     452       $      499
     Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
         Provision for credit losses                                                        -              221
         Depreciation and amortization                                                    214              132
         Net premium amortization and discount accretion                                   14               96
         Deferred income taxes                                                           (16)             (192)
         Amortization of organizational costs                                               -                -
         (Increase) decrease in assets:
              Accrued interest receivable                                                (75)              (81)
              Other assets                                                            (1,190)               88
         Increase (decrease) in liabilities:
              Accounts payable and accrued liabilities                                     72               89
                                                                                    ---------       ----------

                  Net cash provided by operating activities                             (529)              852
                                                                                    ---------       ----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Securities available-for-sale:
         Purchases                                                                          -             (115)
         Principal repayments mortgage-backed investment securities                       838            1,498
     Securities held to maturity
         Purchases                                                                    (2,018)                -
     Increase (decrease) in interest-bearing deposits in other banks                      (6)              106
     Increase in loans                                                                (9,104)          (14,940)
     Purchases of facilities                                                            (326)             (761)
                                                                                    ---------       ----------

                  Net cash used in investing activities                              (10,616)          (14,212)
                                                                                    ---------       ----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Increase (decrease) in deposits:
         Noninterest-bearing                                                            2,645            3,916
         Interest-bearing                                                              18,468             (401)
     Proceeds from other borrowings                                                         2            4,631
     Proceeds from stock warrants exercised                                                15                6
     Repayments of other borrowings                                                   (1,589)                -
                                                                                     ---------       ----------

                  Net cash provided by financing activities                            19,541            8,152
                                                                                    ---------       ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    8,396           (5,208)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                          4,569            9,777
                                                                                    ---------       ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                            $  12,965       $    4,569
                                                                                    =========       ==========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     Cash received during the year for interest and dividends                       $   5,219       $    3,623
                                                                                    =========       ==========
     Cash paid during the year for interest                                         $   2,079       $    1,208
                                                                                    =========       ==========
     Cash paid during the year for income taxes                                     $     160      $        80
                                                                                   ==========      ===========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                       41
<PAGE>
<TABLE>
<CAPTION>
                                    ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY


                                                                                            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, 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

Stock warrants exercised                        1,500           -          15          -          -             15
Comprehensive income:
     Net income                                     -           -           -        452          -
     Net change in net unrealized
         holding gains on securities                -           -           -          -        149

       Total comprehensive income                   -           -           -          -          -            601
                                              -------  ----------     -------    -------   --------        -------

Balance, December 31, 2000                    596,850  $        6     $ 4,228    $ 1,834   $    (48)       $ 6,020
                                              =======  ==========     =======    =======   ========        =======

</TABLE>


          See accompanying notes to consolidated financial statements.

                                       42
<PAGE>
                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2000 AND 1999

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"),
which was merged  into  Oceanside  during  2000.  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 were immaterial in 1999. On May 25, 2000, the board of directors of
Atlantic voted to merge the mortgage  banking  operations of Oceanside  Mortgage
into  Oceanside.  This  transaction  was  approved  by  the  federal  and  state
regulators and was completed during the quarter ended September 30, 2000.

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
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, 2000 and 1999, was
$371,000 and $251,000, respectively.

                                       43
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

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

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.

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
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.


                                       44
<PAGE>
                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

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

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).

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.


                                       45
<PAGE>
                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

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

Computation of Per Share Earnings:

Basic  earnings  per share  amounts are computed by dividing net earnings 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, 2000 and 1999, the outstanding  warrants totaled 592,010
and 593,510,  respectively;  however, the warrants were not considered 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, 2000 and 1999
(in thousands except per share data):

<TABLE>
<CAPTION>
                                                                For the Year Ended December 31,

                                                                    2000                1999
                                                                    ----                ----
<S>                                                                <C>                 <C>
     Basic EPS computation:
         Numerator - Net income                                    $  452              $ 499
         Denominator - Weighted average shares outstanding            596                595
                                                                  -------             ------
         Basic EPS                                                 $ 0.76              $0.84
                                                                   ======              =====
</TABLE>

Statements of Cash Flows:

For purposes of reporting cash flows, cash and cash equivalents  include cash on
hand, amounts on deposit in non-interest  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 2000 and 1999 as  included in
other operating expenses were $68,000 and $39,000, respectively.

Reclassification of Accounts:

Certain  items in the  consolidated  financial  statements  for 1999  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, 2000 and 1999, follow:

<TABLE>
<CAPTION>
                                                December 31, 2000                                  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)
<S>                               <C>        <C>        <C>         <C>         <C>        <C>       <C>          <C>       <C>
Available for sale
------------------
   Mortgage-backed securities     $ 5,403    $     4    $   (81)    $ 5,326       $ 6,255     $     -     $  (317)      $ 5,938
   Other                              171          -          -         171           171           -           -           171
                                  -------    -------    --------    -------       -------     -------     --------      -------
     Total available-for-sale       5,574          4        (81)      5,497         6,426           -        (317)        6,109
                                  -------    -------    --------    -------       -------     -------     --------      -------

Held-to-maturity
----------------
   State, county and municipal
     bonds                          2,018         33          -       2,051             -           -           -             -
                                  -------    -------    --------    -------       -------     -------     --------      -------

     Total held-to-maturity         2,018         33          -       2,051             -           -           -             -
                                  -------    -------    --------    -------       -------     -------     --------      -------

Total investment securities       $ 7,592    $    37    $   (81)    $ 7,548       $ 6,426     $     -     $  (317)      $ 6,109
                                  =======    =======    ========    =======       =======     =======     ========      =======
</TABLE>

                                       46
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

NOTE 2 - INVESTMENT SECURITIES (Continued)

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, 2000,  of $48,000
(net of deferred  income  taxes of $29,000)  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,  2000,  securities  with an
amortized  cost of $973,000 and market value of $982,000  were pledged to secure
deposits and for other operating purposes (see Note 6).

No investment securities were sold during 2000 or 1999.

The cost and estimated fair value of debt and equity  securities at December 31,
2000, 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.
<TABLE>
<CAPTION>

                                                   Securities Available-for-Sale        Securities Held-to-Maturity
                                                   -----------------------------        ---------------------------
                                                      Amortized          Fair            Amortized          Fair
                                                        Cost             Value             Cost              Value
                                                        ----             -----             ----              -----
                                                        (Dollars in Thousands)             (Dollars in Thousands)
<S>                                                   <C>              <C>               <C>               <C>
     Due in ten years or more                         $ 5,403          $ 5,326           $ 2,018           $ 2,051
     Other                                                171              171                 -                 -
                                                    ---------        ---------       -----------       -----------

                                                      $ 5,574          $ 5,497           $ 2,018           $ 2,051
                                                      =======          =======           =======           =======

</TABLE>

NOTE 3 - LOANS

The loan portfolio is classified as follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                             2000             1999
                                                             ----             ----

<S>                                                      <C>              <C>
     Commercial and agricultural                         $ 15,665         $ 12,501
     Real estate                                           28,773           23,283
     Consumer and other loans                               5,651            5,250
                                                        ---------        ---------
         Total loans                                       50,089           41,034
     Less, unearned income                                  (106)              (99)
     Less, allowance for credit losses                      (682)             (738)
                                                         -------          --------

                                                         $ 49,301         $ 40,197
                                                         ========         ========
</TABLE>


At  December  31,  2000,  fixed rate loans  (excluding  nonaccrual  loans)  with
maturities over one year totaled approximately $32.4 million.


                                       47
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

NOTE 3 - LOANS (Continued)

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

<TABLE>
<CAPTION>
                                                                                         2000             1999
                                                                                       ------           ------
<S>                                                                                    <C>              <C>
     Balance, beginning of period                                                      $  738           $  520
     Provisions charged to operating expenses                                               -              221
     Loans charged-off                                                                   (57)               (8)
     Recoveries                                                                             1                5
                                                                                       ------           ------

     Balance, end of period                                                            $  682           $  738
                                                                                       ======           ======

</TABLE>

At December 31, 2000 and 1999, 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
                                                      -------  ----------------        --------         ---------
<S>                                                  <C>            <C>                <C>            <C>
December 31, 2000:
     Land and land improvements                      $    946       $      -           $    946
     Bank building and improvements                     1,337            163              1,174       5 - 40 years
     Furniture, fixtures, and equipment                   754            273                481       3 - 10 years
                                                      -------       --------           --------

                                                      $ 3,037       $    436            $ 2,601
                                                      =======       ========            =======

December 31, 1999:
     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>

Depreciation  and  amortization of facilities  totaled  $214,000 and $132,000 in
2000 and 1999, respectively.

Oceanside  leases  property under  construction  for a future branch location at
13799 Beach Boulevard,  Jacksonville,  Florida, under a noncancellable operating
lease. Annual minimum future rental payments of $148,500 (excluding  adjustments
for inflation)  commence two years from the  completion of the landlord's  work.
Atlantic did not have any other material noncancellable  operating leases during
2000 and 1999.


                                       48
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

NOTE 5 - TIME DEPOSITS

Time  deposits  at  December  31,  2000  and  1999,   totaled   $27,199,000  and
$13,721,000,  respectively.  Maturities  of such  deposits  follow  (dollars  in
thousands):

<TABLE>
<CAPTION>
                                                       December 31, 2000                      December 31, 1999
                                             -------------------------------      ------------------------------
                                                Time, $100,000     Other Time      Time, $100,000    Other Time
                                                    And Over       Deposits            And Over       Deposits
<S>                                                <C>             <C>               <C>              <C>  <C>
     Three months or less                          $ 3,743         $  5,363          $    829         $  1 944
     Over three through twelve months                4,234           10,259             3,597            6,872
     Over twelve months through three years          1,247            2,269                 -              149
     Over three years                                    -               84               108              222
                                                   -------          -------           -------         --------

                                                   $ 9,224          $17,975           $ 4,534          $ 9,187
                                                   =======          =======           =======          =======
</TABLE>

Interest expense on certificates of deposit of $100,000 or more totaled $438,000
and $242,000 for 2000 and 1999, respectively.

NOTE 6 - OTHER BORROWINGS

A summary follows:
<TABLE>
<CAPTION>
                                                                    December 31,
                                                                2000             1999
                                                              -------          --------
                                                              (Dollars In Thousands)
<S>                                                           <C>               <C>
     FHLB of Atlanta advances                                 $ 2,300           $ 2,300
     Revolving lines of credit                                    744               742
     Securities sold under agreements to repurchase                 -             1,589
                                                              -------          --------

                                                              $ 3,044           $ 4,631
                                                              =======           =======
</TABLE>

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  assigned  collateral
consisting  of  wholly-owned  residential  (1-4 units) first  mortgage  loans of
approximately  $2,950,000.  This advance matures on November 17, 2005, and has a
variable interest rate currently at 6.05%.

Revolving Lines of Credit:

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, 2001.  The proceeds from the lines of
credit  have been used to  acquire  real  estate,  fund  start-up  costs for the
mortgage  banking  operations,   and  provide  additional  working  capital  for
Atlantic.  At December 31, 2000 and 1999,  $744,000 and $742,000,  respectively,
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:

At  December  31,  1999,  Oceanside  had 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%.  During 2000,  all amounts
were repaid.

                                       49
<PAGE>


                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

NOTE 7 - INCOME TAXES

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

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                                  2000              1999
                                                                -------           -------
                                                               (Dollars In Thousands)
<S>                                                             <C>               <C>
Current:
     Federal                                                    $   207           $    56
     State                                                           35                10
                                                                -------           -------
                                                                    242                66
                                                                -------           -------

Deferred:
     Federal                                                        (14)            (133)
     State                                                          ( 2)             (23)
                                                               --------         --------
                                                                    (16)            (156)
                                                                -------          -------

              Total income tax provision (benefit)               $  226          $   (90)
                                                                 ======          =======
</TABLE>


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:
<TABLE>
<CAPTION>
                                                                                           Year Ended December 31,
                                                                                            2000              1999
                                                                                            -----           -------
                                                                                            (Dollars In Thousands)

<S>                                                                                         <C>               <C>
     Tax computed at statutory rate                                                         $ 231             $ 159
     Increase (decrease) resulting from:
         Utilization of net operating loss carryover                                            -              (262)
         Other                                                                                 (5)               13
                                                                                            -----           -------

              Income tax provision (benefit)                                                $ 226           $   (90)
                                                                                            =====           =======

</TABLE>
<PAGE>

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

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                                2000              1999
                                                -----           -------
                                                (Dollars In Thousands)
<S>                                             <C>               <C>
     Deferred tax asset:
         Federal                               $  220            $  293
         State                                     38                50
                                               ------            ------

                                                  258               343
                                               ------            ------
     Deferred tax liability:
         Federal                                  (18)             (26)
         State                                    ( 3)             ( 5)
                                               ------            ------

                                                  (21)             (31)
                                              -------         --------

              Net deferred tax asset           $  237            $  312
                                               ======            ======

</TABLE>

Atlantic  recorded no  provision  for income  taxes  through 1998 due to its net
operating losses, which were fully utilized in 1999.


                                       50
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

NOTE 7 - INCOME TAXES (Continued)

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

<TABLE>
<CAPTION>
                                                                      December 31,
                                                                  2000              1999
                                                                ------          -------
                                                               (Dollars In Thousands)

<S>                                                             <C>               <C>
     Net unrealized holding losses on securities                $   29            $  120
     Allowance for credit losses                                   214               198
     Depreciation                                                    1                 9
     Other                                                          (7)             (15)
                                                                ------          -------

              Net deferred tax asset                            $  237            $  312
                                                                ======            ======

</TABLE>

NOTE 8 - EMPLOYEE BENEFITS AND INDEXED RETIREMENT PLANS

Simple Plan:

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 2000 totaled $23,000.

Indexed Retirement Plans:

The Board of Directors has adopted (subject to stockholder ratification in 2001)
an Indexed  Retirement  Plan ("IRP") for Atlantic's  seven directors and four of
its current or former  officers.  The purpose of the IRP is to retain  qualified
directors and members of management by offering a retirement  benefit.  Benefits
under the IRP will vest over a five-year period, starting with service beginning
in 1998. Upon his resignation  from Atlantic,  a former officer and director was
40% vested in the IRP. The  remaining ten  participants  were each 60% vested at
the end of 2000.

Subject to  stockholder  ratification,  Atlantic  has  purchased  a pool of life
insurance  policies  with  $1,100,000  that  had  previously  been  invested  in
overnight  federal funds sold. The policies have cash surrender  values that can
progressively  grow, based on a fluctuating index of life insurance  securities,
resulting in an earnings  stream.  The portion of that earnings  stream equal to
what Atlantic had been earning on its  overnight  federal funds sold is realized
as income by Atlantic.  The variable  portion above what is retained by Atlantic
is used to fund the IRP for the eleven participants.

Beginning at age 65 (except for one director, who will receive his first payment
at age 74) and  continuing for a total of fifteen  years,  the IRP  participants
will  receive  an annual  cash  retirement  benefit  payment.  The size of these
payments  will  depend  on the  growth  in value of the  purchased  pool of life
insurance policies. In addition,  the beneficiaries of eight of the participants
will  each  receive  $100,000  death  benefits,   payable  upon  the  respective
participant's death. The remaining three participants will receive a larger lump
sum payment in their fifteenth year of receiving retirement  benefits.  In 2000,
the IRP provided Atlantic with  approximately  $21,000 in income (net of pension
expense of $23,000 and deferred tax benefit of approximately $16,000).


                                       51
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

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, 2000
                                                          --------------------

     Commitments to extend credit                                $ 8,669
     Standby letters of credit                                   $ 1,171

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 2000 or 1999.

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, 2000,  Oceanside had  $4,200,000  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 Northeast  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 $441,000 and $646,000 at December 31, 2000 and 1999,  respectively.  Unfunded
commitments to the same parties totaled  approximately  $683,000 at December 31,
2000.


                                       52
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

NOTE 11 - RELATED PARTIES (Continued)

A summary of  activity  for 2000 and 1999 for such  loans  follows  (dollars  in
thousands):

<TABLE>
<CAPTION>
                                                     Beginning                                           End of
                                                     of Period         Additions       Reductions        Period
                                                     ---------         ---------       ----------        ------
<S>                                                  <C>              <C>                <C>           <C>
     December 31, 2000                               $    646         $    232           $  437        $    441
                                                     ========         ========           ======        ========
     December 31, 1999                                $ 1,239         $    226           $  819        $    646
                                                      =======         ========           ======        ========

</TABLE>

Deposits  of  insiders  and  their  related  interests  totaled  $4,832,000  and
$5,160,000 at December 31, 2000 and 1999, respectively.

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 stock  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 that the warrants may be exercised to
a period ending no sooner than 30 days after such notice is mailed.

A summary of the warrant activity during 2000 and 1999 follows:

<TABLE>
<CAPTION>
                                                                  Weighted
                                                                   Average
                                                Number of         Exercise
                                                 Warrants            Price
                                                 --------            -----
<S>                                               <C>              <C>
     Outstanding at December 31, 1998             594,110          $ 10.00
     Warrants exercised, 1999                        (600)         $ 10.00
                                                  -------
     Outstanding at December 31, 1999             593,510          $ 10.00
     Warrants exercised, 2000                      (1,500)         $ 10.00
                                                 --------
     Outstanding at December 31, 2000             592,010          $ 10.00
                                                 ========
</TABLE>


All outstanding warrants were fully vested and exercisable at December 31, 2000,
with a remaining contractual life of approximately 19 months.

                                       53
<PAGE>


                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

NOTE 12 - STOCKHOLDERS' EQUITY (Continued)

Dividends:

The ability of Atlantic to pay dividends to  stockholders  depends  primarily on
dividends  received  by Atlantic  from its  subsidiary,  Oceanside.  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, 2000,
retained  earnings of approximately  $718,000 were available to pay dividends to
the holding company only (Atlantic).

NOTE 13 - NONINTEREST OPERATING EXPENSES

Other expenses follow (dollars in thousands):
<TABLE>
<CAPTION>

                                                            2000             1999
                                                            ----             ----
<S>                                                     <C>              <C>
         Advertising and business development           $     68         $     39
         Processing and settlement fees                      196               77
         Professional, legal, and audit fees                 154              105
         ATM expense                                          38               41
         Stationery, printing, and supplies                   81               72
         Amortization of organizational costs                  -               30
         Dues and subscriptions                               22               14
         Education, training, and conventions                 34               34
         Insurance (excluding group insurance)                31               32
         Telephone                                            68               33
         Director fees                                        57               26
         Year 2000 expenses                                    5               35
         Postage and freight                                  53               24
         Other miscellaneous expenses                        238              131
                                                         -------          -------

                                                         $ 1,045          $   693
                                                         =======          =======
</TABLE>

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.


                                       54
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

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

     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, if material.

         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:

         For borrowings at a recent market interest rate, the carrying amount is
         a reasonable estimate of fair value.  Otherwise,  the borrowing will be
         estimated using the rates currently  incurred for borrowings of similar
         remaining maturities.

The estimated  fair values of Atlantic's  financial  instruments at December 31,
2000, follow (dollars in thousands):
<TABLE>
<CAPTION>
                                                    Carrying            Fair
                                                     Amount             Value
                                                  ---------         ---------
<S>                                               <C>               <C>
     Financial Assets

         Cash and deposits in other banks          $  6,356          $  6,356
         Investment securities                        7,515             7,548
         Loans                                       49,301            50,829
                                                   --------          --------

              Total assets valued                  $ 63,172          $ 64,733
                                                   ========          ========

     Financial Liabilities

         Deposits                                  $ 65,002          $ 65,044
         Other borrowings                             3,044             3,409
                                                   --------          --------

              Total liabilities valued             $ 68,046          $ 68,453
                                                   ========          ========
</TABLE>

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,  2000,  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,
2000, should not necessarily be considered to apply at subsequent dates.

                                       55
<PAGE>
                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

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, 2000, 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, 2000:
     Total Risk-Based Capital
     (To Risk-Weighted Assets)     $ 6,888     11.64%           $ 4,736     8.00%                $ 5,920    10.00%
     Tier I Capital
     (To Risk-Weighted Assets)     $ 6,206     10.48%           $ 2,368     4.00%                $ 3,552     6.00%
     Tier I Capital
     (To Adjusted Total Assets)    $ 6,206      8.83%           $ 2,810     4.00%                $ 3,513     5.00%

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%


</TABLE>
                                       56

<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

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:                                                2000              1999
                                                                                          -------          -------
                                                                                          (Dollars In Thousands)
<S>                                                                                      <C>             <C>
Assets

     Cash and cash equivalents                                                           $     11        $      10
     Investment in and advances to subsidiary bank                                          6,158            5,467
     Investment in mortgage banking subsidiary                                                  -               18
     Other assets                                                                             597              651
                                                                                          -------          -------
     Total                                                                                $ 6,766          $ 6,146
                                                                                          =======          =======

Liabilities and Stockholders' Equity

     Liabilities                                                                          $   746          $   742
     Stockholders' equity                                                                   6,020            5,404
                                                                                          -------          -------
     Total                                                                                $ 6,766          $ 6,146
                                                                                          =======          =======
<CAPTION>

Condensed Statements of Operations and Stockholders' Equity

Years Ended December 31:                                                                     2000             1999
                                                                                          -------          -------
                                                                                          (Dollars In Thousands)
Equity in net income of subsidiary bank                                                  $    541         $    568
Equity in net loss of mortgage banking subsidiary                                               -               (1)
Other income                                                                                  205                -
Other expenses                                                                               (294)             (68)
                                                                                          -------          -------
Net income                                                                                    452              499
Stockholders' Equity:
     Beginning of  year                                                                     5,404            5,050
     Stock warrants exercised and rounding                                                     15                5
     Net change in unrealized holding gains (losses)
         on securities in subsidiary bank                                                     149             (150)
                                                                                          -------          -------

     End of year                                                                          $ 6,020          $ 5,404
                                                                                          =======          =======
<CAPTION>

Condensed Statements of Cash Flows

Years Ended December 31:                                                                     2000             1999
                                                                                          -------          -------
                                                                                          (Dollars In Thousands)
Operating Activities

Net income                                                                               $    452         $    499
Adjustment to reconcile net income to net cash
     provided by operating activities:
     Equity in undistributed earnings of subsidiaries                                        (541)            (567)
     Other                                                                                     84              (43)
                                                                                          -------          -------
Net Cash Used In Operating Activities                                                          (5)            (111)
Net Cash Used by Investing Activities:
     Purchase of facilities                                                                   (11)            (609)
Net Cash Provided by Financing Activities:

     Proceeds from other borrowings                                                             2              742
     Advances to mortgage banking subsidiary                                                    -              (18)
     Proceeds from stock warrants exercised                                                    15                6
                                                                                          -------          -------
Increase in Cash and Cash Equivalents                                                           1               10
Cash and Cash Equivalents:
     Beginning of year                                                                         10                -
                                                                                          -------          -------
     End of year                                                                         $     11          $    10
                                                                                         ========          =======

</TABLE>
                                       57
<PAGE>
                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

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.


                                       58
<PAGE>


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

None.


                                    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 26, 2001, 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 (see Exhibit 99.1).

                      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 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  2000,  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  (see
Exhibit 99.1).

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 (see Exhibit 99.1).


                                       59
<PAGE>

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 (see Exhibit 99.1).

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         (a)      The following documents are filed as part of this report:

         1.       Financial Statements

                  Independent Auditors' Report

                  Consolidated Balance Sheets as of December 31, 2000 and 1999
                  Consolidated Statements of Operations and Comprehensive Income
                  for the years ended  December  31, 2000 and 1999
                  Consolidated  Statements  of Cash  Flows for the  years  ended
                  December 31, 2000 and 1999
                  Consolidated Statements of Changes in Stockholders' Equity for
                  the years ended December 31, 2000 and 1999
                  Notes to Consolidated Financial Statements

         2.       Financial Statement Schedules

                  All schedules have been omitted as the required information is
                  either  inapplicable  or included in the Notes to Consolidated
                  Financial Statements.

         3.       Exhibits

                  2.1      Agreement and Plan of  Reorganization  dated November
                           19, 1998,  approved  April 3, 1999, and completed May
                           5, 1999  (Incorporated by reference to Exhibit 2.1 to
                           Atlantic's  Form 10-KSB for year ended  December  31,
                           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  (Incorporated  by  reference to Exhibit
                           3.1 to Atlantic's Form 10-KSB for year ended December
                           31, 1999)

                  3.2      Bylaws of Atlantic BancGroup,  Inc.  (Incorporated by
                           reference  to Exhibit 3.2 to  Atlantic's  Form 10-KSB
                           for year ended December 31, 1999)


                                       60
<PAGE>

                  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 (Incorporated by reference to Exhibit
                           4.1 to Atlantic's Form 10-KSB for year ended December
                           31, 1999)

                  4.2      Form  of  Common  Stock  Warrant   (Incorporated   by
                           reference  to Exhibit 4.2 to  Atlantic's  Form 10-KSB
                           for year ended December 31, 1999)

                  10.1     Software  License  Agreement  dated as of  October 6,
                           1997,  between  Oceanside  and File  Solutions,  Inc.
                           (Incorporated   by   reference  to  Exhibit  10.1  to
                           Atlantic's  Form 10-KSB for year ended  December  31,
                           1999)

                  10.2     File Solutions Software  Maintenance  Agreement dated
                           as of July 15,  1997,  between  Oceanside  and SPARAK
                           Financial Systems, Inc. (Incorporated by reference to
                           Exhibit 10.2 to Atlantic's Form 10-KSB for year ended
                           December 31, 1999)

                  10.3     Remote Data Processing Agreement dated as of March 3,
                           1997,  between  Oceanside and Bankers Data  Services,
                           Inc.  (Incorporated  by  reference to Exhibit 10.3 to
                           Atlantic's  Form 10-KSB for year ended  December  31,
                           1999)

                  10.4     Lease  dated   September   27,  2000,   between  MANT
                           EQUITIES, LLC and Oceanside Bank

                  11       The computation of per share earnings is shown in the
                           consolidated   financial   statements   of   Atlantic
                           BancGroup,  Inc.  and  Subsidiaries  for December 31,
                           2000, contained in Item 7, on Page 46 of the Notes to
                           Consolidated Financial Statements

                  21.1     Subsidiary of the Registrant

                  99.1     Atlantic  BancGroup,  Inc.  Proxy  Statement  for the
                           Annual  Meeting of  Shareholders  to be held on April
                           26, 2001

         (b)      Reports on Form 8-K

                  No current  reports on Form 8-K were filed by Atlantic  during
                  the last fiscal quarter covered by this report.



                                       61
<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 26th day of March, 2001.

                                       ATLANTIC BANCGROUP, INC.

                                       /s/    Barry W. Chandler
                                       -------------------------
                                       Barry W. Chandler
                                       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 26th day of March, 2001.

Signature                             Title
---------                             -----

/s/     Donald F. Glisson, Jr.        Chairman of the Board
------------------------------
        Donald F. Glisson, Jr.

/s/     Barry W. Chandler             President and Chief Executive Officer
------------------------
        Barry W. Chandler

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

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

 /s/    Jimmy Dubberly                Director
----------------------
        Jimmy 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


                                       62
<PAGE>

                     ATLANTIC BANCGROUP, INC. AND SUBSIDIARY

                                   Form 10-KSB

                     For Fiscal Year Ended December 31, 2000

                                  EXHIBIT INDEX

Exhibit
  No.                                    Exhibit

10.4              Lease dated September 27, 2000, between MANT EQUITIES, LLC and
                  Oceanside Bank

21.1              Subsidiary of the Registrant

99.1              Atlantic  BancGroup,  Inc.  Proxy  Statement  for  the  Annual
                  Meeting of Shareholders to be held on April 26, 2001






                                       63