----

----

| (Mark      One) |
|-----------------|
| x               | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|            | SECURITIES      EXCHANGE ACT OF 1934: For the fiscal year ended December 31,      2008 |
|            |   |
| o               | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|            | SECURITIES      EXCHANGE ACT OF 1934: For      the transition period from ____________to      ____________ |

|   | Georgia                       | 58-1640130                                |   |
|--------|-------------------------------|-------------------------------------------|--------|
|   | (State      of incorporation) | (I.R.S.      Employer Identification No.) |   |

|                                                                   |                                                    |                                        |   |
|------------------------------------------------------------------------|---------------------------------------------------------|---------------------------------------------|--------|
|                                                                   | 201      Maple Street                                   |                                        |   |
|                                                                   | P.O.      Box 280                                       | (770)      832-3557                         |   |
|                                                                   | Carrollton, Georgia      30117                          | (Registrant’s      telephone number,  |   |
|                                                                   | (Address      of principal executive offices)           | Including      area code)                   |   |
|                                                                   |                                                    |                                        |   |
|  Securities      registered pursuant to Section 12(b) of the Act: |
|                                                                   |                                                    |                                        |   |
|                                                                   | Title      of Class                                     | Name      of Exchange on Which Listed       |   |
|                                                                   | Common      Stock, no par value                         | The      NASDAQ Stock Market, LLC           |   |
|                                                                   | Series      A Convertible Preferred Stock, no par value | The      NASDAQ Stock Market, LLC (pending) |   |

| Large Accelerated      Filer  ̈ | Accelerated Filer       ̈ | Non-Accelerated      Filer  ̈ | Smaller Reporting      Company x |
|-------------------------------------|-------------------------------|-----------------------------------|----------------------------------|

----

| Item      Numberin      Form 10-K | Description      |                                                                                                          | Page      orLocation |
|-----------------------------------|------------------|---------------------------------------------------------------------------------------------------------------|----------------------|
|                              |             |                                                                                                          |                 |   |
| PART      I                       |             |                                                                                                          |                 |
|                              | Item      1.     | Business                                                                                                      |                 | 1 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      1A.    | Risk      Factors                                                                                             |                 | 19 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      1B.    | Unresolved      Staff Comments                                                                                |                 | 19 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      2.     | Properties                                                                                                    |                 | 20 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      3.     | Legal      Proceedings                                                                                        |                 | 21 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      4.     | Submission      of Matters to a Vote of Security Holders                                                      |                 | 21 |
| PART      II                      |             |                                                                                                          |                 |
|                              | Item      5.     | Market      for the Common Equity, Related Shareholder Matters and Issuer Purchases of      Equity Securities |                 | 21 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      6.     | Selected      Financial Data                                                                                  |                 | 23 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      7.     | Management’s      Discussion and Analysis of Financial Condition      and Results of Operations         |                 | 24 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      7A.    | Quantitative      and Qualitative Disclosures About Market Risk                                               |                 | 48 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      8.     | Financial      Statements and Supplementary Data                                                              |                 | 48 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      9.     | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure                |                 | 48 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      9A(T). | Controls      and Procedures                                                                                  |                 | 48 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      9B.    | Other      Information                                                                                        |                 | 49 |
| PART      III                     |             |                                                                                                          |                 |
|                              | Item      10.    | Directors,      Executive Officers and Corporate Governance                                                   |                 | 49 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      11.    | Executive      Compensation                                                                                   |                 | 49 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      12.    | Security      Ownership of Certain Beneficial Owners and      Management and Related Shareholder Matters      |                 | 49 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      13.    | Certain      Relationships and Related Transactions, and Director      Independence                           |                 | 50 |
|                              |             |                                                                                                          |                 |   |
|                              | Item      14.    | Principal      Accountant Fees and Services                                                                   |                 | 50 |
| PART      IV                      |             |                                                                                                          |                 |
|                              | Item      15.    | Exhibits      and Financial Statement Schedules                                                               |                 | 50 |
|                              |             |                                                                                                          |                 |   |
|                              |             | Signatures                                                                                                    |                 | 54 |

----

----

| Deposit      Mix                   |   |
|------------------------------------|--------|
|                               |   | At      December 31, 2008 |   |
|                               |   |   |   |   |
| Non-interest      bearing demand   |   |   | 9 | % |
| NOW      accounts and money market |   |   | 26 | % |
| Savings                            |   |   | 2 | % |
| Time      Deposits                 |   |   |   |   |
| Under      $100,000                |   |   | 29 | % |
| $100,000 and      over             |   |   | 34 | % |
|                               |   |   | 100 | % |

----

----

| Unsecured      loans                                  |   |   | 30     | %      |
|-------------------------------------------------------|--------|--------|--------|--------|
| Loans      secured by:                                |   |   |   |   |
| Residential      real estate                          |   |   | 300    | %      |
| Total      commercial real estate                     |   |   | 300    | %      |
| Convenience      stores                               |   |   | 20     | %      |
| Hotels/motels                                         |   |   | 10     | %      |
| Apartments                                            |   |   | 50     | %      |
| Construction      acquisition & development loans |   |   | 100    | %      |
| Commercial      and industrial purpose loans          |   |   | 150    | %      |
| Participations      purchased                         |   |   | 75     | %      |
| Single      payment notes                             |   |   | 300    | %      |

|   | ● | the      amounts exceeding the limit are sold on a non-recourse    basis;                                                            |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                 |
|   | ● | the      amounts exceeding the limit are secured by readily marketable securities,      up to a limit of 25% of capital andreserves. |

----

----

----

----

|   | ● | to      acquire the ownership or control of more than 5% of any class of voting      stock of any bank not already controlled by it; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                 |
|   | ● | for      it or any subsidiary (other than a bank) to acquire all or substantially      all of the assets of a bank; and              |
|   |    |                                                                                                                                 |
|   | ● | to      merge or consolidate with any other bank holding  company.                                                                   |

|   | ● | making      or servicing loans and certain leases;            |
|--------|---------|---------------------------------------------------------------|
|   |    |                                                          |
|   | ● | providing      certain data processing services;              |
|   |    |                                                          |
|   | ● | acting      as a fiduciary or investment or financialadvisor; |

----

|   | ● | providing      discount brokerage services;                   |
|--------|---------|---------------------------------------------------------------|
|   |    |                                                          |
|   | ● | underwriting      bank eligible securities; and               |
|   |    |                                                          |
|   | ● | making      investments designed to promote communitywelfare. |

|   | ● | lending,      exchanging, transferring, investing for others or safeguarding money or      securities;                                                                                                                |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                  |
|   | ● | insuring,      guaranteeing, or indemnifying against loss, harm, damage, illness,      disability, or death, or providing and issuing annuities, and acting as      principal, agent, or broker with respect thereto; |
|   |    |                                                                                                                                                                                                                  |
|   | ● | providing      financial, investment, or economic advisory services, including advising      an investment company;                                                                                                   |
|   |    |                                                                                                                                                                                                                  |
|   | ● | issuing      or selling instruments representing interests in pools of assets      permissible for a bank to hold directly; and                                                                                       |
|   |    |                                                                                                                                                                                                                  |
|   | ● | underwriting,      dealing in or making a market insecurities.                                                                                                                                                        |

----

----

----

|   | ● | make      regulatory capital requirements more sensitive to differences in risk      profiles among banks and bank holding companies; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                  |
|   | ● | account      for off-balance sheet exposure; and                                                                                      |
|   |    |                                                                                                                                  |
|   | ● | minimize      disincentives for holding liquidassets.                                                                                 |

----

|        Classification              |   | Total      Risk-Based      Capital |   | Tier      I Risk-Based      Capital |   | Tier      ILeverage |
|-----------------------------------------|--------|------------------------------------|--------|-------------------------------------|--------|---------------------|
|                                    |   |                               |   |                                |   |                |
| Well      Capitalized (1)               |   | 10%                                |   | 6%                                  |   | 5%                  |
|                                    |   |                               |   |                                |   |                |
| Adequately      Capitalized (1)         |   | 8%                                 |   | 4%                                  |   | 4%      (2)         |
|                                    |   |                               |   |                                |   |                |
| Undercapitalized      (3)               |   | <8%                             |   | <4%                              |   | <4%              |
|                                    |   |                               |   |                                |   |                |
| Significantly      Undercapitalized (3) |   | <6%                             |   | <3%                              |   | <3%              |
|                                    |   |                               |   |                                |   |                |
| Critically      Undercapitalized (3)    |   | —                            |   | —                             |   | <2%              |

|   |   |                                                                                                                                        |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|   | (1)    | An      institution must meet all three minimums.                                                                                           |
|   | (2)    | 3%      for composite 1-rated institutions, subject to appropriate federal banking      agency guidelines.                                  |
|   | (3)    | An      institution is classified as undercapitalized if it is below the specified      capital level for any of the three capitalmeasures. |

----

|   | ● | to      conduct enhanced scrutiny of account relationships to guard against money      laundering and report any suspicious transaction;                                                                                      |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                          |
|   | ● | to      ascertain the identity of the nominal and beneficial owners of, and the      source of funds deposited into, each account as needed to guard against      money laundering and report any suspicious    transactions; |

----

|   | ● |  to      ascertain for any foreign bank, the shares of which are not publicly      traded, the identity of the owners of the foreign bank, and the nature and      extent of the ownership interest of each such owner; and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                             |
|   | ● | to      ascertain whether any foreign bank provides correspondent accounts to      other foreign banks and, if so, the identity of those foreign banks and      related due diligenceinformation.                                |

|   | ● | the      development of internal policies, procedures, and  controls; |
|--------|---------|-----------------------------------------------------------------------|
|   |    |                                                                  |
|   | ● | the      designation of a compliance officer;                         |
|   |    |                                                                  |
|   | ● | an      ongoing employee training program; and                        |
|   |    |                                                                  |
|   | ● | an      independent audit function to test theprograms.               |

|   | ● | to      an amount equal to 10% of the bank’s capital and surplus, in the case of      covered transactions with any one affiliate; and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                         |
|   | ● | to      an amount equal to 20% of the bank’s capital and surplus, in the case of      covered transactions with allaffiliates.         |

|   | ● | a      loan or extension of credit to an affiliate;                                                                             |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                            |
|   | ● | a      purchase of, or an investment in, securities issued by an      affiliate;                                                |
|   |    |                                                                                                                            |
|   | ● | a      purchase of assets from an affiliate, with some  exceptions;                                                             |
|   |    |                                                                                                                            |
|   | ● | the      acceptance of securities issued by an affiliate as collateral for a loan      or extension of credit to any party; and |
|   |    |                                                                                                                            |
|   | ● | the      issuance of a guarantee, acceptance or letter of credit on behalf of an      affiliate.                                |

----

|   | ● | a      bank and its subsidiaries may not purchase a low-quality asset from an      affiliate;                                                                                                                                                                            |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                     |
|   | ● | covered      transactions and other specified transactions between a bank or its      subsidiaries and an affiliate must be on terms and conditions that are      consistent with safe and sound banking practices; and                                                  |
|   |    |                                                                                                                                                                                                                                                                     |
|   | ● | with      some exceptions, each loan or extension of credit by a bank to an      affiliate must be secured by collateral with a market value ranging from      100% to 130%, depending on the type of collateral, of the amount of the      loan or extension of credit. |

|   | ● | new      requirements for financial institutions to develop policies and procedures      to identify potential identity theft and, upon the request of a consumer,      place a fraud alert in the consumer’s credit file stating that the      consumer may be the victim of identity theft or other    fraud;                                                  |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                   |
|   | ● | new      consumer notice requirements for lenders that use consumer report      information in connection with risk-based credit pricing      programs;                                                                                                                                                                                                                |
|   |    |                                                                                                                                                                                                                                                                                                                                                                   |
|   | ● | for      entities that furnish information to consumer reporting agencies(which      would include the Bank), new requirements to implement procedures and      policies regarding the accuracy and integrity of the furnished      information, and regarding the correction of previously furnished      information that is later determined to be inaccurate;  and |
|   |    |                                                                                                                                                                                                                                                                                                                                                                   |
|   | ● | a      new requirement for mortgage lenders to disclose credit scores to      consumers.                                                                                                                                                                                                                                                                               |

----

|   | ● | Limits      on compensation incentives for risk taking by senior executive      officers.                                                     |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | Requirement      of recovery of any compensation paid based on inaccurate financial      information.                                         |
|   | ● | Prohibition      on “Golden Parachute Payments”.                                                                                  |
|   | ● | Prohibition      on compensation plans that would encourage manipulation of reported      earnings to enhance the compensation of  employees. |

----

|   | ● | Publicly      registered TARP recipients must establish a board compensation committee      comprised entirely of independent directors, for the purpose of reviewing      employee compensation plans. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | Prohibition      on bonus, retention award, or incentive compensation, except for payments      of long term restricted stock.                                                                          |
|   | ● | Limitation      on luxury expenditures.                                                                                                                                                                 |
|   | ● | TARP      recipients are required to permit a separate shareholder vote to approve      the compensation of executives, as disclosed pursuant to the SEC’s      compensation disclosure rules.    |
|   | ● | The      chief executive officer and chief financial officer of each TARP recipient      will be required to provide a written certification of compliance with      these standards to theSEC.         |

|   | ● | Provide      access to low-cost refinancing for responsible homeowners suffering from      falling home prices.                  |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------|
|   | ● | A      $75 billion homeowner stability initiative to prevent foreclosure and help      responsible families stay in their homes. |
|   | ● | Support      low mortgage rates by strengthening confidence in Fannie Mae and Freddie      Mac.                                  |

|   | ● | assigning      of additional asset recovery staff including management whose sole      responsibility is to manage and reduce non-performing assets as quickly as      possible;                                                                                 |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                             |
|   | ● | continuing      review and revision, as appropriate, of loan portfolio management      procedures and processes including loan diversification, increased      underwriting standards, intensified loan review and aggressive problem      asset identification; |

----

|   | ● | maintaining      a valuation process which we believe balances rapid collection of      non-performing loans and reduction of foreclosed property with maximizing      the net realizable value of these assets for the shareholders;      and   |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                             |
|   | ● | taking      necessary steps, including raising capital through a public offering of      our Series A Preferred stock, in order to be considered well capitalized      as determined by regulatory standards applicable to the Bank and      us. |

----

|   | Facility                                                                                       | Location                                                                                                 | Ownership   |
|--------|------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|-------------|
|   |                                                                                           |                                                                                                     |        |
|   | WGNB      and First National BankCorporate      Offices                                        | 201      Maple StreetCarrollton,      Carroll County, Georgia                                            | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankMain      Branch Office                                                | 201      Maple StreetCarrollton,      Carroll County, Georgia                                            | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankFirst      Tuesday Mall Office                                         | 1004      Bankhead HighwayCarrollton,      Carroll County, Georgia                                       | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankMotor      Office                                                      | 314      Newnan StreetCarrollton,      Carroll County, Georgia                                           | Leased      |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankVilla      Rica Office                                                 | 725      Bankhead HighwayVilla      Rica, Carroll County, Georgia                                        | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankBowdon      Office                                                     | 205      East College StreetBowdon,      Carroll County, Georgia                                         | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankTemple      Office                                                     | 184      Carrollton StreetTemple,      Carroll County, Georgia                                           | Owned  |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankBremen      Financial Center (former      First Haralson headquarters) | 900      Atlantic AvenueBremen,      Haralson County, Georgia                                            | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankBremen      Office                                                     | 501      Pacific AvenueBremen,      Haralson County, Georgia                                             | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankBuchanan      Office                                                   | 3559      Business 27Buchanan,      Haralson County, Georgia                                             | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankTallapoosa      Office                                                 | 3408      Georgia Hwy 100Tallapoosa,      Haralson County, Georgia                                       | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankTallapoosa      Office                                                 | 39      Bowden StreetTallapoosa,      Haralson County, Georgia                                           | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankMirror      Lake Office                                                | Village      at Mirror Lake Shopping CenterDouglasville,      Douglas County, Georgia                    | Owned       |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankHighway      5 Office                                                  | 9557      Georgia Hwy 5Douglasville,      Douglas County, Georgia                                        | Leased      |
|   |                                                                                           |                                                                                                     |        |
|   | First      National BankChapel      Hill Office                                                | 9360      The Landing Drive(adjacent      to Arbor Place Mall)Douglasville,      Douglas County, Georgia | Owned       |

----

----

|   |                |   | Price      Range Per Share |   |   |   |   |
|--------|---------------------|--------|----------------------------|--------|--------|--------|--------|
|   |                |   | Low                        |   |   | High   |   |   | DividendsPaid      Per Share |   |
| 2007:  |                |   |                       |   |   |   |   |   |   |   |
|   | First      Quarter  |   | $                          | 27.50  |   |   | $      | 33.00 |   |   | $ | 0.197 |   |
|   | Second      Quarter |   |                       | 28.32  |   |   |   | 31.60 |   |   |   | 0.203 |   |
|   | Third      Quarter  |   |                       | 24.79  |   |   |   | 28.08 |   |   |   | 0.210 |   |
|   | Fourth      Quarter |   |                       | 19.79  |   |   |   | 24.24 |   |   |   | 0.210 |   |
|   |                |   |                       |   |   |   |   |   |   |   |   |   |   |
| 2008:  |                |   |                       |   |   |   |   |   |   |   |   |   |   |
|   | First      Quarter  |   | $                          | 15.00  |   |   | $      | 21.55 |   |   | $ | 0.210 |   |
|   | Second      Quarter |   |                       | 8.16   |   |   |   | 16.89 |   |   |   | 0.105 |   |
|   | Third      Quarter  |   |                       | 4.28   |   |   |   | 9.37 |   |   |   | 0.000 |   |
|   | Fourth      Quarter |   |                       | 2.27   |   |   |   | 6.99 |   |   |   | 0.000 |   |

----

|                                                     |   | Year      Ended December 31,                         |      |
|----------------------------------------------------------|--------|------------------------------------------------------|-----------|
|                                                     |   | 2008                                            |      |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                     |   | (In      thousands, except share and per share data) |      |
| For      the Year:                                       |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      interest income                               |   | $                                                    | 48,113    |   |   | $ | 55,828 |   |   | $ | 42,093 |   |   | $ | 32,546 |   |   | $ | 25,268 |   |
| Total      interest expense                              |   |                                                 | 25,611    |   |   |   | 27,181 |   |   |   | 18,727 |   |   |   | 12,583 |   |   |   | 7,570 |   |
| Net      interest income                                 |   |                                                 | 22,502    |   |   |   | 28,647 |   |   |   | 23,366 |   |   |   | 19,963 |   |   |   | 17,698 |   |
| Provision      for loan losses                           |   |                                                 | 14,900    |   |   |   | 10,206 |   |   |   | 1,465 |   |   |   | 1,550 |   |   |   | 925 |   |
| Net      interest income after provision for loan losses |   |                                                 | 7,602     |   |   |   | 18,441 |   |   |   | 21,901 |   |   |   | 18,413 |   |   |   | 16,773 |   |
| Other      income                                        |   |                                                 | 7,617     |   |   |   | 8,068 |   |   |   | 6,404 |   |   |   | 6,008 |   |   |   | 5,637 |   |
| Other      expense                                       |   |                                                 | 28,234    |   |   |   | 23,341 |   |   |   | 16,519 |   |   |   | 14,464 |   |   |   | 13,664 |   |
| Goodwill      impairment                                 |   |                                                 | 24,128    |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Earnings      (loss) before income taxes                 |   |                                                 | (37,143   | ) |   |   | 3,168 |   |   |   | 11,786 |   |   |   | 9,957 |   |   |   | 8,746 |   |
| Income      (benefit) taxes                              |   |                                                 | (6,393    | ) |   |   | 134 |   |   |   | 3,458 |   |   |   | 2,889 |   |   |   | 2,682 |   |
| Net      (loss) earnings                                 |   |                                                 | (30,750   | ) |   |   | 3,034 |   |   |   | 8,327 |   |   |   | 7,067 |   |   |   | 6,064 |   |
| Per      Share Data:                                     |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) earnings                                 |   |                                                 | (5.12     | ) |   |   | .55 |   |   |   | 1.67 |   |   |   | 1.42 |   |   |   | 1.22 |   |
| Diluted      (loss) earnings                             |   |                                                 | (5.12     | ) |   |   | .55 |   |   |   | 1.66 |   |   |   | 1.41 |   |   |   | 1.21 |   |
| Diluted      (loss) exclusive of goodwill impairment     |   |                                                 | (1.14     | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Cash      dividends declared                             |   |                                                 | 0.32      |   |   |   | .82 |   |   |   | .72 |   |   |   | .61 |   |   |   | .52 |   |
| Book      value                                          |   |                                                 | 7.43      |   |   |   | 13.23 |   |   |   | 10.50 |   |   |   | 9.61 |   |   |   | 9.01 |   |
| Tangible      book value                                 |   |                                                 | 6.62      |   |   |   | 8.37 |   |   |   | 10.50 |   |   |   | 9.61 |   |   |   | 9.01 |   |
| At      Year End:                                        |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans                                         |   |                                                 | 631,500   |   |   |   | 659,963 |   |   |   | 474,319 |   |   |   | 423,720 |   |   |   | 356,909 |   |
| Earning      assets                                      |   |                                                 | 727,316   |   |   |   | 739,334 |   |   |   | 550,466 |   |   |   | 503,275 |   |   |   | 425,062 |   |
| Assets                                                   |   |                                                 | 892,219   |   |   |   | 883,665 |   |   |   | 575,329 |   |   |   | 523,643 |   |   |   | 441,929 |   |
| Total      deposits                                      |   |                                                 | 761,693   |   |   |   | 706,377 |   |   |   | 462,813 |   |   |   | 429,049 |   |   |   | 338,398 |   |
| Shareholders’      equity                          |   |                                                 | 56,929    |   |   |   | 80,151 |   |   |   | 52,496 |   |   |   | 47,952 |   |   |   | 44,962 |   |
| Tangible      shareholders’ equity                 |   |                                                 | 52,052    |   |   |   | 50,718 |   |   |   | 52,496 |   |   |   | 47,952 |   |   |   | 44,962 |   |
| Common      shares outstanding                           |   |                                                 | 6,058,007 |   |   |   | 6,057,594 |   |   |   | 5,000,613 |   |   |   | 4,987,794 |   |   |   | 4,988,661 |   |
| Average      Balances:                                   |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans                                         |   |                                                 | 652,597   |   |   |   | 580,387 |   |   |   | 441,883 |   |   |   | 395,943 |   |   |   | 330,159 |   |
| Earning      assets                                      |   |                                                 | 803,578   |   |   |   | 683,998 |   |   |   | 522,703 |   |   |   | 473,480 |   |   |   | 404,121 |   |
| Assets                                                   |   |                                                 | 897,715   |   |   |   | 740,862 |   |   |   | 549,691 |   |   |   | 501,191 |   |   |   | 428,637 |   |
| Deposits                                                 |   |                                                 | 729,451   |   |   |   | 594,564 |   |   |   | 440,560 |   |   |   | 393,851 |   |   |   | 325,991 |   |
| Shareholders’      equity                          |   |                                                 | 77,745    |   |   |   | 69,412 |   |   |   | 50,358 |   |   |   | 46,857 |   |   |   | 43,742 |   |
| Tangible      shareholders’ equity                 |   |                                                 | 48,580    |   |   |   | 54,695 |   |   |   | 50,358 |   |   |   | 46,857 |   |   |   | 43,742 |   |
| Weighted      average shares outstanding                 |   |                                                 | 6,057,613 |   |   |   | 5,534,851 |   |   |   | 4,998,103 |   |   |   | 4,986,930 |   |   |   | 4,958,604 |   |
| Weighted      average diluted shares outstanding         |   |                                                 | 6,057,613 |   |   |   | 5,560,038 |   |   |   | 5,024,668 |   |   |   | 5,024,429 |   |   |   | 5,034,495 |   |
| Key      Performance Ratios:                             |   |                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return      on average assets                            |   |                                                 | (3.43     | )% |   |   | 0.41 | % |   |   | 1.51 | % |   |   | 1.41 | % |   |   | 1.41 | % |
| ROAA      exclusive of goodwill impairment               |   |                                                 | (0.74     | )% |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Return      on average equity                            |   |                                                 | (39.55    | )% |   |   | 4.37 | % |   |   | 16.54 | % |   |   | 15.08 | % |   |   | 13.86 | % |
| ROAE      exclusive of goodwill impairment               |   |                                                 | (8.52     | )% |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Return      on average tangible equity                   |   |                                                 | (63.30    | )% |   |   | 5.55 | % |   |   | 16.54 | % |   |   | 15.08 | % |   |   | 13.86 | % |
| ROATE      exclusive of goodwill impairment              |   |                                                 | (13.63    | )% |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Net      interest margin, taxable equivalent             |   |                                                 | 2.97      | % |   |   | 4.33 | % |   |   | 4.60 | % |   |   | 4.37 | % |   |   | 4.55 | % |
| Dividend      payout ratio                               |   | NM                                                   |      |   |   | 149.09 | % |   |   | 43.11 | % |   |   | 43.19 | % |   |   | 42.62 | % |
| Average      equity to average assets                    |   |                                                 | 8.66      | % |   |   | 9.37 | % |   |   | 9.16 | % |   |   | 9.35 | % |   |   | 10.20 | % |
| Average      loans to average deposits                   |   |                                                 | 89.46     | % |   |   | 97.62 | % |   |   | 100.30 | % |   |   | 100.53 | % |   |   | 101.28 | % |
| Overhead      ratio exclusive of goodwill impairment     |   |                                                 | 93.74     | % |   |   | 63.57 | % |   |   | 55.49 | % |   |   | 55.69 | % |   |   | 58.56 | % |

----

|   | ● | the      effect of changes in laws and regulations, including federal and state      banking laws and regulations, with which we must comply, and the      associated costs of compliance with such laws and regulations either      currently or in the future as applicable;                                                            |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect of changes in accounting policies, standards, guidelines or      principles, as may be adopted by the regulatory agencies as well as by the      Financial Accounting Standards Board;                                                                                                                                    |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect of changes in our organization, compensation and benefit      plans;                                                                                                                                                                                                                                                      |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect on our competitive position within our market area of the      increasing consolidation within the banking and financial services      industries, including the increased competition from larger regional and      out-of-state banking organizations as well as non-bank providers of      various financial services; |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect of changes in interest rates;                                                                                                                                                                                                                                                                                             |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect of compliance, or failure to comply within stated deadlines, of the      provisions of our formal agreement with our primary      regulators;                                                                                                                                                                             |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect of changes in the business cycle and downturns in local, regional      or national economies;                                                                                                                                                                                                                             |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect of the continuing deterioration of the local economies in which we      conduct operations which results in, among other things, a deterioration      in credit quality or a reduced demand for credit, including a resultant      adverse effect on our loan portfolio and allowance for loan and lease      losses;     |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      possibility that our allowance for loan and lease losses proves to be      inappropriate or that federal and state regulators who periodically review      our loan portfolio require us to increase the provision for loan losses or      recognize loan charge-offs;                                                           |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect of the current and anticipated deterioration in the housing market      and the residential construction industry which may lead to increased loss      severities and further worsening of delinquencies and non-performing      assets in our loan portfolios;                                                          |
|   |    |                                                                                                                                                                                                                                                                                                                                      |
|   | ● | the      effect of the significant number of construction loans we have in our loan      portfolios, which may pose more credit risk than other types of mortgage      loans typically made by banking institutions due to the disruptions in      credit and housing markets.                                                            |

----

|   | ● | the      effect of troubled institutions in our market area continuing to dispose      of problem assets which, given the already excess inventory of residential      homes and lots will continue to negatively impact home values and increase      the time it takes us or our borrowers to sell existing      inventory; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                          |
|   | ● | the      effect of public perception that banking institutions are risky      institutions for purposes of regulatory compliance or safeguarding      deposits which may cause depositors nonetheless to move their funds to      larger institutions; and                                                                    |
|   |    |                                                                                                                                                                                                                                                                                                                          |
|   | ● | the      possibility that we could be held responsible for environmental      liabilities of properties acquired through  foreclosure.                                                                                                                                                                                        |

----

----

----

| Table      1                                                                  |   |
|-------------------------------------------------------------------------------|--------|
| Average      Consolidated Balance Sheets and Net Interest Analysis            |   |
| (in      thousands)                                                           |   |
|                                                                          |   | For      the Years Ended December 31, |   |
|                                                                          |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                          |   | AverageBalance |   |   | Interest |   |   | Yield/Rate |   |   | AverageBalance |   |   | Interest |   |   | Yield/Rate |   |   | AverageBalance |   |   | Interest |   |   | Yield/Rate |   |
| Assets:                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      earnings assets:                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal      funds sold                                                       |   | $ | 24,877 |   |   |   | 366 |   |   |   | 1.47 | % |   | $ | 11,691 |   |   |   | 614 |   |   |   | 5.25 | % |   | $ | 12,133 |   |   |   | 641 |   |   |   | 5.28 | % |
| Investments:                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                       |   |   | 62,565 |   |   |   | 3,671 |   |   |   | 5.87 | % |   |   | 49,907 |   |   |   | 3,295 |   |   |   | 6.60 | % |   |   | 40,528 |   |   |   | 2,491 |   |   |   | 6.15 | % |
| Tax      exempt                                                               |   |   | 63,539 |   |   |   | 3,996 |   |   |   | 6.29 | % |   |   | 42,013 |   |   |   | 2,699 |   |   |   | 6.42 | % |   |   | 28,159 |   |   |   | 1,825 |   |   |   | 6.48 | % |
|         Total Investments and Federal Funds Sold                    |   |   | 150,981 |   |   |   | 8,033 |   |   |   | 5.32 | % |   |   | 103,611 |   |   |   | 6,608 |   |   |   | 6.38 | % |   |   | 80,820 |   |   |   | 4,957 |   |   |   | 6.13 | % |
| Loans      (including loan fees):                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Taxable                                                                 |   |   | 650,850 |   |   |   | 41,307 |   |   |   | 6.35 | % |   |   | 579,126 |   |   |   | 50,057 |   |   |   | 8.64 | % |   |   | 440,939 |   |   |   | 37,695 |   |   |   | 8.55 | % |
|  Tax      Exempt                                                         |   |   | 1,747 |   |   |   | 147 |   |   |   | 8.41 | % |   |   | 1,261 |   |   |   | 123 |   |   |   | 9.74 | % |   |   | 944 |   |   |   | 94 |   |   |   | 9.96 | % |
| Total      Loans                                                              |   |   | 652,597 |   |   |   | 41,454 |   |   |   | 6.35 | % |   |   | 580,387 |   |   |   | 50,180 |   |   |   | 8.65 | % |   |   | 441,883 |   |   |   | 37,789 |   |   |   | 8.55 | % |
| Total      interest earning assets                                            |   |   | 803,578 |   |   |   | 49,487 |   |   |   | 6.16 | % |   |   | 683,998 |   |   |   | 56,788 |   |   |   | 8.30 | % |   |   | 522,703 |   |   |   | 42,746 |   |   |   | 8.18 | % |
| Other      non-interest earnings assets                                       |   |   | 94,137 |   |   |   |   |   |   |   |   |   |   |   | 56,864 |   |   |   |   |   |   |   |   |   |   |   | 26,988 |   |   |   |   |   |   |   |   |   |
| Total      assets                                                             |   | $ | 897,715 |   |   |   |   |   |   |   |   |   |   | $ | 740,862 |   |   |   |   |   |   |   |   |   |   | $ | 549,691 |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      and shareholders’ equity:                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                                                                        |   | $ | 207,231 |   |   |   | 3,530 |   |   |   | 1.70 | % |   | $ | 172,706 |   |   |   | 6,259 |   |   |   | 3.62 | % |   | $ | 137,747 |   |   |   | 4,995 |   |   |   | 3.63 | % |
| Savings                                                                       |   |   | 25,329 |   |   |   | 96 |   |   |   | 0.38 | % |   |   | 20,631 |   |   |   | 242 |   |   |   | 1.17 | % |   |   | 16,908 |   |   |   | 185 |   |   |   | 1.09 | % |
| Time                                                                          |   |   | 424,315 |   |   |   | 19,088 |   |   |   | 4.50 | % |   |   | 337,058 |   |   |   | 17,373 |   |   |   | 5.15 | % |   |   | 232,143 |   |   |   | 10,776 |   |   |   | 4.64 | % |
| FHLB      advances & other borrowings                                     |   |   | 76,972 |   |   |   | 2,897 |   |   |   | 3.76 | % |   |   | 63,966 |   |   |   | 3,307 |   |   |   | 5.16 | % |   |   | 51,985 |   |   |   | 2,771 |   |   |   | 5.33 | % |
| Total      interest-bearing liabilities                                       |   |   | 733,847 |   |   |   | 25,611 |   |   |   | 3.49 | % |   |   | 594,361 |   |   |   | 27,181 |   |   |   | 4.57 | % |   |   | 438,783 |   |   |   | 18,727 |   |   |   | 4.27 | % |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing deposits                                            |   |   | 72,576 |   |   |   |   |   |   |   |   |   |   |   | 64,170 |   |   |   |   |   |   |   |   |   |   |   | 53,762 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                                        |   |   | 13,547 |   |   |   |   |   |   |   |   |   |   |   | 12,919 |   |   |   |   |   |   |   |   |   |   |   | 6,787 |   |   |   |   |   |   |   |   |   |
| Shareholders’      equity                                               |   |   | 77,745 |   |   |   |   |   |   |   |   |   |   |   | 69,412 |   |   |   |   |   |   |   |   |   |   |   | 50,359 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and Shareholders’      equity                    |   | $ | 897,715 |   |   |   |   |   |   |   |   |   |   | $ | 740,862 |   |   |   |   |   |   |   |   |   |   | $ | 549,691 |   |   |   |   |   |   |   |   |   |
| Excess      of interest-earning assets over interest-bearing      liabilities |   | $ | 89,637 |   |   |   |   |   |   |   |   |   |   | $ | 89,637 |   |   |   |   |   |   |   |   |   |   | $ | 83,920 |   |   |   |   |   |   |   |   |   |
| Ratio      of interest-earning assets to interest-bearing      liabilities    |   |   | 109.50 | % |   |   |   |   |   |   |   |   |   |   | 115.08 | % |   |   |   |   |   |   |   |   |   |   | 119.13 | % |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income tax equivalent                                       |   |   |   |   |   |   | 23,876 |   |   |   |   |   |   |   |   |   |   |   | 29,607 |   |   |   |   |   |   |   |   |   |   |   | 24,019 |   |   |   |   |   |
| Net      interest spread                                                      |   |   |   |   |   |   |   |   |   |   | 2.67 | % |   |   |   |   |   |   |   |   |   |   | 3.73 | % |   |   |   |   |   |   |   |   |   |   | 3.91 | % |
| Net      interest margin on interest earning assets                           |   |   |   |   |   |   |   |   |   |   | 2.97 | % |   |   |   |   |   |   |   |   |   |   | 4.33 | % |   |   |   |   |   |   |   |   |   |   | 4.60 | % |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax      Equivalent Adjustments:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments                                                                   |   |   |   |   |   |   | (1,325 | ) |   |   |   |   |   |   |   |   |   |   | (919 | ) |   |   |   |   |   |   |   |   |   |   | (621 | ) |   |   |   |   |
| Loans                                                                         |   |   |   |   |   |   | (49 | ) |   |   |   |   |   |   |   |   |   |   | (42 | ) |   |   |   |   |   |   |   |   |   |   | (32 | ) |   |   |   |   |
| Net      interest income                                                      |   |   |   |   |   | $ | 22,502 |   |   |   |   |   |   |   |   |   |   | $ | 28,647 |   |   |   |   |   |   |   |   |   |   | $ | 23,366 |   |   |   |   |   |

----

|                                            |   | Increase (decrease) due to changes      in: |   |
|-------------------------------------------------|--------|---------------------------------------------|--------|
|                                            |   | 2008 over 2007                              |   |   | 2007 over 2006 |   |
|                                            |   | Volume                                      |   |   | Rate |   |   | Total |   |   | Volume |   |   | Rate |   |   | Total |   |
| Interest      income on:                        |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal      funds sold                         |   | $                                           | 194    |   |   |   | (442 | ) |   |   | (248 | ) |   | $ | (23 | ) |   |   | (4 | ) |   |   | (27 | ) |
| Taxable      investments                        |   |                                        | 743    |   |   |   | (367 | ) |   |   | 376 |   |   |   | 619 |   |   |   | 186 |   |   |   | 805 |   |
| Non-taxable      investments                    |   |                                        | 1,354  |   |   |   | (56 | ) |   |   | 1,298 |   |   |   | 890 |   |   |   | (16 | ) |   |   | 874 |   |
| Taxable      loans                              |   |                                        | 4,552  |   |   |   | (13,303 | ) |   |   | (8,751 | ) |   |   | 11,983 |   |   |   | 379 |   |   |   | 12,362 |   |
| Non-taxable      loans                          |   |                                        | 40     |   |   |   | (17 | ) |   |   | 23 |   |   |   | 31 |   |   |   | (2 | ) |   |   | 29 |   |
|  Total      Interest Income                |   |                                        | 6,883  |   |   |   | (14,185 | ) |   |   | (7,302 | ) |   |   | 13,500 |   |   |   | 543 |   |   |   | 14,043 |   |
|                                            |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense on:                       |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                       |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                                          |   |                                        | 588    |   |   |   | (3,318 | ) |   |   | (2,730 | ) |   |   | 1,267 |   |   |   | (2 | ) |   |   | 1,265 |   |
| Savings                                         |   |                                        | 18     |   |   |   | (164 | ) |   |   | (146 | ) |   |   | 44 |   |   |   | 13 |   |   |   | 57 |   |
| Time                                            |   |                                        | 3,925  |   |   |   | (2,210 | ) |   |   | 1,715 |   |   |   | 5,408 |   |   |   | 1,189 |   |   |   | 6,597 |   |
| FHLB      advances & other borrowings       |   |                                        | 581    |   |   |   | (990 | ) |   |   | (409 | ) |   |   | 704 |   |   |   | (168 | ) |   |   | 536 |   |
| Total      Interest Expense                     |   |                                        | 5,112  |   |   |   | (6,682 | ) |   |   | (1,570 | ) |   |   | 7,423 |   |   |   | 1,032 |   |   |   | 8,455 |   |
| Increase      (decrease) in net interest income |   | $                                           | 1,771  |   |   |   | (7,503 | ) |   |   | (5,732 | ) |   | $ | 6,077 |   |   |   | (489 | ) |   |   | 5,588 |   |

----

----

----

----

----

----

----

----

----

| (in      thousands)                      |   |   |    |   |   |   |
|------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                     |   |   |    |   |   |   |
| Available for Sale                       |   | 2008   |    |   | 2007   |   |   | 2006 |   |
| US      Government sponsored enterprises |   | $      | — |   |   | $      | 2,030 |   |   | $ | 9,937 |   |
| State,      county and municipal         |   |   | 57,279  |   |   |   | 70,466 |   |   |   | 33,459 |   |
| Mortgage-backed      securities          |   |   | 33,175  |   |   |   | 45,573 |   |   |   | 15,818 |   |
| Corporate      bonds                     |   |   | 3,916   |   |   |   | 4,624 |   |   |   | 5,037 |   |
| Total available for      sale            |   | $      | 94,370  |   |   | $      | 122,693 |   |   | $ | 64,251 |   |
|                                     |   |   |    |   |   |   |   |   |   |   |   |   |
| Held to Maturity                         |   |   |    |   |   |   |   |   |   |   |   |   |
| Trust      Preferred Securities          |   | $      | 7,622   |   |   | $      | 7,902 |   |   | $ | 7,837 |   |

|        Maturities      at December 31,2008 |   | State,      County& Municipals |   |   | Wtd.      Avg. Yld. |   |   | Mortgage      Backed      Securities |   |   | Wtd.      Avg. Yld. |   |   | CorporateBonds |   |   | Wtd.      Avg.      Yld. |   |    | Trust      Preferred |   |   | Wtd.      Avg.      Yld. |   |
|-------------------------------------------------|--------|------------------------------------|--------|--------|--------------------------|--------|--------|--------------------------------------|--------|--------|--------------------------|--------|--------|----------------|--------|--------|--------------------------|--------|---------|----------------------|--------|--------|--------------------------|--------|
| Within      1 year                              |   | $                                  | 350    |   |                     |   | 4.15   | %                                    |   | $      | 2,924                    |   |   |           | 4.68   | %      |                     | $      | — |                 |   |   | —                  | %      |   | $ | — |   |   |   | — | % |
| After      1 through 5 years                    |   |                               | 2,599  |   |                     |   | 6.01   | %                                    |   |   | 11,603                   |   |   |           | 4.90   | %      |                     |   | 3,786   |                 |   |   | 5.54                     | %      |   |   | — |   |   |   | — | % |
| After      5 through 10 years                   |   |                               | 12,040 |   |                     |   | 6.64   | %                                    |   |   | 13,993                   |   |   |           | 5.82   | %      |                     |   | — |                 |   |   | —                  | %      |   |   | — |   |   |   | — | % |
| After      10 years                             |   |                               | 44,342 |   |                     |   | 6.40   | %                                    |   |   | 4,068                    |   |   |           | 5.58   | %      |                     |   | 557     |                 |   |   | —                  | %      |   |   | 7,622 |   |   |   | 5.42 | % |
| Total                                           |   | $                                  | 59,331 |   |                     |   | 6.42   | %                                    |   | $      | 32,588                   |   |   |           | 5.36   | %      |                     | $      | 4,343   |                 |   |   | 4.83                     | %      |   | $ | 7,622 |   |   |   | 5.42 | % |
| Fair      Value                                 |   | $                                  | 57,279 |   |                     |   |   |                                 |   | $      | 33,175                   |   |   |           |   |   |                     | $      | 3,916   |                 |   |   |                     |   |   | $ | 2,853 |   |   |   |   |   |

----

| Table      5                                                                                           |   |         |    |   |   |   |    |   |   |   |    |   |   |   |    |
|--------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
| Loan      Portfolio                                                                                    |   |         |    |   |   |   |    |   |   |   |    |   |   |   |    |
| (in      thousands)                                                                                    |   | December 31, |    |
|                                                                                                   |   |         |    |   |   |   |    |   |   |   |    |   |   |   |    |
|                                                                                                   |   | 2008         |    |   | 2007   |   |    | 2006   |   |   | 2005    |   |   | 2004   |    |
|                                                                                                   |   |         |    |   |   |   |    |   |   |   |    |   |   |   |    |
| Commercial,      financial & agricultural                                                          |   | $            | 64,434  |   |   | $      | 61,540  |   |   | $      | 52,334  |   |   | $      | 51,555  |   |   | $ | 50,528 |   |
| Real      estate – construction                                                                  |   |         | 182,878 |   |   |   | 242,216 |   |   |   | 175,024 |   |   |   | 153,511 |   |   |   | 114,657 |   |
| Real      estate – mortgage                                                                      |   |         | 349,612 |   |   |   | 315,335 |   |   |   | 219,563 |   |   |   | 196,383 |   |   |   | 173,110 |   |
| Consumer                                                                                               |   |         | 34,576  |   |   |   | 40,873  |   |   |   | 27,398  |   |   |   | 22,271  |   |   |   | 18,614 |   |
|                                                                                                   |   |         | 631,500 |   |   |   | 659,964 |   |   |   | 474,319 |   |   |   | 423,720 |   |   |   | 356,909 |   |
| Less:           Unearned      interest and fees |   |         | (1,338  | )      |   |   | (1,803  | )      |   |   | (818    | )      |   |   | (841    | ) |   |   | (581 | ) |
|     Allowance for      loan losses                                                      |   |         | (11,240 | )      |   |   | (12,422 | )      |   |   | (5,748  | )      |   |   | (5,327  | ) |   |   | (4,080 | ) |
|   Loans, net                                                                                      |   | $            | 618,922 |   |   | $      | 645,739 |   |   | $      | 467,753 |   |   | $      | 417,552 |   |   | $ | 352,248 |   |

----

|                                          |   | OneYearOr Less |    |   | Wtd.Avg.Yld. |   |   | OverOne      toFiveYears |   |   | Wtd.Avg.Yld. |   |   | OverFiveYears |   |   | Wtd.Avg.Yld. |   |   | Total  |   |   | Wtd.Avg.Yld. |   |
|-----------------------------------------------|--------|----------------|---------|--------|--------------|--------|--------|--------------------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------------|--------|--------|--------|--------|--------|--------------|--------|
| Commercial,      financial & agricultural | $      | 44,448         |    |   |         | 5.20   | %      |                     | $      | 16,215 |         |   |   | 5.69          | %      |   | $            | 3,771  |   |   |   | 6.41   | %            |   | $ | 64,434 |   |   |   | 5.39 | % |
| Real      estate – construction         |   |           | 169,165 |   |         |   | 2.54   | %                        |   |   | 12,988       |   |   |          | 5.90   | %      |         |   | 725    |   |   |   | 7.32         | %      |   |   | 182,878 |   |   |   | 2.80 | % |
| Real      estate – mortgage             |   |           | 81,237  |   |         |   | 5.77   | %                        |   |   | 215,188      |   |   |          | 6.66   | %      |         |   | 53,187 |   |   |   | 6.10         | %      |   |   | 349,612 |   |   |   | 6.37 | % |
| Consumer                                      |   |           | 16,943  |   |         |   | 8.97   | %                        |   |   | 17,412       |   |   |          | 8.63   | %      |         |   | 221    |   |   |   | 6.88         | %      |   |   | 34,576 |   |   |   | 8.79 | % |
|                                          |   |           |    |   |         |   |   |                     |   |   |         |   |   |          |   |   |         |   |   |   |   |   |         |   |   |   |   |   |   |   |   |   |
| Total                                         |   | $              | 311,793 |   |         |   | 4.11   | %                        |   | $      | 261,803      |   |   |          | 6.69   | %      |         | $      | 57,904 |   |   |   | 6.14         | %      |   | $ | 631,500 |   |   |   | 5.37 | % |

|                                        |   | VariableInterestRates |    |   | WtdAvgYld |   |   | FixedInterestRates |   |   | WtdAvgYld |   |
|---------------------------------------------|--------|-----------------------|---------|--------|-----------|--------|--------|--------------------|--------|--------|-----------|--------|
| Commercial,      financial and agricultural |   | $                     | 23,747  |   |      |   | 3.65   | %                  |   | $      | 40,686    |   |   |   | 6.41 | % |
| Real      estate – construction       |   |                  | 109,518 |   |      |   | 2.26   | %                  |   |   | 73,360    |   |   |   | 3.59 | % |
| Real      estate – mortgage           |   |                  | 132,506 |   |      |   | 4.75   | %                  |   |   | 217,107   |   |   |   | 7.35 | % |
| Consumer                                    |   |                  | 1,558   |   |      |   | 6.29   | %                  |   |   | 33,018    |   |   |   | 8.90 | % |
|                                        |   |                  |    |   |      |   |   |               |   |   |      |   |   |   |   |   |
| Total                                       |   | $                     | 267,329 |   |      |   | 3.64   | %                  |   | $      | 364,171   |   |   |   | 7.83 | % |

----

| Table      7                   |
|--------------------------------|
| Allowance      for Loan Losses |
| (in      thousands)            |

|                                                |   | December      31, |    |
|-----------------------------------------------------|--------|-------------------|---------|
|                                                |   | 2008              |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Balance      at beginning of year                   |   | $                 | 12,422  |   |   | $ | 5,748 |   |   | $ | 5,327 |   |   | $ | 4,080 |   |   | $ | 3,479 |   |
| Charge-offs:                                        |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and      agricultural         |   |              | 440     |   |   |   | 146 |   |   |   | 47 |   |   |   | 24 |   |   |   | 59 |   |
| Real estate –      construction               |   |              | 14,453  |   |   |   | 3,930 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Real estate –    mortgage                     |   |              | 1,035   |   |   |   | 772 |   |   |   | 910 |   |   |   | 235 |   |   |   | 215 |   |
| Consumer loans                                      |   |              | 502     |   |   |   | 395 |   |   |   | 155 |   |   |   | 129 |   |   |   | 123 |   |
| Total charge-offs                                   |   |              | 16,430  |   |   |   | 5,243 |   |   |   | 1,112 |   |   |   | 388 |   |   |   | 397 |   |
| Recoveries:                                         |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and      agricultural         |   |              | 3       |   |   |   | 7 |   |   |   | 11 |   |   |   | 16 |   |   |   | 16 |   |
| Real estate –      construction               |   |              | 203     |   |   |   | 25 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Real estate –    mortgage                     |   |              | 12      |   |   |   | 74 |   |   |   | — |   |   |   | 18 |   |   |   | 13 |   |
| Consumer loans                                      |   |              | 130     |   |   |   | 78 |   |   |   | 57 |   |   |   | 51 |   |   |   | 44 |   |
| Total recoveries                                    |   |              | 348     |   |   |   | 184 |   |   |   | 68 |   |   |   | 85 |   |   |   | 73 |   |
| Net      (charge-offs) recoveries                   |   |              | (16,082 | ) |   |   | (5,059 | ) |   |   | (1,044 | ) |   |   | (303 | ) |   |   | (324 | ) |
| Allowance      attributable to First Haralson loans |   |              | — |   |   |   | 1,527 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Provision      for loan losses                      |   |              | 14,900  |   |   |   | 10,206 |   |   |   | 1,465 |   |   |   | 1,550 |   |   |   | 925 |   |
|                                                |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                         |   | $                 | 11,240  |   |   | $ | 12,422 |   |   | $ | 5,748 |   |   | $ | 5,327 |   |   | $ | 4,080 |   |
|                                                |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of net charge-offs during the            |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period to average loans      outstanding            |   |              | 2.46    | % |   |   | .87 | % |   |   | .24 | % |   |   | .08 | % |   |   | .10 | % |
|                                                |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of allowance to total loans              |   |              | 1.78    | % |   |   | 1.88 | % |   |   | 1.21 | % |   |   | 1.26 | % |   |   | 1.14 | % |

----

| Table      8Non-Performing      Assets(in      thousands) |   |                   |    |
|-----------------------------------------------------------|--------|-------------------|---------|
|                                                      |   | December      31, |    |
|                                                      |   | 2008              |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Foreclosed      property                                  |   | $                 | 45,798  |   |   | $ | 10,313 |   |   | $ | 1,318 |   |   | $ | 567 |   |   | $ | 686 |   |
| Non-accrual      loans                                    |   |              | 71,600  |   |   |   | 46,352 |   |   |   | 1,212 |   |   |   | 2,382 |   |   |   | 536 |   |
| Loans      90 days past due still accruing                |   |              | 4,597   |   |   |   | 1,204 |   |   |   | 1,781 |   |   |   | 673 |   |   |   | 567 |   |
| Total                                                     |   | $                 | 121,995 |   |   | $ | 57,869 |   |   | $ | 4,311 |   |   | $ | 3,622 |   |   | $ | 1,789 |   |
|                                                      |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing      assets as % of total loans            |   |              | 19.32   | % |   |   | 8.77 | % |   |   | .91 | % |   |   | .85 | % |   |   | .50 | % |

----

|                           |   |   |    |
|--------------------------------|--------|--------|---------|
| Within      3 months           |   | $      | 30,347  |   |
| After      3 through 6 months  |   |   | 52,180  |   |
| After      6 through 12 months |   |   | 48,273  |   |
| After      12 months           |   |   | 129,244 |   |
| Total                          |   | $      | 260,044 |   |

----

----

| Table      10Capital      Ratio |
|---------------------------------|
|                            |   |   | Actual      as of December 31, 2008 |   |
|                            | Tier      1 Capital (to risk weighted assets) |   |   | 9 | % |
|                            | Tier      1 Capital minimum requirement |   |   | 4 | % |
|                            |   |   |   |   |   |
|                            | Excess |   |   | 5 | % |
|                            |   |   |   |   |   |
|                            | Total      Capital (to risk weighted assets) |   |   | 11 | % |
|                            | Total      Capital minimum requirement |   |   | 8 | % |
|                            | Excess |   |   | 3 | % |
|                            |   |   |   |   |   |
| Leverage      Ratio             |   |   |   |   |
|                            |   |   |   |   |   |
|                            |   |   | Actual      as of December 31, 2008 |   |
|                            | Tier      1 Capital to average assets |   |   |   |   |
|                            | (“Leverage      Ratio”) |   |   | 7 | % |
|                            | Minimum      leverage requirement |   |   | 4 | % |
|                            |   |   |   |   |   |
|                            | Excess |   |   | 3 | % |

|  Obligation                      |   | Total  |    |   | Less      than 1 year |   |    | 1-3 years |   |   | 3-5 years |   |   | More      than 5 years |    |
|---------------------------------------|--------|--------|---------|--------|-----------------------|--------|---------|-----------|--------|--------|-----------|--------|--------|------------------------|---------|
|                                  |   |   |    |   |                  |   |    |      |   |   |      |   |   |                   |    |   |   |   |   |   |
| Deposits      without stated maturity |   | $      | 279,192 |   |                  | $      | 279,192 |      |   | $      | —   |   |   | $                      | — |   |   | $ | — |   |
| Certificates      of deposit          |   |   | 482,502 |   |                  |   | 270,391 |      |   |   | 177,513   |   |   |                   | 33,588  |   |   |   | 1,010 |   |
| FHLB      advances                    |   |   | 52,000  |   |                  |   | — |      |   |   | 12,000    |   |   |                   | 30,000  |   |   |   | 10,000 |   |
| Junior      subordinated debentures   |   |   | 10,825  |   |                  |   | — |      |   |   | —   |   |   |                   | — |   |   |   | 10,825 |   |
| Total                                 |   | $      | 824,519 |   |                  | $      | 549,583 |      |   | $      | 189,513   |   |   | $                      | 63,588  |   |   | $ | 21,835 |   |

----

----

|                                                                                       |   | At      December 31, 2008Maturing or Repricing in |     |
|--------------------------------------------------------------------------------------------|--------|---------------------------------------------------|----------|
|                                                                                       |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |   | One      Yearor Less                              |     |   | Over      1Year      Thru2 Years |   |   | Over      2Years      Thru5 Years |   |   | Over      5 Years |   |   | Total |   |
| Interest-earning      assets:                                                              |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      deposits with                                                        |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      banks                                                                           |   | $                                                 | 12,575   |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 12,575 |   |
| Federal      funds sold                                                                    |   |                                              | 45,839   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 45,839 |   |
| Securities      (at cost)                                                                  |   |                                              | 3,274    |   |   |   | 3,531 |   |   |   | 14,456 |   |   |   | 82,623 |   |   |   | 103,884 |   |
| Loans                                                                                      |   |                                              | 311,792  |   |   |   | 185,474 |   |   |   | 76,330 |   |   |   | 57,904 |   |   |   | 631,500 |   |
| Total      interest-earning assets                                                         |   |                                              | 373,480  |   |   |   | 189,005 |   |   |   | 90,786 |   |   |   | 140,527 |   |   |   | 793,798 |   |
|                                                                                       |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                         |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                  |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                                                                                     |   |                                              | 194,241  |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 194,241 |   |
| Savings                                                                                    |   |                                              | 18,654   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 18,654 |   |
| Time      deposits                                                                         |   |                                              | 270,391  |   |   |   | 177,513 |   |   |   | 33,588 |   |   |   | 1,010 |   |   |   | 482,502 |   |
| FHLB      advances                                                                         |   |                                              | —  |   |   |   | 12,000 |   |   |   | 30,000 |   |   |   | 10,000 |   |   |   | 52,000 |   |
| Junior      subordinated debenture                                                         |   |                                              | —  |   |   |   | — |   |   |   | — |   |   |   | 10,825 |   |   |   | 10,825 |   |
| Total      interest-bearing liabilities                                                    |   |                                              | 483,286  |   |   |   | 189,513 |   |   |   | 63,588 |   |   |   | 21,835 |   |   |   | 758,222 |   |
| Excess      (deficiency) of interest-earning assets over interest-bearing      liabilities |   |                                              | (109,806 | ) |   |   | (508 | ) |   |   | 27,198 |   |   |   |  118,692 |   |   | $ | 35,576 |   |
| Cumulative      interest sensitivity                                                       |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Difference                                                                                 |   | $                                                 | (109,806 | ) |   | $ | (110,314 | ) |   | $ | (83,116 | ) |   | $ | 35,576 |   |   |   |   |   |
| Cumulative      difference to total                                                        |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest      earning assets                                                               |   |                                              | (13.83   | )% |   |   | (13.90 | )% |   |   | (10.47 | )% |   |   | 4.48 | % |   |   |   |   |

----

|                                                            |   |   |      |   | 2008   |   |      | Quarters |   |   |      |   |   |   |      |   | 2007   |   |      | Quarters |   |   |      |   |
|-----------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|----------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|----------|--------|--------|-----------|--------|
|                                                            |   |   |      |   |   |   |      |     |   |   |      |   |   |   |      |   |   |   |      |     |   |   |      |   |
|                                                            |   | First  |      |   | Second |   |      | Third    |   |   | Fourth    |   |   | First  |      |   | Second |   |      | Third    |   |   | Fourth    |   |
|                                                            |   |   |      |   |   |   |      |     |   |   |      |   |   |   |      |   |   |   |      |     |   |   |      |   |
| Interest      income                                            |   | $      | 14,131    |   |   |   | 11,633    |     |   |   | 11,802    |   |   |   | 10,547    |   |   | $      | 11,892    |     |   |   | 12,324    |   |   |   | 16,388 |   |   |   | 15,224 |   |
| Net      interest income                                        |   |   | 7,312     |   |   |   | 5,352     |     |   |   | 5,476     |   |   |   | 4,362     |   |   |   | 6,272     |     |   |   | 6,598     |   |   |   | 8,546 |   |   |   | 7,231 |   |
| Provision      for loan losses                                  |   |   | 750       |   |   |   | 8,100     |     |   |   | 1,400     |   |   |   | 4,650     |   |   |   | 375       |     |   |   | 375       |   |   |   | 750 |   |   |   | 8,706 |   |
| Earnings      (loss) before income taxes                        |   |   | 2,416     |   |   |   | (7,160    | )        |   |   | (1,797    | )      |   |   | (30,602   | )      |   |   | 2,934     |     |   |   | 3,304     |   |   |   | 3,445 |   |   |   | (6,515 | ) |
| Net      (loss) earnings                                        |   |   | 1,831     |   |   |   | (4,294    | )        |   |   | (855      | )      |   |   | (27,432   | )      |   |   | 1,980     |     |   |   | 2,254     |   |   |   | 2,330 |   |   |   | (3,530 | ) |
| Earnings      per share – basic                           |   |   | 0.30      |   |   |   | (0.71     | )        |   |   | (0.14     | )      |   |   | (4.57     | )      |   |   | 0.40      |     |   |   | 0.45      |   |   |   | 0.38 |   |   |   | (0.68 | ) |
| Earnings      per share – diluted                         |   |   | 0.30      |   |   |   | (0.71     | )        |   |   | (0.14     | )      |   |   | (4.57     | )      |   |   | 0.39      |     |   |   | 0.45      |   |   |   | 0.38 |   |   |   | (0.68 | ) |
| Weighted      average common shares outstanding – basic   |   |   | 6,057,594 |   |   |   | 6,057,594 |     |   |   | 6,057,594 |   |   |   | 6.057,670 |   |   |   | 5,001,286 |     |   |   | 5,003,790 |   |   |   | 6,058,939 |   |   |   | 6.057,594 |   |
| Weighted      average common shares outstanding – diluted |   |   | 6,061,161 |   |   |   | 6,057,594 |     |   |   | 6,057,594 |   |   |   | 6,057,670 |   |   |   | 5,041,575 |     |   |   | 5,045,067 |   |   |   | 6,077,268 |   |   |   | 6,057,594 |   |

----

----

| Plan      Category                                              | Number      of securities to be      issued upon exercise of      outstanding options, warrants      and rights  (a) | Weighted-average      exercise price      of outstanding options,      warrants and rights  (b) | Number      of securities remaining available      for future issuance under      equity compensation plans (excluding      securities reflected in column      (a)) (c) |
|-----------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity      compensation plans approved by security holders     |  238,916                                                                                                                  |  $21.08                                                                                              |  812,317*                                                                                                                                                                |
| Equity      compensation plans not approved by security holders | N/A                                                                                                                            | N/A                                                                                                       | N/A                                                                                                                                                                           |
| Total                                                           | 238,916                                                                                                                        | $21.08                                                                                                    | 812,317*                                                                                                                                                                      |

| (a)(1) | Financial      Statements                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                         |   |
|   | The      following financial statements are filed with this  Report:                                                                                                                                         |
|   |                                                                                                                                                                                                         |   |
|   |                                                                                                                                                                                                         | Report      of Independent Registered Public Accounting Firm |
|   |                                                                                                                                                                                                         |   |
|   |                                                                                                                                                                                                         | Consolidated      Balance Sheets as of December 31, 2008 and 2007 |
|   |                                                                                                                                                                                                         |   |
|   |                                                                                                                                                                                                         | Consolidated      Statements of Operations for the Years Ended December 31, 2008, 2007 and      2006 |
|   |                                                                                                                                                                                                         |   |
|   |                                                                                                                                                                                                         | Consolidated      Statements of Comprehensive Income (Loss) for the Years Ended December 31,      2008, 2007 and 2006 |
|   |                                                                                                                                                                                                         |   |
|   |                                                                                                                                                                                                         | Consolidated      Statements of Changes in Shareholders’ Equity for the Years Ended December      31, 2008, 2007 and 2006 |
|   |                                                                                                                                                                                                         |   |
|   |                                                                                                                                                                                                         | Consolidated      Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and      2006 |
|   |                                                                                                                                                                                                         |   |
|   |                                                                                                                                                                                                         | Notes      to Consolidated Financial Statements |
|   |                                                                                                                                                                                                         |   |
| (2)    | Financial      Statement Schedules                                                                                                                                                                           |
|   |                                                                                                                                                                                                         |
|   | Financial      statement schedules have been omitted because they are not applicable or      the required information has been incorporated in the consolidated      financial statements and related notes. |
|   |                                                                                                                                                                                                         |   |
| (3)    | The      following exhibits are filed with this Report:                                                                                                                                                      |
|   |                                                                                                                                                                                                         |   |
| 3.1    |                                                                                                                                                                                                         | Amended      and Restated Articles of Incorporation (Incorporated by reference to      Exhibit 3.1 to the Company’s Registration Statement on Form 10-SB filed      June 14, 2000 (the “Form 10-SB”)) |

----

| 3.2    |   | Articles      of Amendment to Amended and Restated Articles of Incorporation      (Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K      filed June 19, 2008)                                                                                                                    |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                   |
| 3.3    |   | Second      Articles of Amendment to Amended and Restated Articles of Incorporation      (Regarding Designations, Preferences and Rights of Series A Convertible      Preferred Stock) (Incorporated by reference to Exhibit 3.1 to Current      Report on Form 8-K filed June 26, 2008)               |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 3.4    |   | Third      Articles of Amendment to Amended and Restated Articles of Incorporation      (Regarding restatement of Designations, Preferences and Rights of Series A      Convertible Preferred Stock) (Incorporated by reference to Exhibit 3.1 to      Current Report on Form 8-K filed July 22, 2008) |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 3.5    |   | Amended      and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the Form      10-SB)                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 4.1    |   | See      exhibits 3.1 through 3.5 for provisions of Company’s Articles of      Incorporation and Bylaws Defining the Rights of    Shareholders                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 4.2    |   | Specimen      certificate representing shares of Common Stock (Incorporated by reference      to Exhibit 4.2 to the Form 10-SB)                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 4.3    |   | Specimen      certificate representing shares of Series A Convertible Preferred Stock      (Incoprorated by reference to Exhibit 4.3 to Registration Statement on      Form S-1 (Registration No. 333-151820) filed June 20,  2008)                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 4.4    |   | Amended      and Restated Trust Agreement dated July 2, 2007 (Incorporated by reference      to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed July 6,      2007 (the “July 2007 Form 8-K”)                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 4.5    |   | Indenture,      dated July 2, 2007, by and between WGNB Corp. and Wilmington Trust Company      (Incorporated by reference to Exhibit 4.2 to the July 2007 Form      8-K)                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 4.6    |   | Guarantee      Agreement, dated July 2, 2007, by and between WGNB Corp. and Wilmington      Trust Company (Incorporated by reference to Exhibit 4.3 to the July 2007      Form 8-K)                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 4.7    |   | WGNB      Corp. Direct Stock Purchase and Dividend Reinvestment Plan (Incorporated      by reference to Form S-3 filed May 20, 2008 as amended November 6,      2008)                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 10.1*  |   | Employment      Agreement dated as of July 11, 2006 between H.B. Lipham, III, WGNB Corp.      and West Georgia National Bank (Incorporated by reference to Exhibit 10.1      to the Company’s Current Report on Form 8-K dated July 11,      2006)                                               |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 10.2*  |   | Bonus      and Stock Option Agreement dated as of September 23, 1998 between the      Company and H.B. Lipham, III (Incorporated by reference to Exhibit 10.6 to      the Form 10-SB)                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 10.3*  |   | Bonus      and Stock Option Agreement dated as of September 23, 1998 between the      Company and W. Galen Hobbs, Jr. (Incorporated by reference to Exhibit      10.7 to the Form 10-SB)                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 10.4*  |   | Bonus      and Stock Option Agreement dated as of September 23, 1998 between the      Company and Steven J. Haack (Incorporated by reference to Exhibit 10.8 to      the Form 10-SB)                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 10.5*  |   | Form      of Election for Payment of Director Meeting Fees (Incorporated by      reference to Exhibit 10.10 to the Form 10-SB)                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 10.6*  |   | Employment      Agreement dated August 8, 2005 among WGNB Corp., West Georgia National      Bank and Steven J. Haack (Incorporated by reference to Exhibit 10.1 to the      Company’s Current Report on Form 8-K dated August 8,  2005)                                                          |
|   |   |                                                                                                                                                                                                                                                                                                   |
| 10.7*  |   | Employment      Agreement dated July 11, 2005 between West Georgia National Bank and W.      Galen Hobbs, Jr. (Incorporated by reference to Exhibit 10.1 to the      Company’s Current Report on Form 8-K dated July 11,  2005)                                                                  |

----

| 10.8*  |   | Second      Amendment to Bonus and Stock Option Agreement dated June 17, 2002 between      the Company and H.B. Lipham, III (Incorporated by reference to Exhibit      10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended      June 30, 2002 (the “6/30/02 Form 10-Q)    |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.9*  |   | Incentive      Stock Option Agreement dated March 12, 2002 between the Company and H.B.      Lipham, III (Incorporated by reference to Exhibit 10.8 to the 6/30/02 Form      10-Q)                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.10* |   | Amendment      to Bonus and Stock Option Agreement dated May 30, 2002 between the Company      and W. Galen Hobbs, Jr. (Incorporated by reference to Exhibit 10.10 to the      6/30/02 Form 10-Q)                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.11* |   | Incentive      Stock Option Agreement dated March 12, 2002 between the Company and W.      Galen Hobbs, Jr. (Incorporated by reference to Exhibit 10.11 to the      6/30/02 Form 10-Q)                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.12* |   | Amendment      to Bonus and Stock Option Agreement dated April 26, 2002 between the      Company and Steven J. Haack (Incorporated by reference to Exhibit 10.13 to      the 6/30/02 Form 10-Q)                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.13* |   | Incentive      Stock Option Agreement dated March 12, 2002 between the Company and Steven      J. Haack (Incorporated by reference to Exhibit 10.14 to the 6/30/02 Form      10-Q)                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.14* |   | 2003      Stock Incentive Plan (Incorporated by reference to Appendix A to the      Company’s Definitive Proxy Statement for its 2004 Annual      Meeting)                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.15* |   | Employment      Agreement dated December 31, 2002 between the Company and William R.      Whitaker (Incorporated by reference to Exhibit 10.31 to the Company Annual      Report on Form 10-K for year ended December 31, 2004 (the “2004 Form      10-K”))                                     |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.16* |   | Bonus      and Stock Option Agreement dated December 27, 2004 between the Company and      William R. Whitaker (Incorporated by reference to Exhibit 10.32 to the      2004 Form 10-K)                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.17* |   | Separations      Agreement and Release dated February 14, 2006 between the Company, the      Bank and L. Leighton Alston (Incorporated by reference to Exhibit 10.23 to      the Company’s Annual Report on Form 10-K for the year ended December 31,      2005)                                      |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.18* |   | Employment      Agreement, dated July 1, 2007 among WGNB Corp. West Georgia National Bank      and Randall F. Eaves (Incorporated by reference to Exhibit 10.1 to the      July 2007 Form 8-K)                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.19* |   | Employment      Agreement, dated July 1, 2007 among WGNB Corp. West Georgia National Bank      and Mary Covington (Incorporated by reference to Exhibit 10.2 to the July      2007 Form 8-K)                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.20* |   | Employment      Agreement dated January 2, 2007 between Robert M. Gordy, Jr. and West      Georgia National Bank (Incorporated by reference to Exhibit 10.1 to the      Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,      2007)                                            |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.21* |   | First      Amendment to Employment Agreement among H.B. Lipham, WGNB Corp. and First      National Bank of Georgia dated December 31, 2008 (Incorporated by      reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K      dated December 31, 2008 (the “12/31/08 8-K”)) |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.22* |   | First      Amendment to Employment Agreement among Randall F. Eaves, WGNB Corp. and      First National Bank of Georgia dated December 30, 2008 (Incorporated by      reference to Exhibit 10.2 to the 12/31/08 8-K)                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.23* |   | First      Amendment to Employment Agreement among Steven J. Haack, WGNB Corp. and      First National Bank of Georgia dated December 31, 2008 (Incorporated by      reference to Exhibit 10.3 to the 12/31/08 8-K)                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                        |
| 10.24* |   | First      Amendment to Employment Agreement among Mary M. Covington, WGNB Corp. and      First National Bank of Georgia dated December 31, 2008 (Incorporated by      reference to Exhibit 10.4 to the 12/31/088-K)                                                                                        |

----

| 10.25* |   | First      Amendment to Employment Agreement between W. Galen Hobbs, Jr., and First      National Bank of Georgia dated December 31, 2008 (Incorporated by      reference to Exhibit 10.5 to the 12/31/08 8-K)                                                             |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                       |
| 10.26* |   | First      Amendment to Employment Agreement between Robert M. Gordy, Jr. and First      National Bank of Georgia dated December 31, 2008 (Incorporated by      reference to Exhibit 10.6 to the 12/31/08 8-K)                                                             |
|   |   |                                                                                                                                                                                                                                                                       |
| 10.27  |   | Agreement      between First National Bank of Georgia and The Comptroller of the Currency      dated November 12, 2008 (Incorporated by reference to Exhibit 10.1 to the      Company’s Quarterly Report on Form 10-Q for the quarter ended September      30, 2008) |
|   |   |                                                                                                                                                                                                                                                                       |
| 21     |   | Subsidiary      of WGNB Corp.                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                       |
| 23     |   | Consent      of Porter, Keadle, Moore LLP                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                       |
| 31.1   |   | Certification      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                       |
| 31.2   |   | Certification      of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley      Act of 2002                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                       |
| 32.1   |   | Certification      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley      Act of 2002                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                       |
| 32.2   |   | Certification      of Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley      Act of 2002                                                                                                                                                               |

|   |                                                                     |
|--------|--------------------------------------------------------------------------|
| *      | Indicates      management contract or compensatory plan or  arrangement. |

----

|   | WGNB      CORP. |
|--------|-----------------|
|   |            |
|   | By:             | /s/      H.B. Lipham, III |   |
|   |            | H.B.      Lipham, III, Chief Executive Officer |

|                                                          |   |
|---------------------------------------------------------------|--------|
| /s/      H.B. Lipham, III                                     |   | Date:      March 10, 2009 |
| H.B.      Lipham, III, Chief Executive Officer and Director   |   |
| [Principal      Executive Officer]                            |   |
|                                                          |   |
| /s/      Steven J. Haack                                      |   | Date:      March 10, 2009 |
| Steven      J. Haack, Secretary and Treasurer                 |   |
|  [Principal      Financial and Accounting Officer]       |   |
|                                                          |   |
| /s/      W.T. Green                                           |   | Date:      March 10, 2009 |
| W.      T. Green, Chairman of the Board                       |   |
|                                                          |   |
| /s/      Wanda W. Calhoun                                     |   | Date:      March 10, 2009 |
| Wanda      W. Calhoun, Director                               |   |
|                                                          |   |
| /s/      Grady W. Cole                                        |   | Date:      March 10, 2009 |
| Grady      W. Cole, Director                                  |   |
|                                                          |   |
| /s/      Mary C. Covington                                    |   | Date:      March 10, 2009 |
| Mary      C. Covington, Executive Vice President and Director |   |
|                                                          |   |
| /s/      Randall F. Easves                                    |   | Date:      March 10, 2009 |
| Randall      F. Eaves, President and Director                 |   |
|                                                          |   |
| /s/      Loy M. Howard                                        |   | Date:      March 10, 2009 |
| Loy      M. Howard, Director                                  |   |
|                                                          |   |
| /s/      R. David Perry                                       |   | Date:      March 10, 2009 |
| R.      David Perry, Director                                 |   |
|                                                          |   |
| /s/      L. Richard Plunkett                                  |   | Date:      March 10, 2009 |
| L.      Richard Plunkett, Director                            |   |
|                                                          |   |
| /s/      Donald C. Rhodes                                     |   | Date:      March 10, 2009 |
| Donald      C. Rhodes, Director                               |   |
|                                                          |   |
| /s/      Thomas T. Richards                                   |   | Date:      March 10, 2009 |
| Thomas      T. Richards, Director                             |   |
|                                                          |   |
|                                                          |   | Date:      March __, 2009 |
| William      W. Stone, Director                               |   |
|                                                          |   |
| /s/      J. Thomas Vance                                      |   | Date:      March 10, 2009 |
| J.      Thomas Vance, Director                                |   |
|                                                          |   |
| /s/      Gelon E. Wasdin                                      |   | Date:      March 10, 2009 |
| Gelon      E. Wasdin, Director                                |   |

----

----

----

|                                                                                       |   | 2008   |        |   | 2007   |   |
|--------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Cash      and due from banks, including reserve requirements                               |   |   |        |   |   |   |
| of      $148,000 and $405,000, respectively                                                |   | $      | 16,936,965  |   |   |   | 6,004,621 |   |
| Interest-bearing      funds in other banks                                                 |   |   | 12,574,624  |   |   |   | 1,463,719 |   |
| Federal      funds sold                                                                    |   |   | 45,839,396  |   |   |   | 18,377,000 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Cash      and cash equivalents                                                             |   |   | 75,350,985  |   |   |   | 25,845,340 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Securities      available-for-sale                                                         |   |   | 94,369,622  |   |   |   | 122,693,244 |   |
| Securities      held-to-maturity, estimated fair values of $2,853,170 and      $7,901,839  |   |   | 7,622,340   |   |   |   | 7,901,839 |   |
| Loans,      net                                                                            |   |   | 618,922,150 |   |   |   | 645,738,663 |   |
| Premises      and equipment, net                                                           |   |   | 17,016,363  |   |   |   | 18,356,970 |   |
| Accrued      interest receivable                                                           |   |   | 3,573,092   |   |   |   | 5,927,168 |   |
| Cash      surrender value of life insurance                                                |   |   | 3,803,010   |   |   |   | 3,639,550 |   |
| Intangible      assets                                                                     |   |   | 4,877,300   |   |   |   | 29,433,841 |   |
| Foreclosed      property                                                                   |   |   | 45,797,654  |   |   |   | 10,313,331 |   |
| Other      assets                                                                          |   |   | 20,886,934  |   |   |   | 13,814,577 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
|                                                                                       |   | $      | 892,219,450 |   |   |   | 883,664,523 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Liabilities and      Stockholders’ Equity                                            |
| Deposits:                                                                                  |   |   |        |   |   |   |   |   |
| Demand                                                                                     |   | $      | 66,296,298  |   |   |   | 67,614,983 |   |
| Interest-bearing      demand                                                               |   |   | 194,241,342 |   |   |   | 220,137,199 |   |
| Savings                                                                                    |   |   | 18,653,924  |   |   |   | 19,122,668 |   |
| Time                                                                                       |   |   | 222,457,656 |   |   |   | 170,112,285 |   |
| Time,      over $100,000                                                                   |   |   | 260,043,855 |   |   |   | 229,390,354 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Total      deposits                                                                        |   |   | 761,693,075 |   |   |   | 706,377,489 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Federal      Home Loan Bank advances                                                       |   |   | 52,000,000  |   |   |   | 54,500,000 |   |
| Securities      sold under repurchase agreements                                           |   |   | -           |   |   |   | 20,000,000 |   |
| Junior      subordinated debentures                                                        |   |   | 10,825,000  |   |   |   | 10,825,000 |   |
| Accrued      interest payable                                                              |   |   | 2,847,758   |   |   |   | 3,990,807 |   |
| Other      liabilities                                                                     |   |   | 7,924,350   |   |   |   | 7,820,335 |   |
| Total      liabilities                                                                     |   |   | 835,290,183 |   |   |   | 803,513,631 |   |
| Commitments                                                                                |   |   |        |   |   |   |   |   |
| Stockholders’      equity:                                                           |   |   |        |   |   |   |   |   |
| Series      A convertible perpetual preferred stock, 9% non-cumulative, no par      value, |   |   |        |   |   |   |   |   |
| $8      liquidation value, 10,000,000 shares authorized; 1,509,100 shares      issued      |   |   |        |   |   |   |   |   |
| and      outstanding in 2008 and no shares issued or outstanding in      2007              |   |   | 11,943,515  |   |   |   | - |   |
| Common      stock, no par value in 2008 and $1.25 par value in 2007,                       |   |   |        |   |   |   |   |   |
| 20,000,000      shares authorized; 6,058,007 and 6,057,594 shares                          |   |   |        |   |   |   |   |   |
| issued      and outstanding                                                                |   |   | 37,917,152  |   |   |   | 7,571,993 |   |
| Additional      paid-in capital                                                            |   |   | -           |   |   |   | 30,199,481 |   |
| Retained      earnings                                                                     |   |   | 8,874,438   |   |   |   | 41,786,537 |   |
| Accumulated      other comprehensive income (loss)                                         |   |   | (1,805,838  | )      |   |   | 592,881 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Total      stockholders’ equity                                                      |   |   | 56,929,267  |   |   |   | 80,150,892 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
|                                                                                       |   | $      | 892,219,450 |   |   |   | 883,664,523 |   |

----

|                                                                      |   | 2008   |        |   | 2007   |   |       | 2006   |   |
|---------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|------------|--------|--------|
| Interest      income:                                                     |   |   |        |   |   |   |       |   |   |
| Interest      and fees on loans                                           |   | $      | 41,404,844  |   |   |   | 50,138,669 |   |   |   | 37,757,482 |   |
| Interest      on federal funds sold and funds in other banks              |   |   | 365,614     |   |   |   | 614,087    |   |   |   | 640,956 |   |
| Interest      on investment securities:                                   |   |   |        |   |   |   |       |   |   |   |   |   |
| U.S.      Government  sponsored enterprises                     |   |   | 2,311,178   |   |   |   | 1,693,538  |   |   |   | 1,032,728 |   |
| State,      county and municipal                                          |   |   | 2,885,699   |   |   |   | 1,998,925  |   |   |   | 1,455,708 |   |
| Other                                                                     |   |   | 1,145,788   |   |   |   | 1,383,038  |   |   |   | 1,205,881 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Total      interest income                                                |   |   | 48,113,123  |   |   |   | 55,828,257 |   |   |   | 42,092,755 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Interest      expense:                                                    |   |   |        |   |   |   |       |   |   |   |   |   |
| Interest      on deposits:                                                |   |   |        |   |   |   |       |   |   |   |   |   |
| Demand                                                                    |   |   | 3,530,045   |   |   |   | 6,259,620  |   |   |   | 4,994,332 |   |
| Savings                                                                   |   |   | 95,629      |   |   |   | 242,037    |   |   |   | 185,168 |   |
| Time                                                                      |   |   | 19,088,444  |   |   |   | 17,372,796 |   |   |   | 10,776,290 |   |
| Interest      on FHLB and other borrowings                                |   |   | 2,897,090   |   |   |   | 3,307,029  |   |   |   | 2,771,190 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Total      interest expense                                               |   |   | 25,611,208  |   |   |   | 27,181,482 |   |   |   | 18,726,980 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Net      interest income                                                  |   |   | 22,501,915  |   |   |   | 28,646,775 |   |   |   | 23,365,775 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Provision      for loan losses                                            |   |   | 14,900,000  |   |   |   | 10,206,263 |   |   |   | 1,465,000 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Net      interest income after provision for loan losses                  |   |   | 7,601,915   |   |   |   | 18,440,512 |   |   |   | 21,900,775 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Other      income:                                                        |   |   |        |   |   |   |       |   |   |   |   |   |
| Service      charges on deposit accounts                                  |   |   | 6,255,501   |   |   |   | 5,364,019  |   |   |   | 4,061,892 |   |
| Mortgage      origination fees                                            |   |   | 275,723     |   |   |   | 392,199    |   |   |   | 393,375 |   |
| Brokerage      fees                                                       |   |   | 443,479     |   |   |   | 637,036    |   |   |   | 129,730 |   |
| ATM      network fees                                                     |   |   | 1,469,439   |   |   |   | 1,047,054  |   |   |   | 777,299 |   |
| Loss      on sale or disposal of premises and equipment                   |   |   | (303,453    | )      |   |   | (774       | )      |   |   | (4,327 | ) |
| Loss      on settlement of securities sold under repurchase    agreements |   |   | (683,361    | )      |   |   | -          |   |   |   | - |   |
| Gain      on sale of securities available-for-sale                        |   |   | 435,067     |   |   |   | -          |   |   |   | - |   |
| (Loss)      gain on sale and write-down of foreclosed property            |   |   | (1,185,854  | )      |   |   | (729,261   | )      |   |   | 243,153 |   |
| Miscellaneous                                                             |   |   | 910,744     |   |   |   | 1,358,212  |   |   |   | 803,182 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Total      other income                                                   |   |   | 7,617,285   |   |   |   | 8,068,485  |   |   |   | 6,404,304 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Other      expenses:                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Salaries      and employee benefits                                       |   |   | 14,649,620  |   |   |   | 13,906,002 |   |   |   | 9,924,742 |   |
| Occupancy                                                                 |   |   | 3,961,522   |   |   |   | 3,300,139  |   |   |   | 2,402,303 |   |
| Goodwill      impairment                                                  |   |   | 24,127,865  |   |   |   | -          |   |   |   | - |   |
| Expense      on loans and foreclosed property                             |   |   | 2,387,978   |   |   |   | 423,167    |   |   |   | 175,412 |   |
| Other      operating                                                      |   |   | 7,236,062   |   |   |   | 5,711,678  |   |   |   | 4,016,662 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Total      other expenses                                                 |   |   | 52,363,047  |   |   |   | 23,340,986 |   |   |   | 16,519,119 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| (Loss)      earnings before income taxes                                  |   |   | (37,143,847 | )      |   |   | 3,168,011  |   |   |   | 11,785,960 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Income      tax benefit (expense)                                         |   |   | 6,393,418   |   |   |   | (133,738   | )      |   |   | (3,458,524 | ) |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Net      (loss) earnings                                                  |   | $      | (30,750,429 | )      |   |   | 3,034,273  |   |   |   | 8,327,436 |   |
|                                                                      |   |   |        |   |   |   |       |   |   |   |   |   |
| Basic      (loss) earnings per share                                      |   | $      | (5.12       | )      |   |   | 0.55       |   |   |   | 1.67 |   |
| Diluted      (loss) earnings per share                                    |   | $      | (5.12       | )      |   |   | 0.55       |   |   |   | 1.66 |   |
| Dividends      per share                                                  |   | $      | 0.315       |   |   |   | 0.82       |   |   |   | 0.72 |   |

----

|                                                            |   | 2008   |        |   | 2007   |   |      | 2006   |   |
|-----------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-----------|--------|--------|
|                                                            |   |   |        |   |   |   |      |   |   |
| Net      (loss) earnings                                        |   | $      | (30,750,429 | )      |   |   | 3,034,273 |   |   |   | 8,327,436 |   |
| Other      comprehensive income (loss), net of tax:             |   |   |        |   |   |   |      |   |   |   |   |   |
| Unrealized      gains (losses) on investment                    |   |   |        |   |   |   |      |   |   |   |   |   |
| securities      available-for-sale:                             |   |   |        |   |   |   |      |   |   |   |   |   |
| Unrealized      gains (losses) arising during the period        |   |   | (2,385,123  | )      |   |   | 821,801   |   |   |   | (84,938 | ) |
| Associated      (taxes) benefit                                 |   |   | 810,942     |   |   |   | (279,412  | )      |   |   | 28,879 |   |
| Reclassification      adjustment for gain realized              |   |   | (435,067    | )      |   |   | -         |   |   |   | - |   |
| Associated      taxes                                           |   |   | 147,923     |   |   |   | -         |   |   |   | - |   |
| Change      in fair value of derivatives for cash flow hedges:  |   |   |        |   |   |   |      |   |   |   |   |   |
| Decrease      in fair value of derivatives for cash flow hedges |   |   |        |   |   |   |      |   |   |   |   |   |
| arising      during the period                                  |   |   | (814,233    | )      |   |   | (29,636   | )      |   |   | - |   |
| Associated      tax benefit                                     |   |   | 276,839     |   |   |   | 10,076    |   |   |   | - |   |
|                                                            |   |   |        |   |   |   |      |   |   |   |   |   |
| Other      comprehensive income (loss)                          |   |   | (2,398,719  | )      |   |   | 522,829   |   |   |   | (56,059 | ) |
|                                                            |   |   |        |   |   |   |      |   |   |   |   |   |
| Comprehensive      income (loss)                                |   | $      | (33,149,148 | )      |   |   | 3,557,102 |   |   |   | 8,271,377 |   |

----

|                                                     |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        | Accumulated   |   |   |        |   |
|----------------------------------------------------------|--------|-----------------|-----------|--------|--------------|--------|------------|---------|--------|--------|-----------|--------|--------|---------------|------------|--------|----------|--------|-------------|---------------|--------|--------|-------------|--------|
|                                                     |   |            |      |   |         |   |       |    |   |   |      |   |   | Additional    |       |   |     |   |        | Other         |   |   |        |   |
|                                                     |   | Preferred Stock |      |   | Common Stock |   |       | Paid-in |   |   | Retained  |   |   | Comprehensive |       |   |     |   |
|                                                     |   | Shares          |      |   | Amount       |   |       | Shares  |   |   | Amount    |   |   | Capital       |       |   | Earnings |   |        | Income (Loss) |   |   | Total       |   |
|                                                     |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |
| Balance,      December 31, 2005                          |   |            | -         |   |         | $      | -          |    |   |   | 4,987,794 |   |   | $             | 6,234,743  |   |     |   | 2,803,480   |          |   |   | 38,787,699  |   |   |   | 126,111 |   |   |   | 47,952,033 |   |
| Cash      dividends on common stock ($.72 per share)     |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | (3,601,765  | )      |   |   | - |   |   |   | (3,601,765 | ) |
| Retirement      of common stock                          |   |            | -         |   |         |   | -          |    |   |   | (38,202   | )      |   |          | (47,753    | )      |     |   | (916,895    | )             |   |   | -           |   |   |   | - |   |   |   | (964,648 | ) |
| Exercise      of stock options                           |   |            | -         |   |         |   | -          |    |   |   | 51,021    |   |   |          | 63,776     |   |     |   | 647,471     |          |   |   | -           |   |   |   | - |   |   |   | 711,247 |   |
| Stock      option expense                                |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | 128,250     |          |   |   | -           |   |   |   | - |   |   |   | 128,250 |   |
| Change      in unrealized holding gain                   |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| on      securities available-for-sale,                   |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| net of tax                                               |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | -           |   |   |   | (56,059 | ) |   |   | (56,059 | ) |
| Net      earnings                                        |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | 8,327,436   |   |   |   | - |   |   |   | 8,327,436 |   |
| Balance,      December 31, 2006                          |   |            | -         |   |         |   | -          |    |   |   | 5,000,613 |   |   |          | 6,250,766  |   |     |   | 2,662,306   |          |   |   | 43,513,370  |   |   |   | 70,052 |   |   |   | 52,496,494 |   |
| Cash      dividends on common stock ($.82 per share)     |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | (4,761,106  | )      |   |   | - |   |   |   | (4,761,106 | ) |
| Retirement      of common stock                          |   |            | -         |   |         |   | -          |    |   |   | (1,345    | )      |   |          | (1,681     | )      |     |   | (29,254     | )             |   |   | -           |   |   |   | - |   |   |   | (30,935 | ) |
| Issuance      of shares in acquisition of First Haralson |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| Corporation,      net of issuance costs of $102,292      |   |            | -         |   |         |   | -          |    |   |   | 1,055,149 |   |   |          | 1,318,937  |   |     |   | 27,331,583  |          |   |   | -           |   |   |   | - |   |   |   | 28,650,520 |   |
| Exercise      of stock options                           |   |            | -         |   |         |   | -          |    |   |   | 3,177     |   |   |          | 3,971      |   |     |   | 57,346      |          |   |   | -           |   |   |   | - |   |   |   | 61,317 |   |
| Stock      option expense                                |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | 177,500     |          |   |   | -           |   |   |   | - |   |   |   | 177,500 |   |
| Change      in unrealized holding gain                   |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| on      securities available-for-sale,                   |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| net      of tax                                          |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | -           |   |   |   | 542,389 |   |   |   | 542,389 |   |
| Change      in fair value of derivatives                 |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| for      cash flow      hedges, net of tax               |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | -           |   |   |   | (19,560 | ) |   |   | (19,560 | ) |
| Net      earnings                                        |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | 3,034,273   |   |   |   | - |   |   |   | 3,034,273 |   |
| Balance,      December 31, 2007                          |   |            | -         |   |         |   | -          |    |   |   | 6,057,594 |   |   |          | 7,571,993  |   |     |   | 30,199,481  |          |   |   | 41,786,537  |   |   |   | 592,881 |   |   |   | 80,150,892 |   |
| Cash      dividends on common stock ($.315 per share)    |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | (1,908,142  | )      |   |   | - |   |   |   | (1,908,142 | ) |
| Cash      dividends on Series A preferred stock          |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | (253,528    | )      |   |   | - |   |   |   | (253,528 | ) |
| Stock      issued in dividend reinvestment plan          |   |            | -         |   |         |   | -          |    |   |   | 413       |   |   |          | 1,461      |   |     |   | -           |          |   |   | -           |   |   |   | - |   |   |   | 1,461 |   |
| Issuance      cost of dividend reinvestment plan         |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | (30,283    | )      |     |   | -           |          |   |   | -           |   |   |   | - |   |   |   | (30,283 | ) |
| Issuance      of Series A preferred                      |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| shares,      net of issuance costs                       |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| of      $129,285                                         |   |            | 1,509,100 |   |         |   | 11,943,515 |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | -           |   |   |   | - |   |   |   | 11,943,515 |   |
| Reclassification      change to no par common stock      |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | 30,199,481 |   |     |   | (30,199,481 | )             |   |   | -           |   |   |   | - |   |   |   | - |   |
| Stock      option expense                                |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | 174,500    |   |     |   | -           |          |   |   |        |   |   |   |   |   |   |   | 174,500 |   |
| Change      in unrealized holding                        |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| gain      on securities                                  |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| available-for-sale,      net of tax                      |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | -           |   |   |   | (1,861,325 | ) |   |   | (1,861,325 | ) |
| Change      in fair value of                             |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| derivatives      for cash flow                           |   |            |      |   |         |   |       |    |   |   |      |   |   |          |       |   |     |   |        |          |   |   |        |   |   |   |   |   |   |   |   |   |
| hedges,      net of tax                                  |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | -           |   |   |   | (537,394 | ) |   |   | (537,394 | ) |
| Net      loss                                            |   |            | -         |   |         |   | -          |    |   |   | -         |   |   |          | -          |   |     |   | -           |          |   |   | (30,750,429 | )      |   |   | - |   |   |   | (30,750,429 | ) |
| Balance,      December 31, 2008                          |   |            | 1,509,100 |   |         | $      | 11,943,515 |    |   |   | 6,058,007 |   |   | $             | 37,917,152 |   |     |   | -           |          |   |   | 8,874,438   |   |   |   | (1,805,838 | ) |   |   | 56,929,267 |   |

----

|                                                                                                |   | 2008   |        |   | 2007   |   |        | 2006   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
| Cash      flows from operating activities:                                                          |   |   |        |   |   |   |        |   |   |
| Net      (loss) earnings                                                                            |   | $      | (30,750,429 | )      |   |   | 3,034,273   |   |   |   | 8,327,436 |   |
| Adjustments      to reconcile net (loss) earnings to net cash provided by                           |   |   |        |   |   |   |        |   |   |   |   |   |
| operating      activities:                                                                          |   |   |        |   |   |   |        |   |   |   |   |   |
| Depreciation,      amortization and accretion                                                       |   |   | 1,880,394   |   |   |   | 1,362,866   |   |   |   | 1,099,739 |   |
| Provision      for loan losses                                                                      |   |   | 14,900,000  |   |   |   | 10,206,263  |   |   |   | 1,465,000 |   |
| Goodwill      impairment                                                                            |   |   | 24,127,865  |   |   |   | -           |   |   |   | - |   |
| Stock-based      employee compensation expense                                                      |   |   | 174,500     |   |   |   | 177,500     |   |   |   | 128,250 |   |
| Deferred      income tax benefit                                                                    |   |   | (3,877,569  | )      |   |   | (2,510,403  | )      |   |   | (188,645 | ) |
| Income      from bank owned life insurance                                                          |   |   | (163,460    | )      |   |   | (78,262     | )      |   |   | - |   |
| Gain      on sale of securities available-for-sale                                                  |   |   | (435,067    | )      |   |   | -           |   |   |   | - |   |
| Loss      on sale or disposal of premises and equipment                                             |   |   | 303,453     |   |   |   | 774         |   |   |   | 4,327 |   |
| Net      loss (gain) on sales and write-downs of foreclosedproperty                                 |   |   | 1,185,854   |   |   |   | 729,261     |   |   |   | (243,153 | ) |
| Change      in, net of effects of purchase acquisition in 2007:                                     |   |   |        |   |   |   |        |   |   |   |   |   |
| Other      assets                                                                                   |   |   | (564,365    | )      |   |   | (2,664,963  | )      |   |   | (1,283,102 | ) |
| Other      liabilities                                                                              |   |   | 241,292     |   |   |   | (826,957    | )      |   |   | 795,470 |   |
| Net      cash provided by operating activities                                                      |   |   | 7,022,468   |   |   |   | 9,430,352   |   |   |   | 10,105,322 |   |
|                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash      flows from investing activities, net of effects of purchase acquisition in      2007:     |   |   |        |   |   |   |        |   |   |   |   |   |
| Proceeds      from sales of securities available-for-sale                                           |   |   | 28,966,259  |   |   |   | 5,993,155   |   |   |   | - |   |
| Proceeds      from maturities, calls and pay-downs of  securities      available-for-sale |   |   | 10,914,065  |   |   |   | 52,974,394  |   |   |   | 21,321,435 |   |
| Proceeds      from maturities, calls and pay-downs of securities      held-to-maturity              |   |   | 274,451     |   |   |   | 1,436,551   |   |   |   | 1,403,882 |   |
| Purchases      of securities available-for-sale                                                     |   |   | (13,875,959 | )      |   |   | (74,099,579 | )      |   |   | (21,263,737 | ) |
| Purchases      of securities held-to-maturity                                                       |   |   | -           |   |   |   | (1,500,000  | )      |   |   | (2,503,750 | ) |
| Purchase      of other securities                                                                   |   |   | -           |   |   |   | -           |   |   |   | (1,534,019 | ) |
| Net      change in loans                                                                            |   |   | (29,299,489 | )      |   |   | (60,280,600 | )      |   |   | (52,893,590 | ) |
| Cash      paid in purchase acquisition, net of cash received of      $17,437,208                    |   |   | -           |   |   |   | (615,472    | )      |   |   | - |   |
| Proceeds      from sales of premises and equipment                                                  |   |   | 6,289       |   |   |   | -           |   |   |   | - |   |
| Purchases      of premises and equipment                                                            |   |   | (604,168    | )      |   |   | (1,484,338  | )      |   |   | (994,417 | ) |
| Proceeds      from the redemption of cash surrender value of life    insurance                      |   |   | -           |   |   |   | 293,101     |   |   |   | - |   |
| Capital      expenditures for other real estate                                                     |   |   | (690,122    | )      |   |   | (1,676,548  | )      |   |   | - |   |
| Proceeds      from sales of other real estate                                                       |   |   | 5,503,568   |   |   |   | 546,968     |   |   |   | 851,446 |   |
| Net      cash provided (used) by investing activities                                               |   |   | 1,194,894   |   |   |   | (78,412,368 | )      |   |   | (55,612,750 | ) |
|                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash      flows from financing activities, net of effects of purchase acquisition in      2007:     |   |   |        |   |   |   |        |   |   |   |   |   |
| Net      change in deposits                                                                         |   |   | 55,315,586  |   |   |   | 62,754,411  |   |   |   | 33,763,991 |   |
| Proceeds      from Federal Home Loan Bank advances                                                  |   |   | 5,000,000   |   |   |   | 10,000,000  |   |   |   | 10,000,000 |   |
| Repayment      of Federal Home Loan Bank advances                                                   |   |   | (7,500,000  | )      |   |   | (15,000,000 | )      |   |   | - |   |
| Proceeds      from junior subordinated debentures                                                   |   |   | -           |   |   |   | 10,825,000  |   |   |   | - |   |
| Proceeds      from securities sold under repurchase agreements                                      |   |   | -           |   |   |   | 20,000,000  |   |   |   | - |   |
| Repayment      of securities sold under repurchase agreements                                       |   |   | (20,000,000 | )      |   |   | -           |   |   |   | - |   |
| Net      change in federal funds purchased                                                          |   |   | -           |   |   |   | (2,475,000  | )      |   |   | 2,475,000 |   |
| Proceeds      from Series A preferred stock offering                                                |   |   | 12,072,800  |   |   |   | -           |   |   |   | - |   |
| Dividends      paid on common stock                                                                 |   |   | (3,188,468  | )      |   |   | (4,438,593  | )      |   |   | (3,466,603 | ) |
| Dividends      paid on preferred stock                                                              |   |   | (253,528    | )      |   |   | -           |   |   |   | - |   |
| Proceeds      from dividend reinvestment plan                                                       |   |   | 1,461       |   |   |   | -           |   |   |   | - |   |
| Proceeds      from exercise of stock options                                                        |   |   | -           |   |   |   | 61,317      |   |   |   | 711,247 |   |
| Stock      issuance costs                                                                           |   |   | (159,568    | )      |   |   | (102,292    | )      |   |   | - |   |
| Retirement      of common stock                                                                     |   |   | -           |   |   |   | (30,935     | )      |   |   | (964,648 | ) |
| Net      cash provided by financing activities                                                      |   |   | 41,288,283  |   |   |   | 81,593,908  |   |   |   | 42,518,987 |   |
|                                                                                                |   |   |        |   |   |   |        |   |   |   |   |   |
| Change      in cash and cash equivalents                                                            |   |   | 49,505,645  |   |   |   | 12,611,892  |   |   |   | (2,988,441 | ) |
| Cash      and cash equivalents at beginning of year                                                 |   |   | 25,845,340  |   |   |   | 13,233,448  |   |   |   | 16,221,889 |   |
| Cash      and cash equivalents at end of year                                                       |   | $      | 75,350,985  |   |   |   | 25,845,340  |   |   |   | 13,233,448 |   |

----

|                                                                                 |   | 2008   |       |   | 2007   |   |       | 2006   |   |
|--------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                                                 |   |   |       |   |   |   |       |   |   |
| Supplemental      disclosure of cash flow information:                               |   |   |       |   |   |   |       |   |   |
| Cash      paid during the year for:                                                  |   |   |       |   |   |   |       |   |   |
| Interest                                                                             |   | $      | 26,754,257 |   |   |   | 27,014,520 |   |   |   | 17,978,895 |   |
| Income      taxes (received) paid                                                    |   | $      | (1,091,632 | )      |   |   | 4,263,000  |   |   |   | 3,688,500 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Non-cash      investing and financing activities:                                    |   |   |       |   |   |   |       |   |   |   |   |   |
| Transfer      of loans to other real estate                                          |   | $      | 52,877,940 |   |   |   | 8,680,003  |   |   |   | 1,227,319 |   |
| Loans      to facilitate sales of other real estate                                  |   | $      | 11,394,317 |   |   |   | -          |   |   |   | - |   |
| Change      in unrealized (losses) gains on                                          |   |   |       |   |   |   |       |   |   |   |   |   |
| securities      available-for-sale, net of tax                                       |   | $      | (1,861,325 | )      |   |   | 542,389    |   |   |   | (56,059 | ) |
| Change      in fair value of derivatives for cash flow hedges, net of    tax         |   | $      | (537,394   | )      |   |   | (19,560    | )      |   |   | - |   |
| Change      in dividends payable                                                     |   | $      | (1,280,326 | )      |   |   | 322,513    |   |   |   | 135,162 |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| The      non-cash investing activities associated with the acquisition of      First |   |   |       |   |   |   |       |   |   |   |   |   |
| Haralson      Corporation in 2007 are presented in Note 2 to the    financial        |   |   |       |   |   |   |       |   |   |   |   |   |
| statements.                                                                          |   |   |       |   |   |   |       |   |   |   |   |   |

----

| (1)    | Summary of Significant      Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Basis of      Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The      consolidated financial statements of WGNB Corp. (the “Company”) include      the financial statements of its wholly owned subsidiary, First National      Bank of Georgia (the “Bank”). All significant intercompany accounts and      transactions have been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The      Bank commenced business in 1946 upon receipt of its banking charter from      the Office of the Comptroller of the Currency (the “OCC”). The Bank is      primarily regulated by the OCC and undergoes periodic examinations by this      regulatory agency. The Company is regulated by the Federal Reserve and is      also subject to periodic examinations. The Bank provides a full range of      commercial and consumer banking services principally in Carroll, Haralson,      Douglas, Coweta and Paulding Counties, Georgia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The      accounting and reporting policies of the Company, and the methods of      applying these principles, conform with accounting principles generally      accepted in the United States of America (GAAP) and with general practices      within the banking industry. In preparing the financial statements,      management is required to make estimates and assumptions that affect the      reported amounts of assets and liabilities as of the date of the balance      sheet and income and expenses for the year. Actual results could differ      significantly from those estimates. Material estimates common to the      banking industry that are particularly susceptible to significant change      in an operating cycle of one year include, but are not limited to, the      determination of the allowance for loan losses, the valuation of any real      estate acquired in connection with foreclosures or in satisfaction of      loans and valuation allowances associated with the realization of deferred      tax assets which are based on future taxable income. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Cash and Cash      Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | For      purposes of reporting cash flows, cash and cash equivalents include cash      and due from banks, interest-bearing funds in other banks and federal      funds sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The      Company classifies its securities in one of three categories: trading,      available-for-sale, or held-to-maturity. Trading securities are bought and      held principally for the purpose of selling them in the near term.      Held-to-maturity securities are those securities for which the Company has      the ability and intent to hold the security until maturity. All other      securities not included in trading or held-to-maturity are classified as      available-for-sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Trading      and available-for-sale securities are recorded at fair value.      Held-to-maturity securities are recorded at amortized cost, adjusted for      the amortization of premiums and accretion of discounts. Unrealized      holding gains and losses, net of the related tax effect, on securities      available-for-sale are excluded from earnings and are reported as a      separate component of accumulated other comprehensive income in      stockholders’ equity until realized. Transfers of securities between      categories are recorded at fair value at the date of    transfer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | A      decline in the market value of any available-for-sale or held-to-maturity      investment below cost that is deemed other than temporary is charged to      earnings and establishes a new cost basis for the  security.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Premiums      and discounts are amortized or accreted over the life of the related      security as an adjustment to the yield. Realized gains and losses for      securities classified as available-for-sale are included in earnings and      are derived using the specific identification method for determining the      cost of securities sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | Loans      are stated at the principal amount outstanding, net of unearned interest      and the allowance for loan losses. Interest income on loans is recognized      in a manner that results in a level yield on the principal amount      outstanding. Nonrefundable loan fees are deferred, net of certain direct      origination costs, and amortized into income over the life of the related      loan.  Other loan fees consisting of delinquent payment charges      and other common loan servicing fees are recognized as    earned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Impaired      and Non-accrualLoans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      Company evaluates certain loans, particularly residential construction and      development credits, for impairment on an individual      basis.  Loans are considered to be impaired when it is probable      that collection of all amounts due according to the contractual terms of      the loan agreement become doubtful.  In the instance of a      restructured loan, the contractual terms of the loan agreement refer to      the original loan agreement. For collateral dependent loans, impairment is      measured based on the fair value of the collateral. Impairment is measured      based on the present value of the expected future cash flows discounted at      the loan’s effective interest rate, except for collateral dependent      loans.                                                                                                                                                                                                                                                                                          |

----

| (1)    | Summary of Significant      Accounting Policies, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Impaired      and Non-accrualLoans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Not      all impaired loans are necessarily placed on non-accrual      status.  It is possible that an impaired loan may be      collateralized by assets with fair values in excess of the recorded value      of the loan.  In such a case, the loan would continue to accrue      interest up to the point that fair value is achieved or the collateral is      sold in settlement of the loan.  A loan will normally be placed      on non-accrual when management believes that collection of principal or      interest has become doubtful or when the loan becomes 90 days past due as      to principal and interest, unless the loan is well secured and in the      process of collection.                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | When      a loan is placed on non-accrual status, the previously accrued and      uncollected interest that is considered uncollectible is reversed against      interest income of the current period.  If a payment is received      on a loan in non-accrual status, it is generally applied to reduce the      carrying value of the loan.  Non-accrual loans are returned to      accrual status when they become current as to principal and interest or      become both well secured and in the process of collection and      collectibility is no longer doubtful.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Allowance for Loan      Losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      allowance for loan losses is established through a provision for loan      losses charged to expense. Loans are charged against the allowance for      loan losses when management believes that the collectibility of the      principal is unlikely. The allowance represents an amount which, in      management’s judgment based on historical losses and on current economic      environment, will be adequate to absorb probable losses on existing      loans.  Amounts deemed uncollectible are charged-off and      deducted from the allowance and recoveries on loans previously charged-off      are added back to the allowance.                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Management’s      judgment in determining the adequacy of the allowance is based on      evaluations of the collectibility of loans. These evaluations take into      consideration such factors as the nature and changes in the composition of      the loan portfolio, current economic conditions that may affect the      borrower’s ability to pay, overall portfolio quality, and review of      specific problem loans.  In determining the adequacy of the      allowance for loan losses, management uses a loan grading system that      rates loans in nine different categories.  Grades are assigned      allocations of allowance based on the Company’s loss experience, peer loss      experience, migration analysis and internal and external economic      factors.  The combination of these results is compared monthly      to the recorded allowance for loan losses and material differences are      adjusted by increasing or decreasing the provision for loan      losses. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Management      uses devoted internal loan reviewers who are independent of the lending      function to challenge and corroborate the loan grading system and provide      additional analysis in determining the adequacy of the allowance for loan      losses and the future provisions for estimated loan      losses.  From time to time the Company utilizes independent      external loan reviewers to supplement and challenge the internal loan      reviewers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Management      believes that the allowance for loan losses is adequate. While management      uses available information to provide reserves and recognize losses on      loans, 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      Company’s allowance for loan losses. Such agencies may require the Company      to recognize additions to the allowance based on their judgment of      information available to them at the time of their      examination.                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Premises and      Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Premises      and equipment are carried at cost less accumulated      depreciation.  Depreciation is computed using the straight-line      method over the estimated useful lives of the related      assets.  When assets are retired or otherwise disposed, the cost      and related accumulated depreciation are removed from the accounts, and      any resulting gain or loss is reflected in earnings for the      period.  The cost of maintenance and repairs that do not improve      or extend the useful life of the respective asset is charged to income as      incurred, whereas significant renewals and improvements are      capitalized.  The range of estimated useful lives for premises      and equipment are:                                                                                                                                                                                                                                                                          |

| Buildings      and improvements | 15      – 39 years      |
|---------------------------------|-------------------------------|
| Furniture      and equipment    |  3      – 10 years |

----

| (1)    | Summary of Significant      Accounting Policies, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Cash Surrender Value      of Life Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The      cash surrender value of life insurance is carried at its cash value based      upon accrued earnings of the underlying contract added to the balance of      the asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Core Deposit      Intangible                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The      core deposit intangible is amortized on a straight-line method over the      period of benefit, generally 10 years.  The core deposit      intangible is reviewed for impairment whenever events or changes in      circumstances indicate that the recovery of the value in the underlying      asset which gave rise to the core deposit intangible becomes permanently      impaired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Goodwill      represents the cost of an acquired company in excess of the fair value of      the net assets acquired.  Goodwill is not amortized over a      useful life.  Instead, it is subject to a two step impairment      test in accordance with Statement of Financial Accounting Standards      (“SFAS”) No. 142, Goodwill and Other Intangible      Assets.   The first step compares the fair value of the      reporting unit, the Company, to the carrying amount of the      goodwill.  If the carrying amount of the goodwill exceeds the      fair value of the reporting unit, then a second step is conducted whereby      the implied fair value of the goodwill is compared to the carrying value      of the goodwill.  If the implied fair value is less than the      carrying amount of the goodwill, an impairment loss is      recognized. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Other      Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Other      investments include Federal Home Loan Bank (“FHLB”) stock, Federal Reserve      Bank stock, investments in federal and state income tax credit      partnerships and other equity securities.  The investments have      no readily determinable fair value, are carried at cost,  and      are included in other assets in the accompanying consolidated balance      sheets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Foreclosed      Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Properties      acquired through foreclosure are carried at the lower of cost or fair      value less estimated costs to dispose. Fair value is defined as the amount      that is expected to be received in a current sale between a willing buyer      and seller other than in a forced or liquidation sale. Fair values at      foreclosure are based on appraisals. Losses arising from the acquisition      of foreclosed properties are charged against the allowance for loan      losses. Subsequent write-downs are charged to earnings in the period in      which the need arises.                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Securities Sold Under      Repurchase Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      Company sells securities under agreements to repurchase.  These      repurchase agreements are treated as borrowings.  The      obligations to repurchase securities sold are reflected as a liability and      the securities underlying the agreements are reflected as assets in the      consolidated balance sheets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Income      Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      Company accounts for income taxes under the liability method. Accordingly,      deferred tax assets and liabilities are recognized for the future tax      consequences attributable to differences between the financial statement      carrying amounts of existing assets and liabilities and their respective      tax bases and operating loss and tax credit carryforwards. Deferred tax      assets and liabilities are measured using enacted tax rates expected to      apply to taxable income in the years in which those temporary differences      are expected to be recovered or settled. The effect on deferred tax assets      and liabilities of a change in tax rates is recognized in income in the      period that includes the enactment date.                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | In      the event the future tax consequences of differences between the financial      reporting bases and the tax bases of the assets and liabilities results in      deferred tax assets, an evaluation of the probability of being able to      realize the future benefits indicated by such asset is required. A      valuation allowance is provided for a portion of the deferred tax asset      when it is more likely than not that some portion or all of the deferred      tax asset will not be realized. In assessing the realizability of the      deferred tax assets, management considers the scheduled reversals of      deferred tax liabilities, projected future taxable income, and tax      planning strategies.                                                                                                                                                                                           |

----

| (1)    | Summary of Significant      Accounting Policies, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Income Taxes,      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The      Company adopted Financial Accounting Standards Board (“FASB”)      Interpretation No. 48, Accounting for Uncertainty in      Income Taxes, an Interpretation of FASB Statement 109 (“FIN 48”) as      of January 1, 2007.  A tax position is recognized as a benefit      only if it is “more likely than not” that the tax position would be      sustained in a tax examination, with a tax examination being presumed to      occur.  The amount recognized is the largest amount of tax      benefit that is greater than 50 percent likely of being realized in      examination.  For tax positions not meeting the “more likely      than not” test, no tax benefit is recorded.  The adoption of FIN      48 had no effect on the Company’s financial statements.                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Derivative Instruments      and Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The      Company recognizes the fair value of derivatives as assets or liabilities      in the financial statements.  Accounting for the changes in the      fair value of a derivative depends on the intended use of the derivative      instrument at inception.  The change in fair value of      instruments used as fair value hedges is accounted for in the earnings of      the period simultaneous with accounting for the fair value change of the      item being hedged.  The change in fair value of the effective      portion of cash flow hedges is accounted for in comprehensive income      rather than earnings. The change in fair value of derivative instruments      that are not intended as a hedge is accounted for in the earnings of the      period of the change. When a swap contract is terminated, the cumulative      change in the fair value is amortized into income over the original hedge      period.  If the underlying hedged instrument is sold or settled,      the Company immediately recognizes the cumulative change in the      derivative’s value in the component of earnings. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Stock Compensation      Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | SFAS      No. 123 (revised 2004) (SFAS No. 123 (R)) Share-Based Payment was      adopted by the Company on the required date, January 1, 2006, using the      modified prospective transition method provided for under the      standard.   SFAS No. 123 (R) addresses the accounting for      share-based payment transactions in which the Company receives employee      services in exchange for equity instruments of the Company. SFAS No. 123      (R) requires the Company to recognize as compensation expense the “grant      date fair value” of stock options granted to employees in the statement of      earnings using the fair-value-based method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      Company recognized $174,500, $177,500 and $128,250 of stock based      compensation during the years ended December 31, 2008, 2007 and 2006,      respectively, associated with its stock option grants.  The      Company is recognizing the compensation expense for stock option grants      with graded vesting schedules on a straight-line basis over the requisite      service period of the award as permitted by SFAS No. 123      (R).  As of December 31, 2008, there was $467,307 of      unrecognized compensation cost related to stock option      grants.  The cost is expected to be recognized over the      remaining vesting period of approximately five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      grant-date fair value of each option granted during 2008, 2007 and 2006      was $3.37, $6.39 and $4.47, respectively.    The      fair value of each option is estimated on the date of grant using the      Black-Scholes Model.  The following weighted average assumptions      were used for grants in 2008, 2007 and2006:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|                         |   | 2008           |   |   | 2007           |   |   | 2006          |   |
|------------------------------|--------|----------------|--------|--------|----------------|--------|--------|---------------|--------|
| Dividend      yield          |   |           | 3.09   | %      |           |   | 2.72   | %             |   |   | 2.85 | % |
| Expected      volatility     |   |           | 22     | %      |           |   | 20     | %             |   |   | 13 | % |
| Risk-free      interest rate |   |           | 3.50   | %      |           |   | 4.83   | %             |   |   | 4.54 | % |
| Expected      term           |   | 6.5      years |   |   | 6.6      years |   |   | 10      years |   |

|   | Earnings Per      Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Basic      earnings per share are based on the weighted average number of common      shares outstanding during the period. The effects of potential common      shares outstanding during the period are included in diluted earnings per      share. Stock options, which are described in note 14, are granted to key      management personnel.                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | SFAS      No. 128, Earnings Per      Share, requires that employee equity share options, non-vested      shares and similar equity instruments granted to employees be treated as      potential common shares in computing diluted earnings per share. Diluted      earnings per share should be based on the actual number of options or      shares granted and not yet forfeited, unless doing so would be      anti-dilutive. The Company uses the “treasury stock” method for equity      instruments granted in share-based payment transactions provided in SFAS      No. 128 to determine diluted earnings pershare. |

----

| (1)    | Summary of Significant      Accounting Policies, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Earnings      per share, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Set      forth below is a table showing a reconciliation of the amounts used in the      computation of basic and diluted earnings per share.  Only a      reconciliation of amounts for the periods ended December 31, 2007 and 2006      are presented.  No presentation for the period ended December      31, 2008 is set forth below because inclusion of potential common shares      in the diluted loss per share calculation for these periods would be      anti-dilutive.  Basic earnings per share for 2008 is computed by      dividing the net loss for 2008 less dividends paid to preferred      shareholders by the weighted average common shares outstanding in 2008 as      follows: $(30,750,429) less $253,528 divided by 6,057,613 shares.      Reconciliation of the amounts used in the computation of both “basic      earnings per share” and “diluted earnings per share” for the years ended      December 31, 2007 and 2006 are asfollows: |

|                                      |   |         |      |   | Common |   |      | Per      Share |           |
|-------------------------------------------|--------|--------------|-----------|--------|--------|--------|-----------|----------------|----------------|
| For      the Year Ended December 31, 2007 |   | Net Earnings |      |   | Shares |   |      | Amount         |           |
|                                      |   |         |      |   |   |   |      |           |           |
| Basic      earnings per share             |   | $            | 3,034,273 |   |   |   | 5,534,851 |           |           | $ | .55 |   |
| Effect      of dilutive stock options     |   |         | -         |   |   |   | 25,187    |           |           |   | - |   |
|                                      |   |         |      |   |   |   |      |           |           |   |   |   |
| Diluted      earnings per share           |   | $            | 3,034,273 |   |   |   | 5,560,038 |           |           | $ | .55 |   |
|                                      |   |         |      |   |   |   |      |           |           |   |
|                                      |   |         |      |   |   | Common |      |           | Per      Share |   |
| For      the Year Ended December 31, 2006 |   | Net Earnings |      |   | Shares |   |      | Amount         |           |
| Basic      earnings per share             |   | $            | 8,327,436 |   |   |   | 4,998,103 |           |           | $ | 1.67 |   |
| Effect      of dilutive stock options     |   |         | -         |   |   |   | 26,565    |           |           |   | (.01 | ) |
|                                      |   |         |      |   |   |   |      |           |           |   |   |   |
| Diluted      earnings per share           |   | $            | 8,327,436 |   |   |   | 5,024,668 |           |           | $ | 1.66 |   |

|   | Recent Accounting      Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Business      Combinations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In      December 2007, the FASB issued SFAS No. 141(R), Business      Combinations.  SFAS No. 141 (R) will significantly change      how entities apply the acquisition method to business      combinations.  The most significant changes affecting how the      Company will account for business combinations under this Statement      include: the acquisition date is the date the acquirer obtains control;      (and only) identifiable assets acquired, liabilities assumed, and      noncontrolling interests in the acquiree are stated at fair value on the      acquisition date; assets or liabilities arising from noncontractual      contingencies are measured at their acquisition date fair value only if it      is more likely than not that they meet the definition of an asset or      liability on the acquisition date; adjustments subsequently made to the      provisional amounts recorded on the acquisition date are made      retroactively during a measurement period not to exceed one year;      acquisition related restructuring costs that do not meet the criteria of      SFAS No. 146, Accounting      for Cost Associated with Exit or Disposal Activities, are expensed      as incurred; transaction costs are expensed as incurred; reversals of      deferred income tax valuation allowances and income tax contingencies are      recognized in the earnings subsequent to the measurement period; and the      allowance for loan losses of an acquiree is not permitted to be recognized      by the acquirer.  Additionally, SFAS No. 141(R) requires new and      modified disclosures surrounding subsequent changes to acquisition–related      contingencies, contingent consideration, noncontrolling interest      interests, acquisition-related transaction costs, fair values and cash      flows not expected to be collected for acquired loans and an enhanced      goodwill rollforward.  The Company is required to apply SFAS No.      141(R) prospectively to all business combinations completed after January      1, 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Accounting for      Transfers of Financial Assets and Repurchase Financing      Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In      February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 140-3 Accounting for Transfers of      Financial Assets and Repurchase Financing      Transactions.   This statement provides guidance      regarding the accounting for a transfer of a financial asset and      repurchase financing where the counterparties for both transactions are      the same.  In these circumstances, certain criteria must be met      in order to not account for the transactions as a linked      transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

| (1)    | Summary of Significant      Accounting Policies, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Recent Accounting      Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Accounting for      Transfers of Financial Assets and Repurchase Financing      Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | This      FSP becomes effective for the fiscal years and interim periods beginning      on or after November 15, 2008.  The Company does not anticipate      that this FSP will have a material effect on the Company’s financial      position, results of operations, or disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Disclosures about      Derivative Instruments and Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | In      March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative      Instruments and Hedging Activities. SFAS No. 161 is an amendment to      SFAS No. 133, Accounting      for Derivative Instruments and Hedging Activities. The objective of      SFAS No. 161 is to expand the disclosure requirements of SFAS No. 133 with      the intent to improve the financial reporting of how and why an entity      uses derivative instruments; how derivative instruments and related hedged      items are accounted for under SFAS No. 133 and its related      interpretations; and how derivative instruments and related hedged items      affect an entity's financial position, financial performance and cash      flows.  The statement is effective for financial statements      issued for fiscal years beginning after November 15, 2008.  The      Company does not anticipate the new accounting pronouncement  to      have a material effect on its financial position or results of      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Hierarchy of Generally      Accepted Accounting Principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In      May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally      Accepted Accounting Principles.  SFAS No. 162 identifies      the sources of accounting principles and the framework for selecting the      principles to be used in the preparation of financial statements of      nongovernmental entities that are presented in conformity with generally      accepted accounting principles (GAAP) in the United States (the GAAP      hierarchy).  The current GAAP hierarchy, as set forth in the American      Institute of Certified Public Accountants (AICPA) Statement on Auditing      Standards No. 69, The      Meaning of Present Fairly in Conformity With Generally Accepted Accounting      Principles, has been criticized because (1) it is directed to the      auditor rather than the entity, (2) it is complex, and (3) it ranks FASB      Statements of Financial Accounting Concepts, which are subject to the same      level of due process as FASB Statements of Financial Accounting Standards,      below industry practices that are widely recognized as generally accepted      but that are not subject to due process.  The FASB believes that the      GAAP hierarchy should be directed to entities because it is the entity      (not its auditor) that is responsible for selecting accounting principles      for financial statements that are presented in conformity with GAAP.       Accordingly, the FASB concluded that the GAAP hierarchy should      reside in the accounting literature established by the FASB and is issuing      this Statement to achieve that result.  The Company does not      anticipate the new accounting pronouncement  to have a material      effect on its financial position or results of  operations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Determining the Fair      Value of a Financial Asset When the Market for that Asset is Not      Active                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | In      October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of      a Financial Asset When the Market for That Asset is Not Active.       This FSP clarifies the application of SFAS No. 157, Fair Value      Measurements, in a market that is not active and provides an      example to illustrate key considerations in determining the fair value of      a financial asset when the market for that financial asset is not active.       FSP FAS 157-3 provides guidance on (1) how an entity's own      assumption should be considered when measuring fair value when relevant      observable inputs do not exist, (2) how available observable inputs in a      market that is not active should be considered when measuring fair value      and (3) how the use of market quotes should be considered when assessing      the relevance of observable and unobservable inputs available to measure      fair value.  This FSP Staff Position is effective immediately.       The Company does not anticipate the new accounting      pronouncement  to have a material effect on its financial      position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Other      accounting standards that have been issued or proposed by the FASB and      other standard setting entities that do not require adoption until a      future date are not expected to have a material impact on the Company’s      consolidated financial statements upon adoption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Certain      reclassifications have been made in the prior years’ consolidated      statements to conform to the presentation used in  2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

----

| (2)    | Material Business      Combination                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | On      January 22, 2007, WGNB Corp. entered into an agreement and plan of      reorganization by and among WGNB Corp., West Georgia National Bank, First      Haralson Corporation, and First National Bank of Georgia whereby First      Haralson Corporation will be merged with and into WGNB Corp. by      acquisition of 100 percent of the outstanding common shares of First      Haralson Corporation and, concurrently, First National Bank of Georgia      will be merged into West Georgia National Bank. Upon the closing of the      transaction, West Georgia National Bank changed its name to First National      Bank of Georgia.  The transaction was approved by both      companies’ shareholders and it closed on June 29, 2007 with an effective      date of July 1, 2007. First Haralson Corporation was headquartered in      Buchanan, Georgia and operated five branches in Haralson County and two      branches in Carroll County.  The results of operations from the      acquisition have been included in the Company’s consolidated financial      statements from the date of acquisition, July 1, 2007. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Under      the terms of the merger agreement, First Haralson Corporation’s      shareholders elected to receive cash, WGNB Corp. common stock, or a      combination of the two.  The shareholders made their elections      and, in the aggregate, chose: cash consideration in the amount of      $16,315,423; shares of WGNB Corp. stock in the amount of 1,055,149 valued      at $27.25 per share; which, together with total acquisition costs of      $1,746,463, resulted in a total consideration of $46,814,696 at the date      of the closing.  In addition, the terms of the merger agreement      allowed First Haralson Corporation to pay a one-time, special dividend not      to exceed $7,250,000 in the aggregate, or approximately $35.67 per share,      for each First Haralson Corporation share to First Haralson Corporation      shareholders prior to the closing of the transaction.                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | One      of the primary business objectives for the transaction was to strengthen      the Company’s presence along the Interstate 20 corridor in western      Georgia.  The combined entity has retained the number one market      share ranking in both Carroll and Haralson      counties.  Additionally, the transaction has enhanced the      Company’s core deposits and has diversified its loan portfolio. The      combination also created a top 20 financial institution in Georgia in      terms of total deposits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The      following table summarizes the estimated fair values of assets acquired      and liabilities assumed on the closing date, July 1,  2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

|                               |   | First      Haralson |    |
|------------------------------------|--------|---------------------|---------|
|                               |   | Corporation         |    |
|                               |   | (In      thousands) |    |
| Assets      acquired:              |   |                |    |
| Cash      and cash equivalents     |   | $                   | 8,196   |   |
| Federal      Funds sold            |   |                | 9,241   |   |
| Securities      available for sale |   |                | 42,282  |   |
| Loans,      net                    |   |                | 136,459 |   |
| Premises      and equipment        |   |                | 9,333   |   |
| Core      deposit intangible       |   |                | 5,738   |   |
| Goodwill                           |   |                | 23,991  |   |
| Other      assets                  |   |                | 6,793   |   |
|                               |   |                |    |   |
| Total      assets acquired         |   |                | 242,033 |   |
|                               |   |                |    |   |
| Liabilities      assumed:          |   |                |    |   |
| Deposits                           |   |                | 180,843 |   |
| Other      borrowed funds          |   |                | 7,500   |   |
| Other      liabilities             |   |                | 6,875   |   |
|                               |   |                |    |   |
| Total      liabilities assumed     |   |                | 195,218 |   |
|                               |   |                |    |   |
| Net      assets acquired           |   | $                   | 46,815  |   |

----

| (2)    | Material Business      Combination, continued                                                                                                                                                                                                       |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      financial information below presents the proforma earnings of WGNB Corp.      assuming the operations of First Haralson Corporation were included in      consolidated earnings as of the beginning of the earliest reporting      period: |

|                            |   | Years      Ended December 31, |   |
|---------------------------------|--------|-------------------------------|--------|
|                            |   | (In thousands)                |   |
|                            |   |                          |   |
|                            |   | 2007                          |   |   | 2006 |   |
| Total      revenue              |   | $                             | 73,508 |   |   |   | 64,289 |   |
| Net      earnings               |   | $                             | 3,992  |   |   |   | 10,708 |   |
| Diluted      earnings per share |   | $                             | .66    |   |   |   | 1.76 |   |

| (3)    | Securities                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------|
|   | Securities      available-for-sale and held-to-maturity at December 31, 2008 and 2007 are      summarized as follows: |

| Available-for-Sale                |   | December 31, 2008 |       |
|-----------------------------------|--------|-------------------|------------|
|                              |   |              |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                              |   | Amortized         |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                              |   | Cost              |       |   | Gains |   |   | Losses |   |   | Value |   |
| Mortgage-backed      securities   |   | $                 | 32,587,849 |   |   |   | 617,678 |   |   |   | 30,265 |   |   |   | 33,175,262 |   |
| State,      county and municipals |   |              | 59,330,698 |   |   |   | 352,558 |   |   |   | 2,404,613 |   |   |   | 57,278,643 |   |
| Corporate      bonds              |   |              | 4,343,324  |   |   |   | - |   |   |   | 427,607 |   |   |   | 3,915,717 |   |
|                              |   | $                 | 96,261,871 |   |   |   | 970,236 |   |   |   | 2,862,485 |   |   |   | 94,369,622 |   |

|                                       |   | December 31, 2007 |        |
|--------------------------------------------|--------|-------------------|-------------|
|                                       |   |              |        |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                       |   | Amortized         |        |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                       |   | Cost              |        |   | Gains |   |   | Losses |   |   | Value |   |
| U.S.      Government sponsored enterprises |   | $                 | 1,989,757   |   |   |   | 40,761 |   |   |   | 1,018 |   |   |   | 2,029,500 |   |
| Mortgage-backed      securities            |   |              | 45,194,946  |   |   |   | 547,002 |   |   |   | 168,685 |   |   |   | 45,573,263 |   |
| State,      county and municipals          |   |              | 69,938,633  |   |   |   | 812,974 |   |   |   | 285,138 |   |   |   | 70,466,469 |   |
| Corporate      bonds                       |   |              | 4,641,969   |   |   |   | 1,811 |   |   |   | 19,768 |   |   |   | 4,624,012 |   |
|                                       |   | $                 | 121,765,305 |   |   |   | 1,402,548 |   |   |   | 474,609 |   |   |   | 122,693,244 |   |

| Held-to-Maturity                |   | December 31, 2008 |      |
|---------------------------------|--------|-------------------|-----------|
|                            |   |              |      |   | Gross |   |   | Gross |   |   | Estimated |   |
|                            |   | Amortized         |      |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                            |   | Cost              |      |   | Gains |   |   | Losses |   |   | Value |   |
|                            |   |              |      |   |   |   |   |   |   |   |   |   |
| Trust      preferred securities |   | $                 | 7,622,340 |   |   |   | - |   |   |   | 4,769,170 |   |   |   | 2,853,170 |   |
|                            |   |              |      |
|                            |   | December 31, 2007 |      |
|                            |   |              |      |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                            |   | Amortized         |      |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                            |   | Cost              |      |   | Gains |   |   | Losses |   |   | Value |   |
|                            |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trust      preferred securities |   | $                 | 7,901,839 |   |   |   | - |   |   |   | - |   |   |   | 7,901,839 |   |

----

| (3)    | Securities,      continued                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      amortized cost and estimated fair value of investment securities      available-for-sale and held-to-maturity at December 31, 2008, by      contractual maturity are shown below. Expected maturities will differ from      contractual maturities because borrowers have the right to call or prepay      certain obligations with or without call or prepayment      penalties. |

| Available-for-Sale                                     |   | Amortized |       |   | Estimated  |   |
|--------------------------------------------------------|--------|-----------|------------|--------|------------|--------|
|                                                   |   | Cost      |       |   | Fair Value |   |
| State,      county and municipals and corporate bonds: |   |      |       |   |       |   |
| Within      1 year                                     |   | $         | 350,000    |   |       |   | 350,000 |   |
| 1      to 5 years                                      |   |      | 6,381,488  |   |       |   | 6,003,168 |   |
| 5      to 10 years                                     |   |      | 12,043,040 |   |       |   | 12,196,443 |   |
| After      10 years                                    |   |      | 44,899,494 |   |       |   | 42,644,749 |   |
| Mortgage-backed      securities                        |   |      | 32,587,849 |   |       |   | 33,175,262 |   |
|                                                   |   | $         | 96,261,871 |   |       |   | 94,369,622 |   |
| Held-to-Maturity                                       |   |      |       |   |       |   |   |   |
| Trust      preferred securities:                       |   |      |       |   |       |   |   |   |
| After      10 years                                    |   | $         | 7,622,340  |   |       |   | 2,853,170 |   |

|   | The      following is a summary of the fair values of securities that have      unrealized losses as of December 31, 2008 and  2007: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | December      31, 2008 |       |
|-----------------------------------|--------|------------------------|------------|
|                              |   | Less Than 12 Months    |       |   | 12 Months or More |   |
|                              |   | Fair                   |       |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                              |   | Value                  |       |   | Losses |   |   | Value |   |   | Losses |   |
| Mortgage-backed      securities   |   | $                      | 2,218,159  |   |   |   | 30,265 |   |   |   | - |   |   |   | - |   |
| State,      county and municipals |   |                   | 33,952,227 |   |   |   | 1,951,073 |   |   |   | 3,834,658 |   |   |   | 453,540 |   |
| Corporate      bonds              |   |                   | 3,915,717  |   |   |   | 427,607 |   |   |   | - |   |   |   | - |   |
|                              |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | $                      | 40,086,103 |   |   |   | 2,408,945 |   |   |   | 3,834,658 |   |   |   | 453,540 |   |

|                                       |   | December      31, 2007 |       |
|--------------------------------------------|--------|------------------------|------------|
|                                       |   | Less Than 12 Months    |       |   | 12 Months or More |   |
|                                       |   | Fair                   |       |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                       |   | Value                  |       |   | Losses |   |   | Value |   |   | Losses |   |
| U.S.      Government sponsored enterprises |   | $                      | 998,800    |   |   |   | 1,018 |   |   |   | - |   |   |   | - |   |
| Mortgage-backed      securities            |   |                   | 2,898,436  |   |   |   | 3,691 |   |   |   | 8,049,219 |   |   |   | 164,994 |   |
| State,      county and municipals          |   |                   | 18,168,890 |   |   |   | 256,215 |   |   |   | 3,458,929 |   |   |   | 28,923 |   |
| Corporate      bonds                       |   |                   | 2,352,811  |   |   |   | 10,997 |   |   |   | 697,089 |   |   |   | 8,771 |   |
|                                       |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | $                      | 24,418,937 |   |   |   | 271,921 |   |   |   | 12,205,237 |   |   |   | 202,688 |   |

|   | At      December 31, 2008, all unrealized losses in the investment securities      portfolio related to debt securities. The unrealized losses on these debt      securities arose due to changing interest rates and are considered to be      temporary. From the December 31, 2008 tables above, 18 securities out of      88 securities issued by mortgage backed securities contained unrealized      losses, 85 out of 149 securities issued by state and political      subdivisions contained unrealized losses and three out of three securities      issued by corporations contained unrealized losses. These unrealized      losses are considered temporary because of acceptable investment grades on      each security and the repayment sources of principal and interest are      largely government backed. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3)    | Securities,      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Proceeds      from sales of securities available-for-sale during 2008 and 2007 were      $28,966,259 and $5,993,155, respectively, with a gross gain of $435,067 in      2008. There were no gains or losses recognized upon sales in 2007 due to      investment securities acquired in the First Haralson acquisition being      sold shortly after the merger date to reposition the investment      portfolio.  All investment securities acquired in the      acquisition were acquired at their fair market value. There were no sales      of securities available-for-sale during 2006. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Investment      securities with a fair value of approximately $92,431,000 and $91,679,000      as of December 31, 2008 and 2007, respectively, were pledged to secure      public deposits, as required by law, and for other purposes. In addition,      certificates of deposit at other banks in the amount of $12,000,000, were      pledged to secure public deposits at December 31, 2008.                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (4)    | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Major      classifications of loans at December 31, 2008 and 2007 are summarized as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

|                                              |   | 2008   |        |   | 2007   |   |
|---------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Commercial,      financial and agricultural       |   | $      | 64,433,643  |   |   |   | 63,038,467 |   |
| Real      estate – mortgage                 |   |   | 349,612,461 |   |   |   | 313,836,443 |   |
| Real      estate – construction             |   |   | 182,877,720 |   |   |   | 242,216,730 |   |
| Consumer                                          |   |   | 34,575,962  |   |   |   | 40,872,282 |   |
|                                              |   |   | 631,499,786 |   |   |   | 659,963,922 |   |
| Less:        Unearned interest and fees |   |   | 1,337,869   |   |   |   | 1,802,831 |   |
| Allowance      for loan losses                    |   |   | 11,239,767  |   |   |   | 12,422,428 |   |
|                                              |   | $      | 618,922,150 |   |   |   | 645,738,663 |   |

|   | The      Bank grants loans and extensions of credit to individuals and a variety of      businesses and corporations primarily located in its general trade area of      Carroll, Paulding, Haralson, Coweta and Douglas Counties, Georgia.      Although the Bank has a diversified loan portfolio, a substantial portion      of the loan portfolio is collateralized by improved and unimproved real      estate and is dependent upon the real estate market.                                                                                                                |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Under      the line of credit agreements with the Federal Home Loan Bank and the      Federal Reserve Bank (see Note 8), the Bank pledges acceptable loans under      a blanket lien as collateral for its borrowings.    As      of December 31, 2008, loans totaling $106,200,000, were pledged to the      Federal Home Loan Bank and $20,849,000 were pledged to secure an open line      of credit with the Federal Reserve Bank.  As of December 31,      2007, loans totaling $111,378,000 were pledged to the Federal Home Loan      Bank. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Changes      in the allowance for loan losses for the years ended December 31, 2008,      2007 and 2006 are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

|                                                      |   | 2008   |        |   | 2007   |   |       | 2006   |   |
|-----------------------------------------------------------|--------|--------|-------------|--------|--------|--------|------------|--------|--------|
|                                                      |   |   |        |   |   |   |       |   |   |
| Balance,      beginning of year                           |   | $      | 12,422,428  |   |   |   | 5,748,355  |   |   |   | 5,327,406 |   |
| Provision      for loan losses                            |   |   | 14,900,000  |   |   |   | 10,206,263 |   |   |   | 1,465,000 |   |
| Allowance      attributable to First Haralson acquisition |   |   | -           |   |   |   | 1,527,225  |   |   |   | - |   |
| Loans      charged off                                    |   |   | (16,430,695 | )      |   |   | (5,243,428 | )      |   |   | (1,112,201 | ) |
| Recoveries                                                |   |   | 348,034     |   |   |   | 184,013    |   |   |   | 68,150 |   |
| Balance,      end of year                                 |   | $      | 11,239,767  |   |   |   | 12,422,428 |   |   |   | 5,748,355 |   |

|   | The      Company considers a loan to be impaired when it is probable that it will      be unable to collect all amounts due according to the original terms of      the loan agreement. Impaired loans include loans which are not accruing      interest and restructured loans which are accruing interest. The Company      measures impairment of a loan on a loan-by-loan      basis.  Non-accrual loans are loans which collection of interest      is not probable and all cash flows received are recorded as reduction in      principal.  Restructured loans have modified terms from the      original contract that give the debtor a more practical arrangement for      meeting financial obligations.    Amounts of impaired      loans that are not probable of collection are charged off      immediately.  Impaired loans and related amounts included in the      allowance for loan losses at December 31, 2008 and 2007 are as      follows: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (4) | Loans,      continued |
|-----|-----------------------|

|                                          |   | 2008    |       |   | 2007      |   |
|-----------------------------------------------|--------|---------|------------|--------|-----------|--------|
|                                          |   |    |       |   | Allowance |   |   |   |   |   | Allowance |   |
|                                          |   | Balance |       |   | Amount    |   |   | Balance |   |   | Amount |   |
|                                          |   |    |       |   |      |   |   |   |   |   |   |   |
| Impaired      loans with related allowance    |   | $       | 31,481,508 |   |      |   | 3,708,874 |   |   |   | 11,544,090 |   |   |   | 1,504,955 |   |
| Impaired      loans without related allowance |   |    | 52,910,575 |   |      |   | - |   |   |   | 34,807,780 |   |   |   | - |   |

|   | The      average amount of impaired loans during 2008 and 2007 was $53,794,000 and      $5,807,000, respectively. Interest income recognized on impaired loans was      $119,985 in 2008 and $642,057 in 2007.  No interest income was      recognized on impaired loans in 2006. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                        |
| (5)    | Premises and      Equipment                                                                                                                                                                                                                                                                 |
|   | Major      classifications of premises and equipment at December 31, 2008 and 2007      are summarized as follows:                                                                                                                                                                          |

|                                |   | 2008   |       |   | 2007   |   |
|-------------------------------------|--------|--------|------------|--------|--------|--------|
| Land                                |   | $      | 3,296,109  |   |   |   | 2,793,363 |   |
| Buildings      and improvements     |   |   | 15,017,660 |   |   |   | 15,878,764 |   |
| Furniture      and equipment        |   |   | 10,609,050 |   |   |   | 10,052,282 |   |
|                                |   |   | 28,922,819 |   |   |   | 28,724,409 |   |
| Less:      Accumulated depreciation |   |   | 11,906,456 |   |   |   | 10,367,439 |   |
|                                |   | $      | 17,016,363 |   |   |   | 18,356,970 |   |

|   | Depreciation      expense amounted to $1,635,033, $1,449,463 and $1,134,746 in 2008, 2007      and 2006, respectively.                                                                                                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                     |
| (6)    | Intangible      Assets                                                                                                                                                                                                                                   |
|   | Intangible      assets include goodwill and core deposit intangible, both of which were      generated as a result of the merger with First Haralson Corporation as of      July 1, 2007. The changes in goodwill for 2008 and 2007 are as      follows: |

|                            |   | 2008   |        |   | 2007   |   |
|---------------------------------|--------|--------|-------------|--------|--------|--------|
| Balance,      beginning of year |   | $      | 23,982,743  |   |   |   | - |   |
| Acquired      goodwill          |   |   | -           |   |   |   | 23,982,743 |   |
| Adjustments                     |   |   | 145,122     |   |   |   | - |   |
| Impairment      of goodwill     |   |   | (24,127,865 | )      |   |   | - |   |
| Balance,      end of year       |   | $      | -           |   |   |   | 23,982,743 |   |

|   | During      our annual assessment of goodwill as of September 30, 2008, we concluded      that goodwill was impaired.  SFAS No. 142 Goodwill and Other Intangible      Assets requires that goodwill be reviewed for impairment at least      annually.  Impairment is a condition that exists when the      carrying amount of the goodwill exceeds its fair value.  SFAS      No.  142 identifies a two step impairment test that should be      used to test for impairment and measure the amount of the impairment loss      to be recognized. The two tests were performed by a third party using      three valuation approaches: the market approach, income approach and the      cost approach.  Based on the testing, it was determined that the      entire amount of goodwill recorded at September 30, 2008 was      impaired.  The loss on impairment of goodwill in the amount of      $24,127,865 was recorded as an other expense in the statement of      operations for the year ended December 31, 2008. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | The      core deposit intangible is being amortized over its estimated useful life      of 10 years using the straight-line method.  A summary of core      deposit intangible asset as of December 31, 2008 and 2007 is as      follows                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|                                       |   | 2008   |      |   | 2007   |   |
|--------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Gross      amount                          |   | $      | 5,738,000 |   |   |   | 5,738,000 |   |
| Less      – accumulated amortization |   |   | 860,700   |   |   |   | 286,902 |   |
| Carrying      amount, end of year          |   | $      | 4,877,300 |   |   |   | 5,451,098 |   |

----

| (6)       | Intangible Assets,      continued                                                                                                                                                                                                                                                                                                                          |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      | Amortization      expense for core deposit intangible was $573,798 and $286,902 in 2008 and      2007, respectively.  The Company recorded no amortization of      core deposit intangible in 2006 prior to the      merger.  Amortization expense is estimated to be $573,798 per      year for each of the years, 2009 through 2013. |
|      |                                                                                                                                                                                                                                                                                                                                                       |
|  (7) | Deposits                                                                                                                                                                                                                                                                                                                                                   |
|      | At      December 31, 2008 the scheduled maturities of time deposits are as      follows:                                                                                                                                                                                                                                                                   |

| Maturing      in: |   |   |        |
|-------------------|--------|--------|-------------|
|              |   |   |        |
| 2009              |   | $      | 270,390,914 |   |
| 2010              |   |   | 124,021,430 |   |
| 2011              |   |   | 53,491,703  |   |
| 2012              |   |   | 25,076,488  |   |
| 2013              |   |   | 8,510,899   |   |
| Thereafter        |   |   | 1,010,077   |   |
|              |   |   |        |   |
|              |   | $      | 482,501,511 |   |

|   | The      Bank held $137,662,153 and $91,127,044 in certificates of deposit obtained      through the efforts of third party brokers at December 31, 2008 and 2007,      respectively. The weighted average interest rate on the deposits at      December 31, 2008 and 2007 was 4.31% and 4.77%, respectively. The deposits      outstanding at December 31, 2008 mature as  follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Maturing      in: |   |   |        |
|-------------------|--------|--------|-------------|
|              |   |   |        |
| 2009              |   | $      | 64,707,082  |   |
| 2010              |   |   | 47,720,071  |   |
| 2011              |   |   | 19,940,000  |   |
| 2012              |   |   | 5,295,000   |   |
|              |   |   |        |   |
|              |   | $      | 137,662,153 |   |

| (8)    | Lines of      Credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | As      of December 31, 2008, the Bank has a collateralized line of credit for      overnight borrowings of $15,800,000 with a correspondent bank of which,      none was outstanding.  The line of credit is collateralized by      investment securities at their market values.  On December 31,      2007, the Bank had an uncollateralized line of credit for overnight      borrowings of $24,800,000 with a correspondent bank of which, none was      outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The      Bank has a collateralized line of credit for overnight borrowings with the      Federal Reserve Bank of Atlanta with credit availability of $8,256,000 of      which, none was outstanding as of December 31, 2008.  The line      is collateralized by certain qualifying real estate and commercial loans      in the portfolio that are physically held by the Federal Reserve      Bank.  The Bank did not have a line of credit with the Federal      Reserve Bank of Atlanta in 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The      Bank has a line of credit with the FHLB in the amount of 20 percent of      assets,which was approximately $126,440,000 subject to available      qualifying collateral at December 31, 2008.  The FHLB advances      are secured by the Bank’s stock in the FHLB, it’s qualifying 1-4 family      first mortgage loans and qualified commercial loans. In addition, the      FHLB accepts federal funds sold to FHLB and certain investment securities      as collateral.  Advances on the      FHLB line of credit are subject to available collateral of the      Bank.  At December 31, 2008 and 2007, the Bank had advances      outstanding from the FHLB amounting to $52,000,000 and $54,500,000,      respectively.  The Bank pledged sufficient collateral at      December 31, 2008 and 2007 for these borrowings.  An early      conversion option allows the FHLB to convert certain advances to a      variable interest rate upon notification to the Bank.  The      following advances require quarterly interest  payments: |

----

| (8) | Lines of Credit,      continued |
|-----|---------------------------------|

| Advance |       | Interest Basis |              | Current Rate |   | Maturity |   | Call Date           |   |               | Early Conversion Option |   |
|---------|------------|----------------|-------------------|--------------|--------|----------|--------|---------------------|--------|--------------------|-------------------------|--------|
|    |       |           |              |         |   |     |   |                |   |               |                    |   |
| $       | 10,000,000 |           | Fixed      Hybrid |         |   | 5.49     | %      | May      2011       |   |               | -                       |   |   |   | - |   |
| $       | 7,000,000  |           | Fixed      Hybrid |         |   | 4.24     | %      | June      2010      |   |               | -                       |   |   |   | - |   |
| $       | 5,000,000  |           | Fixed             |         |   | 2.69     | %      | February      2010  |   |               | -                       |   |   |   | - |   |
| $       | 10,000,000 |           | Fixed             |         |   | 4.08     | %      | September      2012 |   |               | -                       |   |   |   | - |   |
| $       | 10,000,000 |           | Fixed             |         |   | 3.23     | %      | February      2014  |   | February      2009 |                    |   | February      2009, 3      month LIBOR |   |
| $       | 10,000,000 |           | Fixed             |         |   | 4.39     | %      | January      2016   |   | January      2011  |                    |   | January      2011, |   |

| Advance |       | Interest Basis |              | Current Rate |   | Maturity |   | Call Date           |   |                | Early Conversion Option |   |
|---------|------------|----------------|-------------------|--------------|--------|----------|--------|---------------------|--------|---------------------|-------------------------|--------|
|    |       |           |              |         |   |     |   |                |   |                |                    |   |   |
| $       | 10,000,000 |           | Fixed      Hybrid |         |   | 5.49     | %      | May      2011       |   |                |                    | -      |   |   |   | - |   |
| $       | 7,000,000  |           | Fixed      Hybrid |         |   | 4.24     | %      | June      2010      |   |                |                    | -      |   |   |   | - |   |
| $       | 5,000,000  |           | Fixed             |         |   | 5.44     | %      | February      2008  |   |                |                    | -      |   |   |   | - |   |
| $       | 10,000,000 |           | Fixed             |         |   | 4.08     | %      | September      2012 |   | September      2008 |                    |   | September      2008, 3      month LIBOR |   |
| $       | 10,000,000 |           | Fixed             |         |   | 3.23     | %      | February      2014  |   |                | February      2009      |   |   | February      2009, 3      month LIBOR |   |
| $       | 10,000,000 |           | Fixed             |         |   | 4.39     | %      | January      2016   |   |                | January      2011       |   |   | January      2011 |   |
|    |       |           |              |         |   |     |   |                |   |                |                    |   |   |   | 3      month LIBOR |   |
| $       | 2,500,000  |           | Fixed             |         |   | 5.39     | %      | March      2008     |   |                |                    | -      |   |   |   | - |   |

| (9)    | Securities Sold Under      Repurchase Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      Company had no securities sold under repurchase agreements as of December      31, 2008.  The Company had securities sold under repurchase      agreements of $20,000,000 at December 31, 2007.  The Company      entered into the transaction on November 23, 2007 and the agreement had a      maturity date of November 23, 2012 and it became callable by the issuer or      the Company on November 23, 2009.  The interest was paid      quarterly at a rate of 3.90%. The Company was required by the issuer to      pay off the securities sold under repurchase in June  2008.                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (10)   | Junior Subordinated      Debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | The      Company entered into a junior subordinated debenture in connection with      the acquisition of First Haralson.  The debenture qualifies as      Tier I capital under risk based capital guidelines subject to certain      limitations.  The debentures were issued June 15, 2007 in the      amount of $10,825,000 at a floating rate of 90 day LIBOR plus 1.55%      payable quarterly.  The debenture is redeemable on a mandatory      basis upon maturity in June 2037, but is callable without premium in June      2012. The interest rate at December 31, 2008 was 3.55%.                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (11)   | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Off Balance Sheet      Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The      Company is a party to financial instruments with off balance sheet risk in      the normal course of business to meet the financing needs of its      customers. These financial instruments include commitments to extend      credit and standby letters of credit. Those instruments involve, to      varying degrees, elements of credit risk in excess of the amount      recognized in the balance sheet. The contractual amounts of those      instruments reflect the extent of involvement the Company has in      particular classes of financial instruments.                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The      Company’s exposure to credit loss in the event of non-performance by the      other party to the financial instrument for commitments to extend credit      and standby letters of credit is represented by the contractual amount of      those instruments. The Company uses the same credit policies in making      commitments and conditional obligations as it does for on balance sheet      instruments.  In most cases, the Company requires collateral to      support financial instruments with credit risk. The following table      summarizes the off balance sheet financial instruments as of December 31,      2008 and 2007: |

|                                                                     |   | Approximate        |       |
|--------------------------------------------------------------------------|--------|--------------------|------------|
|                                                                     |   | Contractual Amount |       |
|                                                                     |   | 2008               |       |   | 2007 |   |
| Financial      instruments whose contract amounts represent credit risk: |   |               |       |   |   |   |
| Commitments      to extend credit                                        |   | $                  | 64,340,000 |   |   |   | 99,882,000 |   |
| Standby      letters of credit                                           |   | $                  | 7,383,000  |   |   |   | 9,943,000 |   |

----

| (11)   | Commitments,      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Off Balance Sheet      Commitments, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Commitments      to extend credit are agreements to lend to a customer as long as there is      no violation of any condition established in the contract. Standby letters      of credit are conditional commitments issued by the Company to guarantee      the performance of a customer to a third party.  Commitments      generally have fixed expiration dates or other termination clauses and may      require payment of a fee. Since many of the commitments may expire without      being drawn upon, the total commitment amounts do not necessarily      represent future cash requirements. The Company evaluates each customer’s      creditworthiness on a case-by-case basis. The amount of collateral      obtained, if deemed necessary by the Company, upon extension of a      commitment is based on management’s credit evaluation. Collateral held      varies, but may include unimproved and improved real estate, certificates      of deposit or personal property. The credit risk involved in issuing      letters of credit is essentially the same as that involved in extending      loans.                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Derivative Instruments      and Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      Company had one and fifteen interest rate swap position(s) at December 31,      2008 and 2007, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | In      2006, the Company entered into a series of fourteen interest rate swap      agreements with a total notional amount of $41,156,509 related to its      issuance of brokered certificates of deposit. The interest rate swap      contracts had various notional amounts, maturity dates, receive fixed      rates and pay floating rates.  The Company designated the      fourteen swap from fixed to variable rate contracts as fair value hedges      and, accordingly, was recording the fair value of the derivatives as well      as the fair value of the items being hedged on the balance sheet. Changes      in the fair value of the swap contracts and the items being hedged were      recorded in current period earnings. The Company terminated its fair value      interest rate swap positions in April 2008 for a gain in the amount of      $626,070. The Company is recognizing the gain on the transaction over      the original term of the swaps.  The Company recognized $482,809      of the gain during 2008.  The fair value of the swap contracts      accounted for as fair value hedges was $263,474 at December 31, 2007 and      were recorded in other assets on the balance sheet. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The      objective of the fourteen swap agreements was to decrease the Company’s      interest rate risk exposure. Being asset sensitive, the Company was (and      remains) susceptible to interest rate risk in a downward rate environment.      This was, in part, attributable to the fixed rate nature of the Company’s      brokered certificates of deposit. The Company was using the swap      agreements to convert the fixed rate brokered certificates of deposit and      borrowings into floating rate instruments. Consequently, the interest rate      swap contracts allowed the Company to hedge changes in the fair value of      its brokered certificates of deposit and borrowings that resulted from      changes in benchmark interest rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The      Company entered into an interest rate swap on December 4, 2007 that has a      maturity date of June 15, 2012.  The objective of the swap was      to lock in a fixed rate as opposed to the contractual variable interest      rate on the junior subordinated debentures.  The interest rate      swap contract has a notional amount of $10,825,000 and is hedging the      variable rate on the junior subordinated debentures described in Note 10      of the consolidated financial statements.  The Company receives      a variable rate of the 90 day LIBOR rate plus 1.55% and pays a fixed rate      of 5.77%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The      Company has designated the swap on the junior subordinated debentures as a      cash flow hedge and, accordingly is recording the fair value of the      derivative on the balance sheet.  Changes in the fair value of      the swap contract are recorded as a current period component of other      comprehensive income, net of tax.  The fair value of the swap      contract accounted for as a cash flow hedge was a loss of $843,869 and      $29,636 at December 31, 2008 and 2007, respectively.  The value      of the swap is recorded in other liabilities on the balance sheet as of      December 31, 2008 and 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

| (11)   | Commitments,      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Derivative Instruments      and Hedging Activities, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      Company uses the long haul method afforded under SFAS No. 133 to assess      the effectiveness of its hedging activity.  The Company assesses      the effectiveness of the cash flow hedge by comparing the cumulative      change in anticipated cash flows from the hedged exposure over the hedging      period to the cumulative change in anticipated cash flows from the hedging      derivative.  The Company utilizes the “Hypothetical Derivative      Method” to compute the cumulative change in anticipated interest cash      flows from the hedged exposure.  To the extent that the      cumulative change in anticipated cash flows from the hedging derivative      offsets from 80% to 120% of the cumulative change in anticipated interest      cash flows from the hedged exposure, the hedge is deemed to be effective.      The Company assessed the effectiveness of the fair value hedge contracts      by regressing the market price, including any premium paid, of the      brokered certificates of deposit (the dependent variables) with the market      price of the interest rate swap (the independent variable) on a quarterly      basis until all the contracts have matured.  Each regression      analysis will include in its data set values from a retrospective      (realized historical prices) and prospective (shocked scenario analysis)      basis.  The hedge is considered effective if the correlation      coefficient is within 80% to 120%, where the R square is highly      correlative to the value of 1 and the F-stat is large signifying high      explanatory power.  The Company’s cash flow hedge has remained      effective since inception |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (12)   | Stockholders’      Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Common      Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | On      June 10, 2008 the Company’s shareholders voted to amend the Company’s      Amended and Restated Articles of Incorporation in order to increase the      number of authorized common stock shares from 10,000,000 shares having a      $1.25 par value per share to 20,000,000 shares having no par      value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Preferred      Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | On      June 10, 2008 the Company’s shareholders voted to amend the Company’s      Amended and Restated Articles of Incorporation in order to authorize the      creation of 10,000,000 shares of preferred stock having no par      value.  The issuance terms can be designated by the Board in one      or more series in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | On      June 20, 2008, the Company filed a Form S-1 with the Securities and      Exchange Commission to register 3,750,000 shares of its Series A      Convertible Preferred Stock (“Series A Preferred”) for sale to the      Company’s shareholders under a rights offering that was completed      September 22, 2008.  A total of 1,153,508 shares of the Series A      Preferred were sold to shareholders in the rights offering.  The      remaining registered shares are subject to an ongoing public offering      which has been extended to April 15, 2009.  As of December 31,      2008, a total of 1,509,100 shares of Series A Preferred have been sold      (including those sold in the rights offering).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Holders      of the Series A Preferred will be entitled to receive, if, as and when      declared by the Board of Directors out of legally available assets,      non-cumulative cash dividends on the Liquidation Preference, which is      $8.00 per share of Series A Preferred. These dividends will be payable at      a rate per annum      equal to 9%, quarterly in arrears on each March 15, June 15, September 15      and December 15, commencing December 15, 2008.  The Company is      prohibited from paying any dividends on its common stock unless and until      all dividends for a particular quarterly dividend period have been      declared and paid on the Series A Preferred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      Series A Preferred is perpetual and will not mature on a specified      date.  The Series A Preferred is not subject to any mandatory      redemption provisions.  The shares become convertible into      shares of common stock at the option of a holder from and after September      22, 2011.  On or after September 15, 2013, the Company may, at      its option, at any time or from time to time cause some or all of the      Series A Preferred to be converted into shares of common      stock.  In the event of a dissolution or liquidation, the Series      A Preferred shareholders receive a preference of $8.00 per share over the      claims of common shareholders.  Holders of the Series A      preferred shares have no voting rights, except as required by      law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Direct Stock Purchase      and Dividend Reinvestment Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | On      May 22, 2008, the Company filed a Form S-3 with the Securities and      Exchange Commission to register 500,000 shares of its common stock for its      Direct Stock Purchase and Dividend Reinvestment Plan.  The plan      offers holders of the Company’s common stock and new investors the      opportunity to reinvest their dividends into the Company’s common stock or      purchase common stock with optional cash payments of $250 to $10,000 per      month without the payment of brokerage commissions or service      charges.  The plan was amended by the Company’s board of      directors in October 2008 in order to permit holders of the Series A      Preferred to reinvest dividends paid on the Series A Preferred into shares      of the Company’s common stock.  As of December 31, 2008, 413      shares at an average price of $3.54 per share have been issued by the      Company in the Direct Stock Purchase and Dividend Reinvestment      Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

|   | Stock Repurchase      Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Beginning      in 1996, the Board of Directors approved a Stock Repurchase Plan of up to      $2,000,000 of the Company’s common stock currently      outstanding.  During 2001, the Board of Directors approved an      additional $1,000,000, to be used for the Stock Repurchase Plan. The      Company retired no shares in 2008, 1,345 and 38,202 shares of common stock      during 2007 and 2006, respectively. At December 31, 2008, the Company had      $557,547 remaining to reacquire shares under the Stock Repurchase      Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (13)   | Regulatory      Matters                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | On      November 12, 2008, the Bank, entered into a formal written agreement (the      “Agreement”) with the OCC.  The Agreement requires the Bank to      undertake certain actions within designated time frames, and to operate in      compliance with the provisions thereof during its term.  The      Board of Directors and management of the Bank have implemented many of      these provisions and continue to support compliance with the      Agreement.  The actions that are to be undertaken are as      follows: implement an asset recovery staff, continue to enhance loan      portfolio management procedures and processes, continue to diversify the      loan portfolio, maintain a valuation process on foreclosed property      maximizing net realizable value for shareholders, continue to raise      capital, provide written plans of action to reduce non-performing assets      and provide a three year budget and capital plan.  Compliance      with the Agreement is to be monitored by a committee made up of seven      Directors of the Company.   As of December 31, 2008, the      Bank is in the process of complying with the Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | On      October 3, 2008, Congress passed the Emergency Economic Stabilization      Act of 2008 ("EESA"), which creates the Troubled Asset Relief Program      ("TARP") and provides the U.S. Secretary of the Treasury with broad      authority to implement certain actions to help restore stability and      liquidity to U.S. markets. The Capital Purchase Program (the "CPP") was      announced by the U.S. Treasury on October 14, 2008 as part of      TARP.  Pursuant to the CPP, the U.S. Treasury will purchase up to      $250 billion of senior preferred shares on standardized terms from      qualifying financial institutions. The purpose of the CPP is to encourage      U.S. financial institutions to build capital to increase the flow of      financing to U.S. businesses and consumers and to support the U.S.      economy.  The CPP is voluntary and requires a participating      institution to comply with a number of restrictions and provisions,      including standards for executive compensation and corporate governance      and limitations on share repurchases and the declaration and payment of      dividends on common shares.  The CPP allows qualifying financial      institutions to issue senior preferred shares to the U.S. Treasury in      aggregate amounts between 1 percent and 3 percent of the institution's      risk weighted assets ("Senior Preferred Shares").   The Senior      Preferred Shares will qualify as Tier 1 capital and rank senior to common      stock.  The Senior Preferred Shares will pay a cumulative dividend      rate of 5 percent per annum for the first five years and will reset to a      rate of 9 percent per annum after year five.  The Senior Preferred      Shares will be non-voting, other than class voting rights on matters that      could adversely affect the shares.  The Senior Preferred Shares will      be callable at par after three years.  Prior to the end of three      years, the Senior Preferred Shares may be redeemed with the proceeds from      a qualifying equity offering of any Tier 1 perpetual preferred or common      stock. U.S. Treasury may also transfer the Senior Preferred Shares to a      third party at any time.  In conjunction with the purchase of Senior      Preferred Shares, Treasury will receive warrants to purchase common stock      with an aggregate market price equal to 15 percent of the Senior Preferred      Shares.  The exercise price on the warrants will be the market price      of the participating institution's common stock at the time of issuance,      calculated on a 20-trading day trailing average.  Companies      participating in the CPP must adopt the U.S. Treasury's standards for      executive compensation and corporate governance.  The Company is      currently evaluating its participation in the CPP. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      Company and the Bank are subject to various regulatory capital      requirements administered by the federal banking agencies. Failure to meet      minimum capital requirements can initiate certain mandatory and possibly      additional discretionary actions by regulators that, if undertaken, could      have a direct material effect on the Company’s and the Bank’s financial      statements.  Under certain adequacy guidelines and the      regulatory framework for prompt corrective action, the Company and the      Bank must meet minimum capital guidelines that involve quantitative      measures of the assets, liabilities, and certain off-balance-sheet items      as calculated under regulatory accounting practices. The capital amounts      and classification are also subject to qualitative judgments by the      regulators about components, risk weightings, and other      factors.  Quantitative measures established by regulation to      ensure capital adequacy require the Company and the Bank to maintain      minimum amounts and ratios of total and Tier I capital to risk-weighted      assets and of Tier I capital to average assets. Under certain      circumstances, the regulators may impose higher minimum capital levels or      otherwise adjust an institution’s capital category based on market      conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

----

| (13)   | Regulatory      Matters, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      Bank received certain requests relating to capital from its primary      regulator, the OCC, the terms of which are confidential. Management is in      the process of complying with certain of these requests. If the regulatory      capital requirements are not met and/or maintained, additional regulatory      actions may be taken against the Bank.                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | As      of December 31, 2008 and 2007, the most recent notification from the      Federal Deposit Insurance Corporation categorized the Bank as well      capitalized and adequately capitalized, respectively, under the regulatory      framework for prompt corrective action.  To be categorized as      well and adequately capitalized the Bank must maintain minimum total      risk-based, Tier I risk-based and Tier I leverage ratios as set forth in      the table. Presented below are the Company’s and the Bank’s actual capital      amounts and ratios: |

|                                          |   |                  |   |   |              |   |   | To      Be Well Capitalized  |   |
|-----------------------------------------------|--------|-----------------------|--------|--------|-------------------|--------|--------|------------------------------|--------|
|                                          |   |                  |   |   | For      Capital  |   |   | Under      Prompt Corrective |   |
|                                          |   | Actual                |   |   | Adequacy Purposes |   |   | Action Provisions            |   |
|                                          |   | Amount                |   |   | Ratio             |   |   | Amount                       |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                          |   | (in      000’s) |   |   |              |   |   | (in      000’s)        |   |   |   |   |   | (in      000’s) |   |   |   |   |
| As      of December 31, 2008:                 |   |                  |   |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |
| Total      Capital (to Risk Weighted Assets)  |   |                  |   |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                  |   | $                     | 72,254 |   |              |   | 10.65  | %                            |   |  >$      54,308 |   |   | >8% |   |   |   | N/A |   |   |   | N/A |   |
| Bank                                          |   | $                     | 70,612 |   |              |   | 10.42  | %                            |   |  >$      54,193 |   |   | >8% |   |   |   | >$      67,713 |   |   | >10% |   |
| Tier      I Capital (to Risk Weighted Assets) |   |                  |   |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                  |   | $                     | 63,773 |   |              |   | 9.40   | %                            |   | >$      27,153 |   |   | >4% |   |   |   | N/A |   |   |   | N/A |   |
| Bank                                          |   | $                     | 62,144 |   |              |   | 9.17   | %                            |   | >$      27,097 |   |   | >4% |   |   |   | >$      40,645 |   |   | > 6% |   |
| Tier      I Capital (to Average Assets)       |   |                  |   |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                  |   | $                     | 63,773 |   |              |   | 7.20   | %                            |   |  >$      35,407 |   |   | >4% |   |   |   | N/A |   |   |   | N/A |   |
| Bank                                          |   | $                     | 62,144 |   |              |   | 7.05   | %                            |   |  >$      35,254 |   |   | >4% |   |   |   | >$      44,068 |   |   | >      5% |   |
|                                          |   |                  |   |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |

| As of December 31,      2007:                 |   |   |   |   |   |   |   |   |   |                    |   |   |   |   |   |   |              |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------------|--------|--------|--------|--------|--------|--------|-------------------|--------|
| Total      Capital (to Risk Weighted Assets)  |   |   |   |   |   |   |   |   |   |                    |   |   |   |   |   |   |              |   |
| Consolidated                                  |   | $      | 69,072 |   |   |   | 10.22  | %      |   |  >$      54,072 |   |   | >8% |   |   |   | N/A               |   |   |   | N/A |   |
| Bank                                          |   | $      | 66,177 |   |   |   | 9.83   | %      |   |  >$      53,844 |   |   | >8% |   |   |   | >$      67,305 |   |   | >10% |   |
| Tier      I Capital (to Risk Weighted Assets) |   |   |   |   |   |   |   |   |   |                    |   |   |   |   |   |   |              |   |   |   |   |   |
| Consolidated                                  |   | $      | 60,624 |   |   |   | 8.97   | %      |   |  >$      27,036 |   |   | >4% |   |   |   | N/A               |   |   |   | N/A |   |
| Bank                                          |   | $      | 57,764 |   |   |   | 8.58   | %      |   | >$      26,922       |   |   | >4% |   |   |   | >$      40,383 |   |   | > 6% |   |
| Tier      I Capital (to Average Assets)       |   |   |   |   |   |   |   |   |   |                    |   |   |   |   |   |   |              |   |   |   |   |   |
| Consolidated                                  |   | $      | 60,624 |   |   |   | 6.99   | %      |   | >$      34,699       |   |   | >4% |   |   |   | N/A               |   |   |   | N/A |   |
| Bank                                          |   | $      | 57,764 |   |   |   | 6.68   | %      |   | >$      34,587       |   |   | >4% |   |   |   | >$      43,234 |   |   | >      5% |   |

|   | Dividends      paid by the Bank are the primary source of funds available to the Company.      Banking regulations limit the amount of dividends that may be paid without      prior approval of the regulatory authorities. These restrictions are based      on the level of regulatory classified assets, the prior years’ net      earnings, and the ratio of equity capital to total assets. At December 31,      2008, the Bank cannot pay dividends without obtaining prior regulatory      approval.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (14)   | Incentive Stock Option      Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Under      the January 11, 1994 Incentive Stock Option Plan (the “1994 Plan”), the      Company may grant options to certain key officers to acquire shares of      common stock of the Company at the then fair value, with the number of      shares to be determined annually by agreed upon formulas. A total of      240,000 shares of common stock were reserved for possible issuance under      the 1994 plan. At December 31, 2003, the Company had distributed all the      options available for awards under the 1994 Plan.  The options      may not be exercised prior to five years from the date of grant and are      exercisable no later than ten years from that date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | On      April 8, 2003, the shareholders approved the WGNB Corp. 2003 Stock      Incentive Plan (the “2003 Plan”).  Under the 2003 Plan, the      Company may grant options to certain key officers to acquire shares of      common stock of the Company at the then fair value for incentive stock      options and no less than 85% of the fair value for nonqualified stock      options, with the number of shares to be determined annually by agreed      upon formulas.  A total of      990,000 shares of common stock were reserved for possible issuance under      the 2003 Plan with a maximum of 525,000 shares to be issued under      nonqualified stock option grants.  During 2008, the Company      granted 66,515 of the options available for awards under the 2003 Plan.      The options under the 2003 Plan were to be distributed commencing in the      2004 fiscal year and will terminate February 14, 2015 unless previously      terminated by the Board of Directors or when the options approved under      the plan have been distributed.  The options may be exercised by      the participants under a vesting period of five years ratably at 20% per      year.  The options are exercisable no later than ten years after      the date of grant.  Compensation cost in the amount of $174,500,      $177,500 and $128,250 has been recognized for the stock options for the      years end December 31, 2008, 2007 and 2006, respectively.  Under      the 1994 and 2003 plans, 59,930 and 178,986 options, respectively, were      unexercised as of December 31, 2008. No options were exercised in      2008.  The total intrinsic value of options exercised in 2007      and 2006 was $2,128 and $578,435,  respectively. |

----

| (14)   | Incentive Stock Option      Plan, continued                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                      |
|   | A      summary status of the Company’s stock option plans as of December 31,      2008, 2007 and 2006, and changes during the years ending on those dates,      is presented below: |

|                                 |   | 2008   |    |    | 2007     |   |   | 2006   |   |
|--------------------------------------|--------|--------|---------|---------|----------|--------|--------|--------|--------|
|                                 |   |   |    |    | Weighted |   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                                 |   |   |    |    | Average  |   |   |   |   |   | Average |   |   |   |   |   | Average |   |
|                                 |   |   |    |    | Exercise |   |   |   |   |   | Exercise |   |   |   |   |   | Exercise |   |
|                                 |   | Shares |    |    | Price    |   |   | Shares |   |   | Price |   |   | Shares |   |   | Price |   |
|                                 |   |   |    |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding,      beginning of year  |   |   | 176,457 |    |     | $      | 22.41  |   |   |   | 130,236 |   |   | $ | 19.44 |   |   |   | 184,676 |   |   | $ | 16.53 |   |
| Awarded      during the year         |   |   | 66,515  |    |     | $      | 17.90  |   |   |   | 49,398 |   |   | $ | 30.06 |   |   |   | 33,470 |   |   | $ | 24.99 |   |
| Exercised      during the year       |   |   | -       |    |     | $      | -      |   |   |   | (3,177 | ) |   | $ | 19.30 |   |   |   | (51,022 | ) |   | $ | 13.94 |   |
| Forfeited      during year           |   |   | (4,056  | )  |     | $      | 26.88  |   |   |   | - |   |   | $ | - |   |   |   | (36,888 | ) |   | $ | 17.50 |   |
|                                 |   |   |    |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding,      end of year        |   |   | 238,916 |    |     | $      | 21.08  |   |   |   | 176,457 |   |   | $ | 22.41 |   |   |   | 130,236 |   |   | $ | 19.44 |   |
|                                 |   |   |    |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options      exercisable at year end |   |   | 102,485 |    |     | $      | 19.26  |   |   |   | 33,803 |   |   | $ | 18.77 |   |   |   | 13,374 |   |   | $ | 17.48 |   |
|                                 |   |   |    |    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Options Outstanding |    |   | Options Exercisable |   |
|---------------------|---------|--------|---------------------|--------|
|  Shares        |    |   |  Range         |   |   | Wtd.      Avg.ExercisePrice |   |   | Wtd.      Avg.RemainingLife (Years) |   |   |  Shares |   |   | Wtd.      Avg.ExercisePrice |   |   | IntrinsicValue |   |
|                | 59,930  |   |                | $      | 13.33      - 16.66 |   |   | $ | 16.38 |   |   |   | 3.48 |   |   |   | 59,930 |   |   | $ | 16.38 |   |   | $ | - |   |
|                | 66,515  |   |                | $      | 17.90 |   |   | $ | 17.90 |   |   |   | 9.12 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
|                | 65,368  |   |                | $      | 19.25      - 24.99 |   |   | $ | 22.16 |   |   |   | 4.97 |   |   |   | 33,135 |   |   | $ | 21.40 |   |   | $ | - |   |
|                | 47,103  |   |                | $      | 29.91      - 30.63 |   |   | $ | 30.06 |   |   |   | 7.91 |   |   |   | 9,420 |   |   | $ | 30.06 |   |   | $ | - |   |
|                | 238,916 |   |                | $      | 13.33      - 30.63 |   |   | $ | 21.08 |   |   |   | 6.33 |   |   |   | 102,485 |   |   | $ | 19.26 |   |   | $ | - |   |

| (15)   | Supplemental      Employee Retirement Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      Company assumed a post-retirement benefit plan to provide retirement      benefits to First Haralson key officers.  Under the plan, the      Company assumed whole life insurance contracts on the lives of each      officer.  The increase in the cash surrender value of the      contracts, less the Company’s cost of funds, constitutes the Bank’s      contribution to the plan each year going forward.  In the event      the insurance contracts fail to produce positive returns, the Bank has no      obligation to contribute to the plan.  The Company recognized      $200,730 and $90,725 in compensation expense related to this plan in 2008      and 2007, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (16)   | Stock      Split                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | On      September 12, 2006, the Company’s board of directors declared a      three-for-two stock split for shareholders of record as of October 16,      2006 payable on November 15, 2006.  All share and per share      amounts have been restated to reflect the stock split as if it had      occurred on January 1, 2005.                                                                                                                                                                                                                                                                                                                                                                                                           |

----

| (17)   | Defined Contribution      Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      Company began a qualified retirement plan pursuant to Internal Revenue      Code Section 401(k) in 1996 covering substantially all employees subject      to certain minimum age and service requirements. Contribution to the plan      by employees is voluntary. During 2008, 2007 and 2006, the Company matched      100% of the participants’ contributions up to 6% of the participants’      salaries, subject to the annual 401(k) contribution limits. The Company      also made discretionary contributions to the plan in 2007 and 2006 of 5%      of participants’ salaries. Contributions to the plan charged to expense      during 2008, 2007 and 2006 were $503,708, $658,767 and $547,255,      respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (18)   | Income      Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      components of the provision for income tax expense (benefit) in the      consolidated statements of operations for the years ended December 31,      2008, 2007 and 2006 are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

|      |   | 2008   |       |   | 2007   |   |       | 2006   |   |
|-----------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Current:  |   |   |       |   |   |   |       |   |   |
| Federal   |   | $      | (2,251,023 | )      |   |   | 2,365,810  |   |   |   | 3,353,207 |   |
| State     |   |   | (264,826   | )      |   |   | 278,331    |   |   |   | 293,962 |   |
| Deferred: |   |   |       |   |   |   |       |   |   |   |   |   |
| Federal   |   |   | (3,469,404 | )      |   |   | (2,246,149 | )      |   |   | (169,031 | ) |
| State     |   |   | (408,165   | )      |   |   | (264,254   | )      |   |   | (19,614 | ) |
|      |   |   |       |   |   |   |       |   |   |   |   |   |
| Total     |   | $      | (6,393,418 | )      |   |   | 133,738    |   |   |   | 3,458,524 |   |

|                                         |   | 2008   |        |   | 2007   |   |      | 2006   |   |
|----------------------------------------------|--------|--------|-------------|--------|--------|--------|-----------|--------|--------|
|                                         |   |   |        |   |   |   |      |   |   |
| Pretax      (loss) income at statutory rates |   | $      | (12,628,908 | )      |   |   | 1,077,124 |   |   |   | 4,007,226 |   |
| Add      (deduct):                           |   |   |        |   |   |   |      |   |   |   |   |   |
| Goodwill      impairment                     |   |   | 8,203,474   |   |   |   | -         |   |   |   | - |   |
| Tax-exempt      interest income              |   |   | (941,518    | )      |   |   | (632,777  | )      |   |   | (430,180 | ) |
| State      taxes, net of federal effect      |   |   | (974,980    | )      |   |   | (208,930  | )      |   |   | 174,612 |   |
| Non-deductible      interest expense         |   |   | 40,495      |   |   |   | 31,378    |   |   |   | 70,448 |   |
| Other                                        |   |   | (91,981     | )      |   |   | (133,057  | )      |   |   | (363,582 | ) |
|                                         |   |   |        |   |   |   |      |   |   |   |   |   |
|                                         |   | $      | (6,393,418  | )      |   |   | 133,738   |   |   |   | 3,458,524 |   |

|  | The      following summarizes the net deferred tax asset, which is included as a      component of other assets, at December 31, 2008 and  2007. |
|--|--------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Deferred      income tax assets:                                                    |   |   |       |   |   |   |
| Allowance      for loan losses                                                      |   | $      | 4,214,537  |   |   |   | 4,590,089 |   |
| Other      real estate owned                                                        |   |   | 3,997,262  |   |   |   | 469,385 |   |
| Deferred      compensation                                                          |   |   | 1,378,421  |   |   |   | 1,307,090 |   |
| Net      unrealized loss on securities available-for-sale and      cash flow hedges |   |   | 479,769    |   |   |   | - |   |
| Income      tax credits and net operating loss carryforward                         |   |   | 420,799    |   |   |   | - |   |
| Deferred      income                                                                |   |   | 206,552    |   |   |   | - |   |
| Other                                                                               |   |   | -          |   |   |   | 22,493 |   |
|                                                                                |   |   |       |   |   |   |   |   |
| Total      gross deferred income tax assets                                         |   |   | 10,697,340 |   |   |   | 6,389,057 |   |
|                                                                                |   |   |       |   |   |   |   |   |
| Deferred      income tax liabilities:                                               |   |   |       |   |   |   |   |   |
| Low      income housing credits                                                     |   |   | (247,672   | )      |   |   | (251,671 | ) |
| Premises      and equipment                                                         |   |   | (1,364,101 | )      |   |   | (396,121 | ) |
| Net      unrealized gain on securities available-for-sale and      cash flow hedges |   |   | -          |   |   |   | (102,992 | ) |
| Purchase      accounting intangibles                                                |   |   | (1,508,892 | )      |   |   | (2,521,928 | ) |
| Other                                                                               |   |   | (1,742     | )      |   |   | (1,742 | ) |
|                                                                                |   |   |       |   |   |   |   |   |
| Total      gross deferred income tax liabilities                                    |   |   | (3,122,407 | )      |   |   | (3,274,454 | ) |
|                                                                                |   |   |       |   |   |   |   |   |
| Net      deferred income tax asset                                                  |   | $      | 7,574,933  |   |   |   | 3,114,603 |   |

----

| (19)   | Related Party      Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      Bank conducts transactions with directors and executive officers,      including companies in which they have beneficial interests, in the normal      course of business. It is the Bank’s policy to comply with federal      regulations that require that loan transactions with directors and      executive officers be made on substantially the same terms as those      prevailing at the time made for comparable loans to other persons. The      following summary reflects activity for related party loans for      2008: |

| Beginning      balance         |   | $      | 12,292,538 |   |
|--------------------------------|--------|--------|------------|--------|
| New      loans                 |   |   | 11,859,707 |   |
| Repayments                     |   |   | (8,966,080 | )      |
| Change      in related parties |   |   | (5,334,540 | )      |
|                           |   |   |       |   |
| Ending      balance            |   | $      | 9,851,625  |   |

|   | At      December 31, 2008 and 2007, deposits from directors, executive officers,      and their related interests totaled   approximately      $8,360,000 and $10,251,000, respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                    |
| (20)   | Other Operating      Expenses                                                                                                                                                                           |
|   | Components      of other operating expenses which exceed 1% of total interest income and      other income are as follows:                                                                              |

|                       |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|----------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                       |   |   |    |   |   |   |    |   |   |
| Professional      fees     |   | $      | 935,320 |   |   |   | 714,686 |   |   |   | 662,967 |   |
| Printing      and supplies |   | $      | 556,865 |   |   |   | 557,964 |   |   |   | 365,189 |   |

| (21)   | Fair      Value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Effective      January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements      ,which provides a framework for measuring fair value under generally      accepted accounting principles.  SFAS No. 157 applies to all      financial instruments that are being measured and reported on a fair value      basis.                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The      Company utilizes fair value measurements to record fair value adjustments      to certain assets and liabilities and to determine fair value      disclosures.  Securities available-for-sale, derivatives and      certain deposits are recorded at fair value on a recurring      basis.  Additionally, from time to time, the Company may be      required to record at fair value other assets on a non-recurring basis,      such as impaired loans and foreclosed property.  These      non-recurring fair value adjustments typically involve the application of      lower of cost or market accounting or write-downs of individual      assets. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Fair Value      Hierarchy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Under      SFAS No. 157, the Company groups assets and liabilities at fair value in      three levels, based on the markets in which the assets and liabilities are      traded and the reliability of the assumptions used to determine fair      value.  These levels are:                                                                                                                                                                                                                                                                                                                                                                                                           |

|   | Level      1 – | Valuation      is based upon quoted prices for identical instruments traded in active      markets.                                                                                                                                                                                                                                                                                                                                                                  |
|--------|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Level      2 – | Valuation      is based upon quoted market prices for similar instruments in active      markets, quoted prices for identical or similar instruments in markets      that are not active, and model-based valuation techniques for which all      significant assumptions are observable in the market.                                                                                                                                                              |
|   | Level      3 – | Valuation      is generated from model-based techniques that use at least one significant      assumption not     observable in the      market.  These unobservable assumptions reflect estimates of      assumptions that market participants would use in pricing the asset or      liability.  Valuation techniques include use of option pricing      models, discounted cash flow models and similar  techniques. |

|   | Following      is a description of valuation methodologies used for assets and      liabilities recorded at fair value: |
|--------|-------------------------------------------------------------------------------------------------------------------------|

----

| (21)   | Fair Value,      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Securities      Available-for-Sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Securities      available-for-sale are recorded at fair value on a recurring      basis.  Fair value measurement is based upon quoted prices, if      available.  If quoted prices are not available, fair values are      measured using independent pricing models or other model-based valuation      techniques such as the present value of future cash flows, adjusted for      the security’s credit rating, prepayment assumptions and other factors      such as credit loss assumptions.  Level 1 securities include      those traded on active exchanges such as U.S. Treasury securities that are      traded by dealers or brokers in active over-the-counter      markets.  Level 2 securities include mortgage-backed securities      issued by government sponsored enterprises, corporate debt securities and      municipal bonds.  Securities classified as Level 3 include      asset-backed securities in less liquid markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The      Company does not record loans at fair value on a recurring      basis.  However, from time to time, a loan is considered      impaired and an allowance for loan losses is established.  Loans      for which it is probable that payment of interest and principal will not      be made in accordance with the contractual terms of the loan agreement are      considered impaired.  Once a loan is identified as individually      impaired, management measures impairment in accordance with SFAS No. 114,      Accounting by Creditors      for Impairment of a Loan.  The fair value of impaired      loans is estimated using one of several methods, including collateral      value, market value of similar debt, enterprise value, liquidation value      and discounted cash flows.  Those impaired loans not requiring      an allowance represent loans for which the fair value of the expected      repayments or collateral exceed the recorded investments in such      loans.  At December 31, 2008, substantially all of the impaired      loans were evaluated based on the fair value of the      collateral.  In accordance with SFAS No. 157, impaired loans      where an allowance is established based on the fair value of collateral      require classification in the fair value hierarchy.  When the      fair value of the collateral is based on an observable market price or a      current appraised value, the Company records the impaired loan as      non-recurring Level 2.  When an appraised value is not available      or management determines the fair value of the collateral is further      impaired below the appraised value and there is no observable market      price, the Company records the impaired loan as non-recurring Level      3. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Foreclosed      Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Foreclosed      assets are adjusted to fair value upon transfer of the loans to foreclosed      assets.  Subsequently, foreclosed assets are carried at the      lower of carrying value or fair value.  Fair value is based upon      independent market prices, appraised values of the collateral or      management’s estimation of the value of the collateral.  When      the fair value of the collateral is based on an observable market price or      a current appraised value, the Company records the foreclosed asset as      non-recurring Level 2.  When an appraised value is not available      or management determines the fair value of the collateral is further      impaired below the appraised value and there is no observable market      price, the Company records the foreclosed asset as non-recurring Level      3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Intangible      Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Identified      intangible assets are subject to impairment testing.  A      projected cash flow valuation method is used in the completion of      impairment testing.  This valuation method requires a      significant degree of management judgment.  In the event the      projected undiscounted net operating cash flows are less than the carrying      value, the asset is recorded at fair value as determined by the valuation      model.  As such, the Company classifies intangible assets      subjected to nonrecurring fair value adjustments as Level    3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

| (21)   | Fair Value,      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Derivative Financial      Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The      Company uses interest rate swaps to manage interest rate      risk.  The valuation of these instruments is determined using      widely accepted valuation techniques including discounted cash flow      analysis on the expected cash flows of each derivative.  This      analysis reflects the contractual terms of the derivatives, including the      period to maturity, and uses observable market-based inputs, including      interest rate curves and implied volatilities.  The fair values      of interest rate swaps are determined using the market standard      methodology of netting the discounted future fixed cash receipts and the      discounted expected variable cash payments.  The variable cash      payments are based on an expectation of future interest rates (forward      curves derived from observable market interest rate    curves). |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | To      comply with the provisions of SFAS No. 157, the Company incorporates      credit valuation adjustments to appropriately reflect both its own      nonperformance risk and the respective counterparty’s nonperformance risk      in the fair value measurements.  In adjusting the fair value of      its derivative contracts for the effect of nonperformance risk, the      Company has considered the impact of netting any applicable credit      enhancements such as collateral postings, thresholds,      mutual  puts and guarantees.                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Although      the Company has determined that the majority of the inputs used to value      its derivatives fall within Level 2 of the fair value hierarchy, the      credit valuation adjustments associated with its derivatives utilize Level      3 inputs, such as estimates of current credit spreads to evaluate the      likelihood of default by itself or the counterparties.  However,      as of December 31, 2008, the Company has assessed the significance of the      impact of the credit valuation adjustments on the overall valuation of its      derivative positions and has determined that the credit valuation      adjustments are not significant to the overall valuation of its      derivatives.  As a result, the Company has determined that its      derivative valuations in their entirety are classified in Level 2 of the      fair value hierarchy.                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Assets and Liabilities      Recorded at Fair Value on a Recurring Basis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      table below presents the recorded amount of the Company’s assets and      liabilities measured at fair value on a recurring basis as of December 31,      2008 aggregated by the level in the fair value hierarchy within which      those measurements fall:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

|                                          |   | December      31, 2008 |   |
|-----------------------------------------------|--------|-----------------------------|--------|
|                                          |   | Level 1                     |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Investment      securities available-for-sale |   | $                           | -      |   |   |   | 94,369,622 |   |   |   | - |   |   |   | 94,369,622 |   |
|                                          |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative      financial instruments         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cash      flow hedge                          |   | $                           | -      |   |   |   | 843,869 |   |   |   | - |   |   |   | 843,869 |   |

|   | Assets Recorded at      Fair Value on a Non-recurring Basis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      Company may be required, from time to time, to measure certain assets at      fair value on a non-recurring basis in accordance with U.S. Generally      Accepted Accounting Principles.  These include assets that are      measured at the lower of cost or market that were recognized at fair value      below cost at the end of the period.  The table below presents      the Company’s assets measured at fair value on a non-recurring basis as of      December 31, 2008 by the level in the fair value hierarchy within which      those measurements fall: |

|                     |   | December      31, 2008 |   |
|--------------------------|--------|-----------------------------|--------|
|                     |   | Level 1                     |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Loans                    |   | $                           | -      |   |   |   | 80,683,209 |   |   |   | - |   |   |   | 68,161,156 |   |
| Foreclosed      property |   | $                           | -      |   |   |   | 45,797,654 |   |   |   | - |   |   |   | 45,797,654 |   |

----

| (21)   | Fair Value,      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Fair Value of      Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      Company is required to disclose fair value information about financial      instruments, whether or not recognized on the face of the balance sheet,      for which it is practicable to estimate that value. The assumptions used      in the estimation of the fair value of the Company’s financial instruments      are detailed below. Where quoted prices are not available, fair values are      based on estimates using discounted cash flows and other valuation      techniques. The use of discounted cash flows can be significantly affected      by the assumptions used, including the discount rate and estimates of future cash      flows. The following disclosures should not be considered a surrogate of      the liquidation value of the Company or its subsidiary, but rather a      good-faith estimate of the increase or decrease in value of financial      instruments held by the Company since purchase, origination, or      issuance. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Cash and Cash      Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | For      cash, due from banks, interest-bearing funds in other banks and federal      funds sold, the carrying amount is a reasonable estimate of fair      value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The      fair values for investment securities are based on quoted market      prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      fair value of fixed rate 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. For variable rate loans, the      carrying amount is a reasonable estimate of fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Cash Surrender Value      of Life Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The      fair value of cash surrender value of life insurance is based on the net      surrender value of the insurance contract.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      fair value of demand deposits, savings accounts, NOW and certain money      market deposits is the amount payable on demand at the reporting date. The      fair value of fixed maturity certificates of deposit is estimated by      discounting the future cash flows using the rates currently offered for      deposits of similar remaining maturities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Federal Home Loan Bank      Advances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      fair value of advances outstanding is based on the quoted value provided      by the FHLB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Junior Subordinated      Debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | For      the floating rate junior subordinated debentures, the carrying amount is a      reasonable estimate of fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Securities Sold Under      Repurchase Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The      fair value of the securities sold under repurchase agreements is estimated      as the amount that the Company would receive or pay to terminate the      contracts at the reporting date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Derivative      Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | For      derivative instruments, fair value is estimated as the amount that the      Company would receive or pay to terminate the contracts at the reporting      date, taking into account the current unrealized gains or losses on open      contracts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Commitments to Extend      Credit, Standby Letters of Credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Off      balance sheet instruments (commitments to extend credit and standby      letters of credit) are generally short-term and at variable interest      rates.  Therefore, both the carrying value and estimated fair      value associated with these instruments are  immaterial.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

| (21)   | Fair Value,      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Limitations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Fair      value estimates are made at a specific point in time, based on relevant      market information and information about the financial instrument. These      estimates do not reflect any premium or discount that could result from      offering for sale at one time the Company’s entire holdings of a      particular financial instrument. Because no market exists for a      significant portion of the Company’s financial instruments, fair value      estimates are based on many judgments. These estimates are subjective in      nature and involve uncertainties and matters of significant judgment and      therefore cannot be determined with precision. Changes in assumptions      could significantly affect the estimates.                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Fair      value estimates are based on existing on and off balance sheet financial      instruments without attempting to estimate the value of anticipated future      business and the value of assets and liabilities that are not considered      financial instruments. Significant assets and liabilities that are not      considered financial instruments include deferred income taxes and      premises and equipment. In addition, the tax ramifications related to the      realization of the unrealized gains and losses can have a significant      effect on fair value estimates and have not been considered in the      estimates. The carrying amount and estimated fair values of the Company’s      financial instruments at December 31, 2008 and 2007 are as      follows: |

|                                         |   | 2008     |        |   | 2007       |   |
|----------------------------------------------|--------|----------|-------------|--------|------------|--------|
|                                         |   | Carrying |        |   | Estimated  |   |   | Carrying |   |   | Estimated |   |
|                                         |   | Amount   |        |   | Fair Value |   |   | Amount |   |   | Fair Value |   |
| Assets:                                      |   |     |        |   |       |   |   |   |   |   |   |   |
| Cash      and cash equivalents               |   | $        | 75,350,985  |   |       |   | 75,350,985 |   |   |   | 25,845,340 |   |   |   | 25,845,340 |   |
| Securities      available-for-sale           |   | $        | 94,369,622  |   |       |   | 94,369,622 |   |   |   | 122,693,244 |   |   |   | 122,693,244 |   |
| Securities      held-to-maturity             |   | $        | 7,622,340   |   |       |   | 2,853,170 |   |   |   | 7,901,839 |   |   |   | 7,901,839 |   |
| Derivative      instruments-fair value hedge |   | $        | -           |   |       |   | - |   |   |   | 263,474 |   |   |   | 263,474 |   |
| Loans,      net                              |   | $        | 618,922,150 |   |       |   | 626,375,582 |   |   |   | 645,738,663 |   |   |   | 650,318,190 |   |
| Cash      surrender value of life insurance  |   | $        | 3,803,010   |   |       |   | 3,803,010 |   |   |   | 3,639,550 |   |   |   | 3,639,550 |   |
| Liabilities:                                 |   |     |        |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                     |   | $        | 761,693,075 |   |       |   | 770,356,279 |   |   |   | 706,377,489 |   |   |   | 707,629,177 |   |
| Federal      Home Loan Bank advances         |   | $        | 52,000,000  |   |       |   | 55,640,862 |   |   |   | 54,500,000 |   |   |   | 55,492,641 |   |
| Securities      sold under repurchase        |   |     |        |   |       |   |   |   |   |   |   |   |   |   |   |   |
| agreements                                   |   | $        | -           |   |       |   | - |   |   |   | 20,000,000 |   |   |   | 20,218,036 |   |
| Junior      subordinated debentures          |   | $        | 10,825,000  |   |       |   | 10,825,000 |   |   |   | 10,825,000 |   |   |   | 10,825,000 |   |
| Derivative      instruments-cash flow hedge  |   | $        | 843,869     |   |       |   | 843,869 |   |   |   | 29,636 |   |   |   | 29,636 |   |

----

| (22) | WGNB Corp. (Parent      Company Only) FinancialInformation |
|------|------------------------------------------------------------|

|                                            |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash                                            |   | $      | 1,265,606  |   |   |   | 1,734,744 |   |
| Investment      in Bank                         |   |   | 66,357,203 |   |   |   | 87,810,281 |   |
| Securities      held-to-maturity                |   |   | -          |   |   |   | 1,996,736 |   |
| Other      assets                               |   |   | 1,004,899  |   |   |   | 763,684 |   |
|                                            |   |   |       |   |   |   |   |   |
|                                            |   | $      | 68,627,708 |   |   |   | 92,305,445 |   |
|                                            |   |   |       |   |   |   |   |   |
| Liabilities and      Stockholders’ Equity |   |
|                                            |   |   |       |   |   |   |   |   |
| Dividends      payable                          |   | $      | 2,132      |   |   |   | 1,282,458 |   |
| Junior      subordinated debentures             |   |   | 10,825,000 |   |   |   | 10,825,000 |   |
| Other      liabilities                          |   |   | 871,309    |   |   |   | 47,095 |   |
|                                            |   |   |       |   |   |   |   |   |
| Total      liabilities                          |   |   | 11,698,441 |   |   |   | 12,154,553 |   |
|                                            |   |   |       |   |   |   |   |   |
| Stockholders’      equity                 |   |   | 56,929,267 |   |   |   | 80,150,892 |   |
|                                            |   |   |       |   |   |   |   |   |
|                                            |   | $      | 68,627,708 |   |   |   | 92,305,445 |   |

|                                                           |   | 2008   |        |   | 2007   |   |       | 2006   |   |
|----------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|------------|--------|--------|
|                                                           |   |   |        |   |   |   |       |   |   |
| Dividends      from Bank                                       |   | $      | 2,108,142   |   |   |   | 4,961,106  |   |   |   | 3,601,555 |   |
| Other      income                                              |   |   | 72,562      |   |   |   | 230,183    |   |   |   | 234,458 |   |
| Total      income                                              |   |   | 2,180,704   |   |   |   | 5,191,289  |   |   |   | 3,836,013 |   |
|                                                           |   |   |        |   |   |   |       |   |   |   |   |   |
| Interest      expense                                          |   |   | 631,522     |   |   |   | 385,754    |   |   |   | - |   |
| Other      expense                                             |   |   | 57,402      |   |   |   | 33,013     |   |   |   | 36,085 |   |
| Total      expense                                             |   |   | 688,924     |   |   |   | 418,767    |   |   |   | 36,085 |   |
|                                                           |   |   |        |   |   |   |       |   |   |   |   |   |
| Earnings      before (dividends received in excess of earnings |   |   |        |   |   |   |       |   |   |   |   |   |
| of      Bank)/equity in undistributed earnings of Bank         |   |   | 1,491,780   |   |   |   | 4,772,522  |   |   |   | 3,799,928 |   |
|                                                           |   |   |        |   |   |   |       |   |   |   |   |   |
| Dividends      received in excess of earnings of Bank          |   |   | (32,242,209 | )      |   |   | (1,738,249 | )      |   |   | - |   |
|                                                           |   |   |        |   |   |   |       |   |   |   |   |   |
| Equity      in undistributed earnings of Bank                  |   |   | -           |   |   |   | -          |   |   |   | 4,527,508 |   |
|                                                           |   |   |        |   |   |   |       |   |   |   |   |   |
| Net      (loss) earnings                                       |   | $      | (30,750,429 | )      |   |   | 3,034,273  |   |   |   | 8,327,436 |   |

----

| (22) | WGNB Corp. (Parent      Company Only) Financial Information,    continued |
|------|---------------------------------------------------------------------------|

|                                                                         |   | 2008   |        |   | 2007   |   |        | 2006   |   |
|------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                                                         |   |   |        |   |   |   |        |   |   |
| Cash      flows from operating activities:                                   |   |   |        |   |   |   |        |   |   |
| Net      (loss) earnings                                                     |   | $      | (30,750,429 | )      |   |   | 3,034,273   |   |   |   | 8,327,436 |   |
| Adjustments      to reconcile net (loss) earnings to net                     |   |   |        |   |   |   |        |   |   |   |   |   |
| cash      provided by operating activities:                                  |   |   |        |   |   |   |        |   |   |   |   |   |
| Amortization      and accretion                                              |   |   | -           |   |   |   | 827         |   |   |   | 5,019 |   |
| Stock      option expense                                                    |   |   | 174,500     |   |   |   | 177,500     |   |   |   | 128,250 |   |
| Equity      in undistributed earnings of Bank                                |   |   | -           |   |   |   | -           |   |   |   | (4,527,508 | ) |
| Dividends      received in excess of earnings of Bank                        |   |   | 32,242,209  |   |   |   | 1,738,249   |   |   |   | - |   |
| Change      in other assets                                                  |   |   | (778,609    | )      |   |   | (583,499    | )      |   |   | (74,354 | ) |
| Change      in other liabilities                                             |   |   | 824,214     |   |   |   | 27,535      |   |   |   | (128,525 | ) |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Net      cash provided by operating activities                               |   |   | 1,711,885   |   |   |   | 4,394,885   |   |   |   | 3,730,318 |   |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash      flows from investing activities:                                   |   |   |        |   |   |   |        |   |   |   |   |   |
| Capital      infusion to Bank                                                |   |   | (10,653,720 | )      |   |   | -           |   |   |   | - |   |
| Cash      paid to First Haralson shareholders                                |   |   | -           |   |   |   | (12,628,189 | )      |   |   | - |   |
| Proceeds      from pay-downs of securities available-for-sale                |   |   | -           |   |   |   | -           |   |   |   | 599,887 |   |
| Proceeds      from pay-downs of securities held-to-maturity                  |   |   | -           |   |   |   | 277,680     |   |   |   | 192,331 |   |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Net      cash (used) provided by investing activities                        |   |   | (10,653,720 | )      |   |   | (12,350,509 | )      |   |   | 792,218 |   |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash      flows from financing activities:                                   |   |   |        |   |   |   |        |   |   |   |   |   |
| Proceeds      from preferred stock offering                                  |   |   | 12,072,800  |   |   |   | -           |   |   |   | - |   |
| Dividends      paid on common stock                                          |   |   | (3,188,468  | )      |   |   | (4,438,593  | )      |   |   | (3,466,603 | ) |
| Dividends      paid on preferred stock                                       |   |   | (253,528    | )      |   |   | -           |   |   |   | - |   |
| Proceeds      from dividend reinvestment plan                                |   |   | 1,461       |   |   |   | -           |   |   |   | - |   |
| Proceeds      from junior subordinated debentures                            |   |   | -           |   |   |   | 10,825,000  |   |   |   | - |   |
| Exercise      of stock options                                               |   |   | -           |   |   |   | 61,317      |   |   |   | 711,247 |   |
| Stock      issuance cost                                                     |   |   | (159,568    | )      |   |   | (102,292    | )      |   |   | - |   |
| Retirement      of common stock                                              |   |   | -           |   |   |   | (30,935     | )      |   |   | (964,648 | ) |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Net      cash provided (used) by financing activities                        |   |   | 8,472,697   |   |   |   | 6,314,497   |   |   |   | (3,720,004 | ) |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Increase      (decrease) in cash                                             |   |   | (469,138    | )      |   |   | (1,641,127  | )      |   |   | 802,532 |   |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash      at beginning of year                                               |   |   | 1,734,744   |   |   |   | 3,375,871   |   |   |   | 2,573,339 |   |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash      at end of year                                                     |   | $      | 1,265,606   |   |   |   | 1,734,744   |   |   |   | 3,375,871 |   |
|                                                                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Supplemental      disclosure of non-cash investing and financing activities: |   |   |        |   |   |   |        |   |   |   |   |   |
| Securities      held-to-maturity contributed to the Bank                     |   | $      | (1,996,736  | )      |   |   | -           |   |   |   | - |   |
| Change      in dividends payable                                             |   | $      | (1,280,326  | )      |   |   | 322,513     |   |   |   | 135,162 |   |
| Change      in unrealized gains (losses) on securities                       |   |   |        |   |   |   |        |   |   |   |   |   |
| available-for-sale,      net of tax                                          |   | $      | (1,861,325  | )      |   |   | 542,389     |   |   |   | (56,059 | ) |
| Change      in fair value of derivatives                                     |   |   |        |   |   |   |        |   |   |   |   |   |
| for      cash flow hedges, net of tax                                        |   | $      | (537,394    | )      |   |   | (19,560     | )      |   |   | - |   |