U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB


              Annual Report Pursuant to Section 13 or 15(d) of
              The Securities Exchange Act of 1934
              For the Fiscal Year Ended December 31, 1999

              Transition Report Pursuant to Section 13 or 15(d) of
              The Securities Exchange Act of 1934

                        Commission File Number 000-25267

                          Oconee Financial Corporation
          ------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                    Georgia                                  58-2442250
          ----------------------------                  ---------------
          (State or other jurisdiction of              (I.R.S. Employer
          incorporation or organization)               Identification No.)

             35 North Main Street, Watkinsville, Georgia 30677-0205
         --------------------------------------------------------------
               (Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code:  (706) 769-6611
                                                     ---------------

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

Name of exchange on which registered:  None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $10.00
par value per share.

     Check whether the Registrant (1) has filed all reports required to be filed
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.

                      Yes     X         No
                           ------           -----

     Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K  is not  contained  herein  and  will  not be  contained,  to  the  best  of
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. X -----

     State issuer's revenues for its most recent fiscal year.    $11,973,681
                                                                 -----------

     Transitional Small Business Disclosure format.  Yes             No   X
                                                          -----         -----

     State the aggregate market value of the voting stock held by non-affiliates
(which for purposes  hereof are all holders  other than  executive  officers and
directors):  As of February 29, 2000:  115,971 shares of common stock $10.00 par
value (the "Common  Stock"),  with an aggregate  value of $18,555,360  (based on
approximate  market  value of  $160.00/share)  (the last sale price known to the
Registrant  for the Common  Stock,  for which  there is no  established  trading
market).

     State the number of shares  outstanding of each of the issuer's  classes of
Common Stock as of the latest practicable date: As of March 20, 2000, there were
issued and  outstanding  179,979  shares of Common  Stock,  par value $10.00 per
share.


<PAGE>

                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL
-------

         Oconee  Financial   Corporation   ("Oconee")  or  (the  "Company"),   a
registered bank holding company,  was incorporated  under the laws of Georgia in
1998 and commenced  operations by acquiring  100% of the  outstanding  shares of
Oconee  State Bank (the  "Bank")  effective  January 1,  1999.  All of  Oconee's
activities  are currently  conducted by the Bank,  its wholly owned  subsidiary,
which was  incorporated as a bank under the laws of Georgia in 1959. At December
31, 1999,  Oconee had  approximately  600 holders of record of Common Stock, its
only class of equity securities.

         At December  31,  1999,  the Bank's  total  assets  were  $152,139,000,
compared to $130,652,000  at year-end 1998. Over the past 5 years,  total assets
of the Bank have grown by $69,285,000 representing an increase of 80.7%.

SERVICES
--------

         The Bank is a community oriented, full-service commercial bank, located
in Oconee and Clarke Counties,  Georgia with three full-service banking offices,
one  limited-service  loan production  office and five automated teller machines
(ATMs). The Bank places an emphasis on retail banking, and offers such customary
banking  services as consumer and commercial  checking  accounts,  NOW accounts,
money market accounts,  savings accounts,  certificates of deposits,  individual
retirement  accounts,  safe deposit  facilities,  and money transfers.  The Bank
finances  commercial  and consumer  transactions,  makes  secured and  unsecured
loans,  offers lines of credit,  VISA and  MasterCard  accounts,  and provides a
variety of other banking services.

MARKETS
-------

         The primary market for the Bank is Oconee County,  Georgia.  The Bank's
secondary market is defined as those counties contiguous to Oconee County, which
include Clarke, Greene,  Morgan, Walton, Barrow, and Oglethorpe,  as well as any
counties which are a part of the Athens Standard Metropolitan  Statistical Area,
but are not contiguous to Oconee County.

DEPOSITS
--------

         The Bank offers a full range of  depository  accounts  and  services to
both  consumers and  businesses.  At December 31, 1999,  the Bank's deposit base
totaled $136,527,000 and consisted of the following types of accounts:


                                       2

<PAGE>

                                                    Amount           Percentage
                                                    ------           ----------

Non-interest bearing demand deposits              $ 18,736,000          13.7%
Interest-bearing NOW accounts                       25,566,000          18.7%
Money market deposit accounts                       11,832,000           8.7%
Savings deposits                                    11,190,000           8.2%
Time deposits less than $100,000                    52,425,000          38.4%
Time deposits of $100,000 or more                    9,849,000           7.2%
Individual Retirement Accounts                       6,929,000            5.1%
                                                  ------------          -----
       Total Deposits                             $136,527,000          100.0%
                                                  ============          =====

         Management  of the Bank is of the  opinion  that its time  deposits  of
$100,000 or more are customer  relationship-oriented  and represent a reasonably
stable source of funds.

LOANS
-----

         The Bank makes both  secured and  unsecured  loans to  individuals  and
businesses. At December 31, 1999, the Bank's loan portfolio totaled $93,330,000,
consisting of the following categories of loans:

                                                     Amount         Percentage
                                                     ------         ----------

Loans secured by real estate                      $68,998,000           73.9%
Agricultural production & loans to farmers            724,000            0.8%
Commercial and industrial loans                    11,588,000           12.5%
Credit cards and related plans                        854,000            0.9%
Consumer loans (excluding credit cards)             9,877,000           10.6%
All other loans                                     1,133,000            1.2%
Lease financing receivables                           205,000            0.2%
LESS: Unearned income                                 (49,000)          (0.1%)
                                                  -----------          -----
      Total Loans Net of Unearned Income          $93,330,000          100.0%
                                                  ===========          =====

         The following  table shows the amounts and growth for loans,  deposits,
capital,  and total assets at December 31, for the years ended 1994-1998 (dollar
amounts are in millions).

<TABLE>
<CAPTION>
                                1999       1998      1997       1996      1995        1994         5-Year Growth
                                 ----       ----      ----       ----      ----        ----         -------------
<S>                            <C>         <C>      <C>        <C>        <C>          <C>             <C>
         Loans                 $  93.3     $ 76.8   $  72.3    $  68.8    $ 58.6       $ 54.9          73.4%
         Deposits                136.5      116.1     104.6       97.0      79.3         74.2          85.3%
         Capital                  13.0       12.5      11.2       10.0       9.1          8.0          61.3%
         Total Assets            152.1      130.7     117.5      108.5      89.8         82.9          83.1%
</TABLE>

As of December 31, 1999,  the Bank had a  concentration  of loans to the housing
industry.  Loans secured by real estate totaled  $68,998,000,  which represented
73.9% of the Bank's loan portfolio at December 31, 1999. At year-end 1999, total
outstanding balances and commitments for development and construction loans were
$37,669,000, which represented 40.3% of the Bank's total loans and 275.4% of the
Bank's equity capital. The Bank's established guidelines for this concentration,

                                       3

<PAGE>

is to be in a range of 200% - 285% of Tier 1 equity capital.  Low interest rates
and the  desirability  of living in Oconee  County  have  fueled  demand for new
housing and therefore new  subdivisions  in the area.  Georgia  Highway 316, the
Watkinsville  by-pass,  and the  re-routing  of  Highway  441 will  continue  to
encourage   further   housing   growth,   resulting  in  the  Bank's   continued
concentration  of loans to this industry.  As of December 31, 1999, the Bank has
two related borrower concentrations.

LENDING POLICY
--------------

         The  current  lending  policy  of the Bank is to offer  consumer,  real
estate, and commercial credit services to individuals and entities that meet the
Bank's credit  standards.  The Bank  provides each lending  officer with written
guidelines for lending  activities.  Lending authority is delegated by the Board
of Directors of the Bank to loan officers, each of whom is limited in the amount
of secured and unsecured loans which he can make to a single borrower or related
group of borrowers.  As of December 31, 1999, the Bank had a legal lending limit
of $2,500,000.

         The Board of Directors of the Bank is  responsible  for  approving  and
monitoring  the loan  policy,  providing  guidance  and  counsel to all  lending
personnel and approving all extensions of credit over $125,000.

LOAN REVIEW AND NON-PERFORMING ASSETS
-------------------------------------

         The Bank  reviews its loan  portfolio  to  determine  deficiencies  and
corrective action to be taken.  Senior lending officers conduct periodic reviews
of borrowers with total direct and indirect indebtedness of $150,000 or more and
ongoing  review of all past due  loans.  Past due loans  are  reviewed  at least
weekly by lending  officers,  and a summary  report is  reviewed  monthly by the
Board of Directors  of the Bank.  The Board of Directors of the Bank reviews all
loans over $150,000,  whether  current or past due, at least once  annually.  In
addition,  the Bank  maintains  internal  classifications  of potential  problem
loans.

INVESTMENT POLICY
-----------------

         The  Bank's  investment  policy  provides  guidelines  for  determining
permissible investments in the investment portfolio, credit criteria and quality
ratings,  the  desired  mix among  those  investments,  and  preferred  maturity
distribution  of the  portfolio.  The Bank has five  objectives  concerning  its
investment portfolio which address  asset/liability  management,  profitability,
liquidity,  pledging,  and local  community  support.  The Bank's  President and
Executive Vice President/CFO are authorized to buy and sell securities according
to the criteria set forth in the  investment  policy.  Individual  transactions,
portfolio  composition and performance are reviewed by the Bank's Investment and
Asset/Liability Management Committee and the full Board of the Bank on a monthly
basis.  The  investment  policy is  reviewed  annually  by the  Bank's  Board of
Directors.

         In general,  the Bank's investment policy is to place securities in the
Available for Sale  portfolio.  As of December 31, 1999,  investment  securities
totaled $37,257,000.

The primary risks in the Bank's securities portfolio consist of 2 types:


                                       4

<PAGE>

         (1)      Credit  risk,  or the risk of default of the issuer.  Treasury
                  and  Agency  securities  comprised  56.7%  of  the  portfolio;
                  therefore the credit risk is primarily  limited to the risk of
                  default  of the  U.S.  Government  and  its  agencies.  State,
                  County,  and Municipal  bonds represent 43.3% of the portfolio
                  with the  credit  risk  limited  to the risk of default of the
                  issuing  municipality.  Substantially  all of such  securities
                  have  been  rated  by  a  bond  rating  service  and  all  are
                  investment grade and bank qualified investments.

         (2)      Interest  rate  risk,  or the  risk of  adverse  movements  in
                  interest  rates on the value of the portfolio.  In general,  a
                  rise in  interest  rates  will  cause the value of the  Bank's
                  securities portfolio to decline. The longer the maturity of an
                  individual  security,  the  greater  the  effect  of change in
                  interest  rate of its value.  The Bank  measures  its interest
                  rate risk  exposure  by  analyzing  its rate  sensitivity  GAP
                  position.  The Bank's GAP position is reviewed  monthly by the
                  Investment and  Asset/Liability  Management  Committee and the
                  Board of Directors.

COMPETITION
-----------

         The Bank  competes in Oconee County with four other  commercial  banks.
There are seven  commercial banks in  Athens-Clarke  County,  four of which have
offices  in Oconee  County.  As of June 30,  1999,  the seven  banks  located in
Athens-Clarke County held deposits totaling $1,181,733,000.  The Bank's physical
presence in  Athens-Clarke  County is limited to the loan production  office and
two  ATM's,  located  in Jimbo's  Convenience  Store and Quick Stop  Convenience
Store.  With three  full-service  and one limited  banking  office within Oconee
County,  the Bank is the  dominant  market  leader in Oconee  County in terms of
assets,  deposit size,  facility locations,  and market coverage.  The following
table shows  deposits by financial  institution  along with market share for the
period ended June 30, 1999 (Dollar amounts are in thousands):

                                                Total              Market
                                               Deposits             Share
                                               --------             -----
    Athens First Bank & Trust Company         $ 65,865               34.2%
    First American Bank & Trust Company          1,849                1.0%
    NationsBank, N.A.                            8,634                4.5%
    Oconee State Bank                          114,779               59.6%
    SunTrust Bank, Northeast Georgia, N.A.       1,326                0.7%
                                              --------              -----
         Total Deposits                       $192,453              100.0%
                                              ========              =====


In addition to the Bank's  competition in Oconee County,  the Bank competes with
commercial  banks,  thrifts,  and  various  other  financial   institutions  and
brokerage firms located in Northeast  Georgia  counties  outside its primary and
secondary market areas. To a lesser extent,  the Bank also competes for deposits
and loans with credit unions and for loans with insurance companies,  small loan
or finance  companies,  and certain  governmental  agencies.  To the extent that
banks must maintain non-interest earning reserves against deposits,  they may be
at a  competitive  disadvantage  when  compared  with  other  financial  service
organizations  that are not required to maintain reserves against  substantially
equivalent  sources of funds.  Further,  the increased  income  competition from

                                       5

<PAGE>

investment  bankers and brokers and other financial  service  organizations  may
have a significant  impact upon the  competitive  environment  in which the Bank
operates.

         Set forth below are certain ratios of the Bank for the years indicated:

<TABLE>
<CAPTION>
                                                              1999            1998             1997
                                                              ----            ----             ----
<S>                                                          <C>             <C>              <C>
Net income to:
         Average equity capital accounts                     16.66%          16.61%           15.66%
         Average daily total deposits                         1.83%           1.93%            1.75%
Ratio of average daily loans to average daily deposits       72.06%          72.16%           74.23%
</TABLE>

For  the  most  part,  the  business  of the  Bank is not  materially  seasonal.
Construction  and  development  lending  are  strongest  in Spring  and  Summer.
Building slows somewhat in Fall and Winter,  but not to the degree that there is
an appreciable impact upon the Bank's Balance Sheet or Statement of Earnings.

YEAR 2000 COMPLIANCE
--------------------

         The Bank did not experience any material  disruptions in its operations
or activities as a result of the so-called "Year 2000" problem. Nor did the Bank
incur material expenses in correcting perceived or suspected Year 2000 problems.
In addition,  the Bank is not aware that any of its  suppliers or customers  has
experienced any material disruptions in their operations or activities. The Bank
does not  expect to  encounter  any such  problems  in the  foreseeable  future,
although  it  continues  to  monitor  its  computer   operations  for  signs  or
indications of such problems.

         It is possible, however, that if Year 2000 problems are incurred by the
customers  of the Bank,  such  problems  could have a negative  impact on future
operations and financial performance of the Bank, although the Bank has not been
able to specifically  identify any such problems among its clients or suppliers.
Furthermore, the Year 2000 problem may impact other entities with which the Bank
transacts  business  and the Bank  cannot  predict  the  effect of the Year 2000
problem on such entities or the resulting effect on the Bank.

SUPERVISION AND REGULATION
--------------------------

         GENERAL.  Oconee  is a  registered  bank  holding  company  subject  to
regulation by the Board of Governors of the Federal Reserve System (the "Federal
Reserve")  under the Bank Holding  Company Act of 1956,  as amended (the "Act").
Oconee is  required  to file  financial  information  with the  Federal  Reserve
periodically and is subject to periodic examination by the Federal Reserve.

         The Act  requires  every  bank  holding  company  to  obtain  the prior
approval of the  Federal  Reserve  before (i) it may acquire  direct or indirect
ownership  or control  of more than 5% of the voting  shares of any bank that it
does not already control; (ii) it or any of its subsidiaries, other than a bank,
may acquire all or  substantially  all of the assets of a bank; and (iii) it may
merge or consolidate  with any other bank holding company.  In addition,  a bank
holding company is generally  prohibited from engaging in, or acquiring,  direct
or indirect  control of the voting shares of any company  engaged in non-banking
activities.  This  prohibition does not apply to activities found by the Federal
Reserve, by order or regulation, to be so closely related to banking or managing


                                       6

<PAGE>

or controlling banks as to be a proper incident thereto.  Some of the activities
that the Federal  Reserve has  determined  by  regulation or order to be closely
related to banking are:  making or servicing  loans and certain types of leases;
performing certain data processing  services;  acting as fiduciary or investment
or financial advisor;  providing discount brokerage services;  underwriting bank
eligible securities;  underwriting debt and equity securities on a limited basis
through  separately   capitalized   subsidiaries;   and  making  investments  in
corporations or projects designed primarily to promote community welfare.

         In addition,  effective  March 11, 2000,  bank holding  companies whose
banking  subsidiaries  are all well  capitalized  and well  managed may apply to
become  a  financial  holding  company.  Financial  holding  companies  have the
authority to engage in  activities  that are  "financial in nature" that are not
permitted for other bank holding companies.  Some of the activities that the Act
provides are financial in nature are:

         (a)      lending,  exchanging,  transferring,  investing  for others or
                  safeguarding money or securities;

         (b)      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;

         (c)      providing   financial,   investment,   or  economic   advisory
                  services, including advising an investment company;

         (d)      issuing or selling instruments representing interests in pools
                  of assets permissible for a bank
                  to hold directly; and

         (e)      underwriting, dealing in or making a market in securities.

         Oconee  has no  immediate  plans to  register  as a  financial  holding
company.

         Oconee must also  register  with the Georgia  Department of Banking and
Finance (the "GDBF") and file  periodic  information  with the GDBF.  As part of
such registration,  the GDBF requires  information with respect to the financial
condition,  operations,  management and intercompany relationships of Oconee and
the Bank and related matters.  The GDBF may also require such other  information
as is necessary to keep itself  informed as to whether the provisions of Georgia
law and the  regulations  and  orders  issued  thereunder  by the GDBF have been
complied with, and the GDBF may examine Oconee and the Bank.

         Oconee is an  "affiliate"  of the Bank under the Federal  Reserve  Act,
which  imposes  certain  restrictions  on (i) loans by the Bank to Oconee,  (ii)
investments  in the stock or securities of Oconee by the Bank,  (iii) the Bank's
taking the stock or securities of an  "affiliate" as collateral for loans by the
Bank to a  borrower,  and (iv) the  purchase  of assets from Oconee by the Bank.
Further,  a bank  holding  company  and its  subsidiaries  are  prohibited  from
engaging in certain  tie-in  arrangements  in  connection  with any extension of
credit, lease or sale of property or furnishing of services.

         The Bank, a subsidiary of Oconee, is regularly  examined by the Federal
Deposit  Insurance   Corporation  (the  "FDIC").   The  Bank,  a  state  banking
association  organized  under Georgia law, is subject to the supervision of, and
is regularly  examined by, the GDBF. Both the FDIC and the GDBF must grant prior

                                       7

<PAGE>

approval  of any  merger,  consolidation  or  other  corporation  reorganization
involving  the Bank.  A bank can be held  liable  for any loss  incurred  by, or
reasonably  expected to be incurred by, the FDIC in connection  with the default
of a commonly controlled institution.

         PAYMENT OF  DIVIDENDS.  Oconee is a legal entity  separate and distinct
from the Bank.  Most of the revenues of Oconee result from  dividends paid to it
by the Bank. There are statutory and regulatory  requirements  applicable to the
payment of dividends by the Bank, as well as by Oconee to its shareholders.

         The Bank is a state  chartered bank regulated by the GDBF and the FDIC.
Under the  regulations  of the GDBF,  dividends  may not be declared  out of the
retained earnings of a state bank without first obtaining the written permission
of the GDBF unless such bank meets all the following requirements:

         (a)      total classified  assets as of the most recent  examination of
                  the bank do not exceed 80% of equity  capital  (as  defined by
                  regulation);

         (b)      the aggregate  amount of dividends  declared or anticipated to
                  be  declared in the  calendar  year does not exceed 50% of the
                  net profits after taxes but before  dividends for the previous
                  calendar year; and

         (c)      the  ratio  of  equity capital  to adjusted assets is not less
                  than 6%.

         The payment of dividends by Oconee and the Bank may also be affected or
limited by other factors,  such as the requirement to maintain  adequate capital
above regulatory  guidelines.  In addition, if, in the opinion of the applicable
regulatory authority, a bank under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound  practice  (which,  depending  upon the financial
condition of the bank,  could include the payment of dividends),  such authority
may require, after notice and hearing, that such bank cease and desist from such
practice.  The FDIC has issued a policy  statement  providing that insured banks
should  generally  only pay  dividends  out of current  operating  earnings.  In
addition to the formal statutes and regulations, regulatory authorities consider
the adequacy of the Bank's total capital in relation to its assets, deposits and
other such  items.  Capital  adequacy  considerations  could  further  limit the
availability  of  dividends  to the Bank.  At  December  31,  1999,  net  assets
available from the Bank to pay dividends  without prior approval from regulatory
authorities  totaled  $1,122,878.  For 1999,  Oconee's cash  dividend  payout to
stockholders was 40.8% of net income.

         MONETARY POLICY.  The results of operations of the Bank are affected by
credit policies of monetary  authorities,  particularly the Federal Reserve. The
instruments  of monetary  policy  employed by the Federal  Reserve  include open
market operations in U.S. government securities, changes in the discount rate on
bank borrowings and changes in reserve  requirements  against bank deposits.  In
view of changing conditions in the national economy and in the money markets, as
well as the effect of actions by monetary and fiscal authorities,  including the
Federal  Reserve,  no prediction  can be made as to possible  future  changes in
interest rates,  deposit levels, loan demand or the business and earnings of the
Bank.



<PAGE>

                                       8
         CAPITAL  ADEQUACY.  The Federal  Reserve and the FDIC have  implemented
substantially  identical  risk-based  rules for assessing  bank and bank holding
company capital adequacy.  These regulations establish minimum capital standards
in relation to assets and  off-balance  sheet  exposures  as adjusted for credit
risk. Banks and bank holding  companies are required to have (1) a minimum level
of total capital (as defined) to risk-weighted assets of eight percent (8%); (2)
a minimum Tier One Capital (as defined) to risk-weighted  assets of four percent
(4%); and (3) a minimum  stockholders'  equity to  risk-weighted  assets of four
percent (4%). In addition,  the Federal Reserve and the FDIC have  established a
minimum three  percent (3%)  leverage  ratio of Tier One Capital to total assets
for the most highly rated banks and bank holding  companies.  "Tier One Capital"
generally consists of common equity not including  unrecognized gains and losses
on  securities,   minority   interests  in  equity   accounts  of   consolidated
subsidiaries and certain perpetual preferred stock less certain intangibles. The
Federal  Reserve and the FDIC will  require a bank  holding  company and a bank,
respectively,  to maintain a leverage  ratio  greater  than four percent (4%) if
either is experiencing or anticipating  significant  growth or is operating with
less than  well-diversified  risks in the  opinion of the Federal  Reserve.  The
Federal  Reserve  and the  FDIC  use the  leverage  ratio  in  tandem  with  the
risk-based  ratio to assess  the  capital  adequacy  of banks  and bank  holding
companies.  The FDIC, the Office of the  Comptroller of the Currency (the "OCC")
and the Federal  Reserve have amended,  effective  January 1, 1997,  the capital
adequacy standards to provide for the consideration of interest rate risk in the
overall  determination  of a bank's capital ratio,  requiring banks with greater
interest  rate risk to  maintain  adequate  capital  for the risk.  The  revised
standards have not had a significant effect on Oconee's capital requirements.

         In  addition,  effective  December  19,  1992,  a new Section 38 to the
Federal  Deposit   Insurance  Act  implemented  the  prompt   corrective  action
provisions  that  Congress  enacted as a part of the Federal  Deposit  Insurance
Corporation  Improvement  Act of 1991 (the "1991 Act").  The "prompt  corrective
action" provisions set forth five regulatory zones in which all banks are placed
largely  based on their  capital  positions.  Regulators  are  permitted to take
increasingly harsh action as a bank's financial condition  declines.  Regulators
are also  empowered  to place in  receivership  or require the sale of a bank to
another depository  institution when a bank's capital leverage ratio reaches 2%.
Better-capitalized institutions are generally subject to less onerous regulation
and supervision than banks with lesser amounts of capital.

         The FDIC has adopted  regulations  implementing  the prompt  corrective
action  provisions of the 1991 Act, which place  financial  institutions  in the
following  five  categories  based  upon  capitalization  ratios:  (1)  a  "well
capitalized" institution has a total risk-based capital ratio of at least 10%, a
Tier One  risk-based  ratio of at least 6% and a leverage  ratio of at least 5%;
(2) an "adequately capitalized" institution has a total risk-based capital ratio
of at least 8%, a Tier One risk-based  ratio of at least 4% and a leverage ratio
of at least 4%; (3) an  "undercapitalized"  institution  has a total  risk-based
capital ratio of under 8%, a Tier One risk-based ratio of under 4% or a leverage
ratio of under 4%;  (4) a  "significantly  undercapitalized"  institution  has a
total risk-based capital ratio of under 6%, a Tier One risk-based ratio of under
3% or a  leverage  ratio of under 3%;  and (5) a  "critically  undercapitalized"
institution has a leverage ratio of 2% or less. Institutions in any of the three
undercapitalized  categories  would be prohibited  from  declaring  dividends or
making capital distributions. The FDIC regulations also establish procedures for
"downgrading"  an institution  to a lower capital  category based on supervisory
factors other than capital.  Under the FDIC's regulations,  the Bank was a "well
capitalized" institution at December 31, 1998 and December 31, 1999.


                                       9

<PAGE>

         Set  forth  below  are  pertinent  capital  ratios  for the  Bank as of
December 31, 1999:

Minimum                      Capital                   The Bank
-------                      -------                   --------
Requirement
-----------
Tier One Capital to                                     13.3%
     Risk Based
     Assets:  4% <F1>

Total Capital to                                        14.6%
     Risk Based
     Assets:  8% <F2>

Leverage Ratio (Tier One                                 9.2%
     Capital to Average Total
     Assets):  3% <F3>
--------------------------
[FN]
<F1>  Minimum required ratio for "well capitalized" banks is 6%
<F2>  Minimum required ratio for "well capitalized" banks is 10%
<F3>  Minimum  required ratio for "well capitalized" banks is 5%
</FN>

         RECENT  LEGISLATIVE  AND  REGULATORY  ACTION.  On  November  12,  1999,
President Clinton signed the Gramm-Leach-Bliley Act, a very significant piece of
legislation  intended to modernize the  financial  services  industry.  The bill
repeals the anti-affiliation  provisions of the 1933 Glass-Steagall Act to allow
for the merger of banking  and  securities  organizations  and  permits  banking
organizations   to   engage  in   insurance   activities   including   insurance
underwriting. The bill also allows bank holding companies to engage in financial
activities  that are  "financial  in  nature  or  complementary  to a  financial
activity."  The act lists the  expanded  areas that are  financial in nature and
includes  insurance  and  securities  underwriting  and merchant  banking  among
others. The bill also:

         (a)      prohibits    non-financial    entities   from   acquiring   or
                  establishing a thrift while  grandfathering  existing  thrifts
                  owned by non-financial entities;

         (b)      establishes  state  regulators as the  appropriate  functional
                  regulators  for insurance  activities  but provides that state
                  regulators  cannot "prevent or  significantly  interfere" with
                  affiliations between banks and insurance firms;

         (c)      contains provisions designed to protect consumer privacy.  The
                  bill requires financial  institutions to disclose their policy
                  for  collecting and protecting  confidential  information  and
                  allows  consumers to "opt out" of  information  sharing except
                  with  unaffiliated  third parties who market the institutions'
                  own  products  and  services or  pursuant to joint  agreements
                  between two or more financial institutions; and

         (d)      provides  for  functional  regulation  of a bank's  securities
                  activities by the Securities and
                  Exchange Commission.

                                       10

<PAGE>

         Various portions of the bill have different  effective  dates,  ranging
from immediately to more than a year for implementation.

ECONOMIC CONDITIONS
-------------------

         Economic  growth in the Bank's  primary  service  area is  expected  to
remain  steady.  The counties in the Bank's market area are expected to continue
to receive revenues from their traditional sources of trade, finance, insurance,
real estate development and sales,  manufacturing and the service industry. Both
employment  and population  growth are projected to increase  steadily in Oconee
and Athens-Clarke Counties.

EMPLOYEES
---------

         At  December  31,  1999,  the Bank had 56  full-time  employees  and 27
part-time  employees.  The  Bank is not a  party  to any  collective  bargaining
agreement, and the Bank believes that its employee relations are good.

ITEM 2.  DESCRIPTION OF PROPERTIES.

         The Bank operates three  full-service  banking  offices and one limited
service banking office as follows:

         (1)      Main Office
                  -----------
                  35 North Main Street
                  Watkinsville, Georgia 30677

         (2)      Bogart Branch
                  -------------
                  U.S. Highway 78
                  Bogart, Georgia 30622

         (3)      Friendship Branch
                  -----------------
                  8811 Macon Highway
                  Athens, Georgia 30606

         (4)      Mortgage Department/Operations Annex
                  ------------------------------------
                  (Limited Service/Support Offices)
                  Condominium Units 10, 12, 14, 16, & 18
                  Durham Street
                  Watkinsville, Georgia 30677

         (5)      Athens Loan Center
                  ------------------
                  (Limited Service Loan Production Office)
                  500 North Milledge Avenue
                  Athens, Georgia 30605


                                       11

<PAGE>

         The  executive  offices  and the main office of Oconee and the Bank are
located in a 6,500 square-foot facility at 35 North Main Street in Watkinsville,
Georgia with three drive-thru windows and a walk-up ATM.

         The Bogart Branch is located at the intersection of U.S. Highway 78 and
Mars Hill  Road in  Bogart,  Georgia.  This  5,250  square-foot  facility  has 2
drive-thru windows and a drive-thru ATM.

         The  Friendship  Branch is an 800  square-foot  facility  at 8811 Macon
Highway,  Athens,  Georgia.  This branch has three drive-thru windows and serves
the  Friendship  community.  Although it has an Athens  address,  this branch is
located within Oconee County.

         The Bank owns five office  condominium units adjacent to and behind its
main  office in  Watkinsville.  The units are  numbered  10, 12, 14, 16, & 18 on
Durham Street in Watkinsville,  Georgia. Each unit contains 1,180 square feet on
the ground floor and 450 square feet on the second  floor,  for a total of 1,630
square feet per unit or 8,150  square feet for all units  owned.  Unit 10 houses
the Bank's  mortgage  loan  department,  Units 12, 14, and 16 are  connected  by
interior hallways and house proof,  bookkeeping,  supplies, human resources, and
training  functions.   Unit  18  is  occupied  by  the  Bank's  loan  operations
department.

         All of the properties  referenced previously are owned by Oconee or the
Bank. In September  1999, the Bank entered into a lease agreement with Hardigree
Properties,  LLLP to lease  office  condominium  unit #20 on  Durham  Street  in
Watkinsville,  Georgia.  This unit is next to other office condominiums owned by
the Bank.  The lease is for two years  with an option to renew at the end of two
years. Unit 20 houses accounting and audit personnel and allows needed space for
expansion.  In addition, two parking lots adjacent to the main office are leased
which provide additional parking for employees.  None of the properties owned by
Oconee or the Bank are subject to any encumbrances.

         The  Athens  Loan  Center is located  at 500 North  Milledge  Avenue in
Athens, Georgia. The Loan Center is a 2,000 square foot building that houses one
commercial  loan  officer and one  mortgage  loan  originator,  along with their
support  staff.  The Loan Center is leased by the Bank from Henry G. Utley.  The
lease was entered into in July of 1999 and is for two years.

         The Bank also  owns 2.3  acres of land  located  on Epps  Bridge  Road,
1331st G.M.D., Oconee County, Georgia for future branch expansion.  The property
is not subject to any other encumbrances.

         Management  of Oconee and the Bank believe  that all of its  properties
are adequately covered by insurance.

ITEM 3.  LEGAL PROCEEDINGS.

         Neither  Oconee  nor  the  Bank  is a party  to,  nor are any of  their
properties  the subject of, any material  legal  proceeding  other than ordinary
routine litigation incidental to Oconee's and the Bank's business.


                                       12

<PAGE>

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

         No matters were  submitted to a vote of the security  holders of Oconee
during the fourth quarter of the fiscal year covered by the report.


                                       13

<PAGE>


                                     PART II
                                     -------


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKETS FOR CAPITAL STOCK
-------------------------

         Oconee Stock is not traded on any  established  public trading  market.
Management is aware of 31 trades of Bank Stock in 1999,  aggregating  845 shares
in blocks  ranging from 1 share to 100 shares at prices  ranging from $145.00 to
$155.00 per share.

         Management  of the Bank is aware of 34  trades  of Bank  Stock in 1998,
aggregating  758 shares in blocks  ranging  from 1 share to 150 shares at prices
ranging from $115.00 to $145.00 per share.

HOLDERS
-------

         As of  December  31,  1999,  there were 587 holders of record of common
stock.

DIVIDENDS
---------

         In 1999 and 1998,  the Bank declared cash  dividends of $5.00 per share
and $4.00 per share respectively,  payable to shareholders of record on December
31 of each year. The Bank intends to continue paying cash dividends on an annual
basis.  Cash dividends for 1999 represented a payment of 40.8% of net income for
the year  compared to 35.4% for 1998.  The amount and  frequency of dividends is
determined  by the  Bank's  Board of  Directors  in light of  earnings,  capital
requirements and the financial condition of the Bank.

         Under Section  7-1-460 of the Financial  Institutions  Code of Georgia,
the  Board of  Directors  of the  Bank  may  declare  dividends  payable  to the
shareholders from time to time, subject to the conditions stated therein,  which
include  restrictions  on the payment of dividends  to payments  made out of the
retained  earnings of the Bank, and a prohibition  against  payments which would
render  the Bank  insolvent.  See  "Supervision  and  Regulation  --  Payment of
Dividends."

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         PLAN OF OPERATION FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998.

         This analysis of Oconee has been  prepared to provide  insight into the
financial  condition  of the  Company,  and  addresses  the  factors  which have
affected the Company's results of operations. The Company's financial statements
and  accompanying  notes which  follow are an  integral  part of this review and
should be read in conjunction with it.


                                       14

<PAGE>

Selected Financial Information

<TABLE>
<CAPTION>
                                              1999            1998          1997         1996         1995
                                                           (AMOUNTS ARE PRESENTED IN THOUSANDS.)
                                             --------------------------------------------------------------------
<S>                                            <C>          <C>             <C>          <C>           <C>
Net interest income                              6,331        5,734           5,418        4,865        4,592
Other operating income                           1,328        1,283           1,080          949          848
Provision for loan losses                          116           61             166          281          100
Net income                                       2,203        2,032           1,705        1,506        1,350
Net income per common share                      12.24        11.29            9.47         8.37         7.50
Total assets                                   152,139      130,652         117,482      108,506       89,779
Cash dividends declared per common share          5.00         4.00            3.30         3.00         2.50
                                             ------------- --------------- ------------ ------------ ------------
</TABLE>

         FINANCIAL  CONDITION - 1999 VS. 1998. During 1999, average total assets
increased  $16,409,000 (14%) over 1998. Average deposits  increased  $15,140,000
(14%) in 1999 over 1998. Average loans increased  $10,808,000 (14%) in 1999 over
1998.

         Year-end balances at December 31, 1999 and 1998 show increases in total
assets  of  $21,487,000  (16%)  from  1998 to  1999.  Total  deposits  increased
$20,407,000   (18%)  from  1998  to  1999  while  total  gross  loans  increased
$16,550,000  (22%) during 1999. Time deposits  increased  $16,034,000 (30%) from
1998 to 1999 while all other deposit  accounts  increased  $4,373,000  (7%) from
1998 to 1999.  Loan demand  continued to increase due to a strong local economy.
These loan  increases,  along with the net increases in  investment  securities,
were funded by  increases  in deposits  during  1999.  Non-performing  assets at
December  31, 1999 were $78,000  compared to $71,000 at December  31, 1998.  The
majority  of  the  increase  is  attributable  to  an  increase  in  repossessed
collateral.   There  were  no  related   party  loans   which  were   considered
non-performing at December 31, 1999.

         The Bank was most recently examined by its primary regulatory authority
in October of 1999. There were no  recommendations  by the regulatory  authority
that,  in  management's  opinion,  will  have  material  effects  on the  Bank's
liquidity, capital resources, or operations.

         RESULTS OF OPERATIONS - 1999 VS. 1998. The Company's earnings depend to
a large  degree on net  interest  income,  which is the  difference  between the
interest  income  received  from its earning  assets (such as loans,  investment
securities,  federal funds sold, etc.) and the interest expense which is paid on
deposit liabilities.

         Net  interest  income  in  1999,  which  was  $6,331,000  increased  by
$597,000,  or 10%,  over 1998.  The  increase is primarily  attributable  to the
increase in interest and fees on loans  offset by increases in interest  expense
on time deposits.  Net yield on average  interest  earning assets (4.98% in 1999
and 5.08% in 1998) decreased approximately .10% in 1999 from 1998. This decrease
was associated with an $872,000 or 9% increase in interest earned and a $275,000
or 7% increase in interest  paid in 1999 as compared to 1998.  Although  average
interest  earning  assets  increased  $14,378,000  or 13% in 1999, the resulting
$872,000  increase in interest  earned did not keep pace. This was the result of
increased  loan  competition in the Company's  market  resulting in loan pricing
concessions  during a period of increased  loan demand,  which  coincided with a
period in which  competition in the Company's  market forced interest rates paid


                                       15

<PAGE>

on deposits to be higher, thus explaining the Company's higher cost of funds for
1999 as compared to 1998.  These  competitive  market pressures on both loan and
deposit  pricing  resulted in the decline in the Company's net yield on interest
earning assets.

         The provision for loan losses in 1999 was $116,000  compared to $60,720
in  1998.   The  increase  in  the  provision  for  loan  losses  was  primarily
attributable  to growth in the loan  portfolio.  The  provision  for loan losses
continues to reflect management's  estimate of potential loan losses inherent in
the  portfolio  and the creation of an allowance  for loan losses to absorb such
losses.  The allowance for loan losses  represented  approximately 1.6% of total
loans  outstanding  at December 31, 1999  compared to 1.9% at December 31, 1998.
Net  charge-offs  for 1999 were  $74,294  compared to net  recoveries  of $4,170
during 1998. A dedicated  loan review  function is utilized by the Company which
is  supplemented  by the use of an outside  loan  review  specialist.  All loans
$150,000 or more are  reviewed  annually  and placed into  various  loan grading
categories  which assist in developing lists of potential  problem loans.  These
loans are  regularly  monitored  by the loan  review  process  to  ensure  early
identification  of repayment  problems so that adequate  allowances  can be made
through the provision for loan losses.  Management believes that these levels of
allowance are  appropriate  based upon the Company's  loan portfolio and current
economic conditions.

         Other  operating  income in 1999 of $1,328,000  increased  from 1998 by
$45,000 or 4% due  primarily  to an increase of $19,000 in ATM service  charges,
resulting  from two new ATM's  which were  placed in service  during 1999 and an
increase of $92,000 in commission  income on investment  sales.  These increases
were offset by a decrease in fee income on mortgage  loans of $79,000  from 1998
as a result of  rising  interest  rates on  mortgage  loans  which  resulted  in
decreased demand for these types of loans.  Other operating  expenses in 1999 of
$4,506,000  increased  by  $397,000  or 10% over 1998  levels.  The  increase in
operating  expenses is  attributable  to an increase  in salaries  and  employee
benefits expense of $244,000 or 10%. In addition, occupancy expense increased by
$28,000 or 5% due to  increased  repairs and  maintenance  expense and  computer
upgrades.  Also,  other  operating  expenses  increased  by $125,000 or 11% with
$32,000 in costs attributed to Year 2000 compliance.

         Income taxes  expressed as a percentage of earnings before income taxes
decreased  from 29% in 1998 to 27% in 1999.  This  decrease  relates to a higher
amount of tax-free interest income from state,  county and municipal  investment
securities as compared to 1998.

         RESULTS OF  OPERATIONS  - 1998 VS. 1997.  Net interest  income in 1998,
which was $5,734,000,  increased by $316,000,  or 6%, over 1997. The increase is
primarily  attributable  to the increase in interest and fees on loans offset by
increases in interest  expense on time deposits.  Net yield on interest  earning
assets (5.00% in 1998 and 5.25% in 1997)  decreased  approximately  0.2% in 1998
from 1997.  This  decrease  was  associated  with a $585,000  or 6%  increase in
interest  earned and a  $269,000  or 7%  increase  in  interest  paid in 1998 as
compared to 1997 as well as an increase in average interest bearing  liabilities
of $5,516,000 or 7% in 1998. The prime rate dropped 0.75% during 1998, which was
a  contributing  factor to the decrease in the  Company's  net  interest  margin
during the year.

         The provision for loan losses in 1998 was $60,720  compared to $166,200
in  1997.   The  decrease  in  the  provision  for  loan  losses  was  primarily
attributable  to an improvement in the overall  quality of loans within the loan
portfolio.  The  provision  for loan losses  continues  to reflect  management's
estimate of potential loan losses  inherent in the portfolio and the creation of

                                       16

<PAGE>

an  allowance  for loan losses to absorb such  losses.  The  allowance  for loan
losses represented approximately 1.9% of total loans outstanding at December 31,
1998 and 1997. Net recoveries for 1998 were $4,170  compared to net  charge-offs
of $5,871 during 1997.

         Other  operating  income in 1998 of $1,283,000  increased  from 1997 by
$203,000  or 19%,  due  primarily  to an  increase  of $157,000 in fee income on
mortgage loans sold. Other operating expenses in 1998 of $4,109,000 increased by
$203,000  or 5%  over  1997  levels.  The  increase  in  operating  expenses  is
attributable to an increase in salaries and employee benefits expense of $94,000
or 4%.  In  addition,  occupancy  expense  increased  by  $48,000  or 10% due to
increased  repairs and maintenance  expense and computer  upgrades.  Also, other
operating  expenses  increased by $61,000 or 5% with $41,000 in costs attributed
to Year 2000 compliance.

         Income taxes  expressed as a percentage of earnings before income taxes
decreased  from 30% in 1997 to 29% in 1998.  This  decrease  relates to a higher
amount of tax-free interest income from state,  county and municipal  investment
securities as compared to 1997.

         INVESTMENTS. The investment portfolio consists of debt securities which
provide the  Company  with a source of  liquidity  and a  long-term,  relatively
stable  source of income.  Additionally,  the  investment  portfolio  provides a
balance to  interest  rate and credit  risk in other  categories  of the balance
sheet  while  providing  a  vehicle  for  the  investment  of  available  funds,
furnishing liquidity,  and supplying securities to pledge as required collateral
for certain deposits.

         LIQUIDITY.  The Company must  maintain,  on a daily  basis,  sufficient
funds to cover the  withdrawals  from  depositors'  accounts  and to supply  new
borrowers with funds. To meet these obligations, the Company keeps cash on hand,
maintains account balances with its correspondent banks, and purchases and sells
federal funds and other short-term  investments.  Asset and liability maturities
are monitored in an attempt to match these to meet  liquidity  needs.  It is the
policy of the Company to monitor its liquidity to meet  regulatory  requirements
and their local funding requirements.

         The Company maintains  relationships with correspondent  banks that can
provide  funds to it on short  notice,  if needed.  Presently,  the  Company has
arrangements  with a  commercial  bank for short term  unsecured  advances up to
$4,400,000.  Additional  liquidity is provided to the Company through  available
FHLB advances up to $22,800,000.

         Cash  and  cash  equivalents   increased   $2,059,000  to  a  total  of
$16,128,000  at year-end  1999 as cash  provided  by  financing  activities  and
operating activities outpaced amounts used by investing activities. Cash inflows
from  operations  totaled  $2,225,000  in 1999,  while  inflows  from  financing
activities totaled $19,994,000,  most of which were net deposit increases during
1999 of $20,407,000.

         Investing  activities  used  $20,160,000 of cash and cash  equivalents,
principally composed of net advances of loans to customers of $16,625,000 during
1999 and investment  purchases,  net of sales, calls, and paydowns of investment
securities totaling $3,673,000.


                                       17

<PAGE>

         CAPITAL  RESOURCES.  The Company continues to maintain adequate capital
ratios.  The following tables present the Company's  regulatory capital position
at December 31, 1999
<TABLE>
<CAPTION>

                                                                 Risk-Based Capital Ratios
                                                              Actual as of December 31, 1999

<S>      <S>                                                             <C>
         Tier 1 Capital                                                  13.3%
         Tier 1 Capital minimum requirement                               4.0%
                                                                         -----
         Excess                                                           9.3%
                                                                          ====

         Total Capital                                                   14.6%
         Total Capital minimum requirement                                8.0%
                                                                        ------
         Excess                                                           6.6%
                                                                        ======

                                                          Leverage Ratio As of December 31, 1999
         Tier 1 Capital to adjusted total assets
         ("Leverage Ratio")                                               9.2%
         Minimum leverage requirement                                     3.0%
                                                                        ------
         Excess                                                           6.2%
                                                                        ======
</TABLE>

         For a more complete discussion of the actual and required ratios of the
Company, see note 11 to the consolidated financial statements.

         ASSET/LIABILITY  MANAGEMENT.  It is the  Company's  objective to manage
assets  and  liabilities  to  provide  a  satisfactory,   consistent   level  of
profitability  within the  framework  of  established  cash,  loan,  investment,
borrowing  and  capital   policies.   Certain  officers  are  charged  with  the
responsibility  for  monitoring  policies  and  procedures  that are designed to
ensure  acceptable  composition  of the  asset/liability  mix. It is the overall
philosophy of management to support  asset growth  primarily  through  growth of
core  deposits,   which  include  deposits  of  all  categories  made  by  local
individuals,  partnerships and  corporations.  The objective of the policy is to
control  interest  sensitive assets and liabilities so as to minimize the impact
of substantial movements in interest rates on earnings.

         The  asset/liability  mix is  monitored  on a regular  basis.  A report
reflecting the interest sensitive assets and interest  sensitive  liabilities is
prepared and presented to the Board of Directors of the Bank on a monthly basis.

         One method to measure a bank's  interest  rate  exposure is through its
repricing gap. The gap is calculated by citing all  liabilities  that reprice or
taking  all  assets  that  reprice  or  mature  within a given  time  frame  and
subtracting all liabilities  that reprice or mature within that time frame.  The


                                       18

<PAGE>

difference  between these two amounts is called the "gap",  the amount of either
liabilities  or  assets  that will  reprice  without  a  corresponding  asset or
liability repricing.

         A negative  gap (more  liabilities  repricing  than  assets)  generally
indicates  that the bank's net interest  income will decrease if interest  rates
rise and will  increase  if  interest  rates  fall.  A  positive  gap  generally
indicates  that the bank's net interest  income will  decrease if rates fall and
will increase if rates rise.

         The following table summarizes the amounts of  interest-earning  assets
and  interest-bearing  liabilities  outstanding  at  December  31, 1999 that are
expected to mature,  prepay or reprice in each of the future time periods shown.
Except as stated  below,  the  amount of assets or  liabilities  that  mature or
reprice  during a  particular  period  was  determined  in  accordance  with the
contractual terms of the asset or liability.  Adjustable rate loans are included
in the period in which  interest  rates are next scheduled to adjust rather than
in the  period in which they are due,  and fixed rate loans and  mortgage-backed
securities  are  included  in the  periods in which they are  anticipated  to be
repaid  based on  scheduled  maturities.  The  Company's  savings  accounts  and
interest-bearing demand accounts (NOW and money market deposit accounts),  which
are generally subject to immediate withdrawal, are included in the "Three Months
or Less" category,  although historical  experience has proven these deposits to
be more stable over the course of a year.

<TABLE>
<CAPTION>
                                                                                  At December 31, 1999
                                                                                Maturing or Repricing in
                                                                                ------------------------
                                                                                 (dollars in thousands)
                                                        Three         Four Months
                                                        Month             to             1 to 5           Over 5
                                                       or Less         12 Months          Years            Years           Total
                                                       -------         ---------          -----            -----           -----
<S>                                                  <C>                  <C>              <C>              <C>            <C>
Interest-earning assets:
  Investment securities                              $      100            1,149            5,037           30,971          37,257
  Federal funds sold                                      9,690            --                --               --             9,690
  Loans                                                  46,453           16,655           30,500              121          93,729
                                                        -------         --------          -------              ---         -------
     Total interest-bearing assets                   $   56,243           17,804           35,537           31,584         140,676
                                                        -------         --------          -------           ------         -------
Interest-bearing liabilities:
  Deposits:
  Savings and demand                                 $   48,589            --               --               --              48,589
  Time deposits                                           7,888           34,440           26,875           --              69,203
  Repurchase agreements                                     866            --               --               --                 866
                                                            ---                                                                ---

Total interest-bearing liabilities                   $   57,343           34,440           26,875           --             118,658
----------------------------------                      -------         --------          -------           --             -------
Interest sensitive difference per period                (1,100)         (16,636)            8,662           31,092          22,018
                                                        ------          -------           -------           ------          ------
Cumulative interest sensitivity difference              (1,100)         (17,736)          (9,074)           22,018
                                                        ------          -------           ------            ------
Cumulative difference to total assets                    (0.8%)          (12.6%)           (6.5%)            15.7%
                                                        -----            -----            -----              ----
</TABLE>


                                       19

<PAGE>

         At December 31, 1999 the difference  between the Company's  liabilities
and assets  repricing  or maturing  within one year was  $17,736,000.  Due to an
excess of liabilities  repricing or maturing within one year, a rise in interest
rates would cause the Company's net interest income to decline.

         Certain  shortcomings are inherent in the method of analysis  presented
in the foregoing table. For example, although certain assets and liabilities may
have similar  maturities  or periods to  repricing,  they may react in different
degrees or at  different  points in time to changes  in market  interest  rates.
Additionally,  certain assets, such as adjustable-rate  mortgages, have features
that restrict changes in interest rates, both on a short-term basis and over the
life of the asset. Changes in interest rates, prepayment rates, early withdrawal
levels and the ability of borrowers to service their debt,  among other factors,
may change significantly from the assumptions made in the table.

         Inflation.  Inflation impacts the growth in total assets in the banking
industry  and causes a need to  increase  equity  capital at higher  than normal
rates to meet capital adequacy requirements.  The Company copes with the effects
of  inflation  through the  management  of its  interest  rate  sensitivity  gap
position,  by  periodically  reviewing  and adjusting its pricing of services to
consider current costs, and through managing its level of net earnings  relative
to its dividend payout policy.


                                       20
<PAGE>


SELECTED STATISTICAL INFORMATION

         The following section presents statistical  information for the Company
which supplements the financial data discussed elsewhere herein.


INDEX TO SELECTED STATISTICAL INFORMATION

         Table 1  Average  Balances  and  Interest  Rates  Table  2  Volume-Rate
         Analysis Table 3 Investment  Portfolio  Table 4 Loan Portfolio  Table 5
         Allowance for Loan Losses Table 6 Deposits Table 7 Selected Ratios

         Average  balances  contained  in  the  following  selected  statistical
information generally represent average daily balances for all periods.



                                       21
<PAGE>

TABLE 1
AVERAGE BALANCE SHEETS AND INTEREST RATES

The table  below  shows the  month-end  average  balance  for each  category  of
interest  earning  assets and  interest-bearing  liabilities  for the  indicated
periods and the average rate of interest earned or paid thereon.

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

                                                                  1999                                       1998
                                          -----------------------------------------------  -----------------------------------------
                                                 Average                      Yield/         Average                       Yield/
                                                 Balance        Interest       Rate          Balance        Interest        Rate
                                                 -------        --------       ----          -------        --------        ----
<S>                                             <C>             <C>           <C>           <C>             <C>             <C>
Assets:
Interest earning assets:
   Interest earning deposits                        -              -            -               -              -              -
   Investment securities:
      Taxable                                   18,573,453      1,163,116     6.26%         16,607,049      1,051,887       6.33%
      Non-taxable                               16,219,209        808,336     4.98%         13,976,265        704,153       5.04%
   Federal funds sold                            5,561,260        294,214     5.28%          6,201,576        340,869       5.50%
   Loans (including loan fees)                  86,926,333      8,379,754     9.65%         76,117,421      7,676,432       10.09%
                                              ------------     ----------     ----        ------------      ---------       -----
Total interest-earning assets                  127,280,255     10,645,420     8.37%        112,902,311      9,773,341        8.66%

Allowance for loan losses                       (1,424,606)                                 (1,371,765)
Cash and due from banks                          5,324,326                                   3,516,984
Other assets                                     4,188,340                                   3,912,157
      Total assets                            $135,368,315                                $118,959,687
                                              ============                                ============

Liabilities and stockholders' equity:
Interest-bearing liabilities:
   Deposits:
      Interest-bearing demand                  35,025,775      1,045,860      2.99%         26,784,495        771,894         2.88%
      Savings                                   9,606,416        192,028      2.00%          8,741,058        203,929         2.33%
      Time                                     57,723,166      3,041,875      5.27%         53,995,027      3,043,214         5.64%
Federal Funds Purchased                           136,877          5,295      3.87%                  -              -         -
Securities sold under repurchase agreements       779,715         29,207      3.75%            510,940         20,499         4.01%
                                             ------------      ---------      ----          ----------      ---------         ----
      Total interest bearing liabilities      103,271,949      4,314,265      4.18%         90,031,520      4,039,536         4.49%

Non-interest bearing deposits                  18,275,259                                   15,970,054
Other liabilities                                 599,312                                      724,339
                                             ------------                                   ----------
Total liabilities                             122,146,520                                  106,725,913

Stockholders' equity                           13,221,795                                   12,233,774
                                             ------------                                  -----------
      Total liabilities and stockholders'
      equity                                 $135,368,315                                  $18,959,687
                                             ============                                  ===========
Excess of interest-bearing assets over
   interest-bearing liabilities               24,008,306                                    22,870,791
                                             ===========                                   ===========
Ratio of interest-earning assets to
   interest-bearing liabilities                   123.25%                                       125.40%
Net interest income                                            6,331,155                                    5,733,805
Net interest spread                                                           4.19%                                           4.17%
Net interest yield on interest earning
   assets                                                                     4.98%                                           5.08%
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                     For the Year Ended December 31,
                                                                   1997
                                                 -----------------------------------------
                                                  Average                         Yield/
                                                  Balance        Interest         Rate
                                                  -------        --------         ----

<S>                                               <C>             <C>               <C>
Assets:
Interest earning assets:
   Interest earning deposits
   Investment securities:
      Taxable                                     17,934,818      1,150,389         6.42%
      Non-taxable                                  8,859,856        461,016         5.20%
   Federal funds sold                              4,215,699        245,238         5.82%
   Loans (including loan fees)                    72,278,399      7,331,744        10.49%
                                                ------------      ---------        -----
Total interest-earning assets                    103,288,772      9,188,387         8.9%

Allowance for loan losses                         (1,284,979)
Cash and due from banks                            3,508,953
Other assets                                       3,838,035
      Total assets                              $109,350,781
                                                ============

Liabilities and stockholders' equity:
Interest-bearing liabilities:
   Deposits:
      Interest-bearing demand                     26,299,721        767,773         2.92%
      Savings                                      9,226,456        257,510         2.79%
      Time                                        48,487,156      2,723,989         5.62%
Federal Funds Purchased                                    -             --         -
Securities sold under repurchase agreements          502,284         21,301         4.24%
                                                ------------      ---------         ----
      Total interest bearing liabilities          84,515,617      3,770,573         4.46%

Non-interest bearing deposits                     13,362,850
Other liabilities                                    588,763
                                                ------------
Total liabilities                                 98,467,230

Stockholders' equity                              10,883,551
--------------------                             -----------
      Total liabilities and stockholders'
      equity                                    $109,350,781
                                                ============

Excess of interest-bearing assets over
   interest-bearing liabilities                   18,773,155
                                                ============
Ratio of interest-earning assets to
   interest-bearing liabilities                       122.21%
Net interest income                                               5,917,814
Net interest spread                                                                 4.44%
Net interest yield on interest earning
   assets                                                                           5.25%
</TABLE>


Non-accrual  loans and the interest income which was recorded on these loans, if
any, are included in the yield  calculation  for loans in all periods  reported.
Tax-exempt income is not calculated on a tax-equivalent basis.


                                       22

<PAGE>


TABLE 2
VOLUME-RATE ANALYSIS

The  following  tables  show a summary  of the  changes in  interest  income and
interest expense  resulting from changes in volume and changes in rates for each
major category of interest earning assets and  interest-bearing  liabilities for
1999 over 1998 and 1998 over 1997.

<TABLE>
<CAPTION>
                                                      1999 OVER 1998
                                                       --------------
                                            INCREASE (DECREASE) DUE TO CHANGES IN:
                                            --------------------------------------
                                              VOLUME          RATE          TOTAL
<S>                                          <C>            <C>            <C>
Interest income on:
   Investment securities
     Taxable                                   131,505       (20,276)      111,229
     Non-taxable                               113,687        (9,504)      104,183
Federal funds sold                             (32,945)      (13,710)      (46,655)
Loans (including loan fees)                  1,050,369      (347,047)      703,322
                                            ----------      --------      --------

     Total interest earning assets           1,262,616      (390,537)      872,079
                                            ----------      --------      --------
Interest expense on:
   Deposits:
     Interest bearing demand                   238,076        35,889       273,965
     Savings                                   (17,776)      (29,677)      (11,901)
     Time                                      203,301      (204,637)       (1,336)
  Securities sold under repurchase
  agreements                                    10,120        (1,412)        8,708
   Federal funds purchased                       5,295         5,295
                                            ----------      --------      --------
                                                                                 0
     Total interest bearing liabilities
                                               469,273      (194,542)      274,731
                                            ----------      --------      --------
</TABLE>


Note:    Rate/volume  variances were allocated between rate variances and volume
         variances using a weighted average allocation method.



                                       23
<PAGE>


TABLE 2
VOLUME-RATE ANALYSIS (CONTINUED)
<TABLE>
<CAPTION>
                                                      1998 OVER 1997
                                                      --------------
                                            INCREASE (DECREASE) DUE TO CHANGES IN:
                                            --------------------------------------
                                              VOLUME        RATE          TOTAL
<S>                                          <C>          <C>            <C>
Interest income on:
   Investment securities
     Taxable                                 (80,646)      (17,856)      (98,502)
     Non-taxable                             257,775       (14,638)      243,137
Federal funds sold                           108,932       (13,301)       95,631
Loans (including loan fees)                  490,125      (145,437)      344,688
                                            --------      --------      --------

     Total interest earning assets           776,186      (191,232)      584,954
                                            --------      --------      --------
Interest expense on:
   Deposits:
     Interest bearing demand                  22,370       (18,249)        4,121
     Savings                                 (11,324)      (42,257)      (53,581)
     Time                                    307,807        11,418       319,225
  Securities sold under repurchase
  agreements                                    (802)          -            (802)
                                            --------      --------      --------
     Total interest bearing liabilities      318,051       (49,088)      268,963
                                            --------      --------      --------
</TABLE>


Note:    Rate/volume  variances were allocated between rate variances and volume
         variances using a weighted average allocation method.




                                       24
<PAGE>

TABLE 3
INVESTMENT PORTFOLIO

The following  table presents the  investments by category at December 31, 1999,
1998, and 1997:

<TABLE>
<CAPTION>
                                                  1999            1998             1997
                                                  ----            ----             ----

<S>                                            <C>             <C>             <C>
HELD TO MATURITY (AT AMORTIZED COST)
     State, county and municipal               $    --         $15,303,990     $13,276,282
                                               ----------      -----------     -----------


AVAILABLE FOR SALE
     State, county and municipal               $16,113,705            --              --
     United States treasuries and agencies       8,248,061     $ 6,291,116     $ 9,650,483
     Mortgage-backed                            12,895,247      13,764,308       7,004,215
                                               -----------     -----------     -----------

       Totals                                  $37,257,013     $20,055,424     $16,654,698
                                               ===========     ===========     ===========
</TABLE>


The following  table  presents the  maturities of all  investment  securities at
carrying  value and the  weighted  average  yields for each range of  maturities
presented.
<TABLE>
<CAPTION>
Maturities at               United States      Mortgage-       State, County       Weighted
December 31, 1999           Treasury and        Backed             and              Average
                              Agencies        Securities         Municipal            Yields
                              --------        ----------         ---------            ------

<S>                            <C>            <C>                <C>                 <C>
Within 1 year                     --                --              465,043           6.09%
After 1 through 5 years      2,205,469              --            3,028,828           5.34%
After 5 through 10 years     5,863,517            86,932          1,412,533           6.69%
After 10 years                 179,075        12,808,315         11,207,301           5.77%
      --                       -------        ----------         ----------           ----

    Totals                   8,248,061        12,895,247         16,113,705
       </TABLE>


Mortgage  backed  securities are included in the maturities  categories in which
they are anticipated to be repaid based on scheduled maturities.

                                       25

<PAGE>


Table 4
Loan Portfolio

The following table presents loans by type at the end of the last 5 years.

<TABLE>
<CAPTION>
                                           1999             1998             1997              1996             1995
                                      --------------   --------------    --------------   --------------   ----------------
Commercial, financial and
<S>                                    <C>              <C>              <C>              <C>               <C>
agricultural                           $ 12,714,342     $ 11,332,765     $ 10,570,994     $  9,792,533      $  8,160,215
Real estate - construction               28,310,935       16,925,962       13,824,372       16,836,092        12,583,049
Real estate - mortgage                   40,222,371       38,942,845       38,748,388       34,511,657        31,534,900
Consumer                                 12,082,629        9,578,312        9,129,134        7,680,871         6,331,668
                                         93,330,277       76,779,884       72,272,888       68,821,153        58,609,832
Less:  Allowance for loan
losses                                   (1,469,126)      (1,427,420)      (1,362,530)      (1,202,201)       (1,019,644)

Loans, net                             $ 91,861,151     $ 75,352,464     $ 70,910,358     $ 67,618,952      $ 57,590,188
</TABLE>


At December 31, 1999, maturities of loans in the indicated  classifications were
as follows:

                         Commercial,              Real
                        Financial and            Estate
Maturity                Agricultural          Construction             Total
--------                ------------          ------------             -----


   Within 1 year         $ 6,362,761          $ 24,537,001          $ 30,899,762
   1 to 5 years            5,989,526             3,773,934             9,763,460
   Over 5 years              362,055                --                   362,055

       Totals            $12,714,342          $ 28,310,935          $ 41,025,277
                         ===========          ============          ============


As of  December  31,  1999,  the  interest  terms  of  loans  in  the  indicated
classifications for the indicated maturity ranges are as follows:


<TABLE>
<CAPTION>
                                                   Fixed              Variable
                                                 Interest             Interest
                                                   Rates                Rates             Total
                                                -----------         ------------      ------------
<S>                                            <C>                   <C>               <C>
Commercial, financial and agricultural
1 to 5 years                                   $ 4,857,197           1,132,329         $ 5,989,526
Over 5 years                                   $   271,187              90,868         $   362,055

Real estate construction
1 to 5 years                                        --               $3,773,934         $ 3,773,934
</TABLE>


                                       26

<PAGE>


TABLE 4
LOAN PORTFOLIO (CONTINUED)

The following  summarizes  past-due and non-accrual loans, other real estate and
repossessions  and income that would have been reported on non-accrual  loans as
of December 31, 1999, 1998, 1997, 1996, and 1995:

<TABLE>
<CAPTION>
                                                                              December 31,
                                                     1999            1998           1997           1996          1995
                                                     ----            ----           ----           ----          ----

<S>                                                  <C>            <C>             <C>            <C>           <C>
Other real estate and repossessions                  53,398         40,000          40,000         40,000        40,000
Accruing loans 90 days or more past due                   -            530            -             -           238,000
Non-accrual loans                                    25,010         30,571           4,000        278,000       282,000
Interest on non-accrual  loans which would
have been reported                                      200          1,500             200         19,000        18,000
</TABLE>


A loan is placed on  non-accrual  status when,  in  management's  judgment,  the
collection of interest  appears  doubtful.  As a result of management's  ongoing
review of the loan portfolio, loans are classified as non-accrual generally when
they are past  due in  principal  and  interest  for more  than 90 days or it is
otherwise not  reasonable to expect  collection of principal and interest  under
the original  terms.  Exceptions are allowed for 90 day past due loans when such
loans  are well  secured  and in  process  of  collection.  Generally,  payments
received on non-accrual loans are applied directly to principal.




                                       27
<PAGE>


TABLE 5
ALLOWANCE FOR LOAN LOSSES

The following  table  summarizes  information  concerning the allowance for loan
losses:

<TABLE>
<CAPTION>
                                               1999         1998         1997     1996       1995
                                               ----         ----         ----     ----       ----
                                                       (Amounts are presented in thousands)
<S>                                           <C>        <C>          <C>        <C>        <C>
Balance at beginning of year                  $1,427     $ 1,363      $1,202     $1,020     $1,057
Charges-offs:
     Commerce, financial and agricultural         29          18           4         83         40
     Installment                                  74          74          30         47        120

         Total charge-offs                       103          92          34        130        160
Recoveries:
     Commerce, financial and agricultural         17          73           4          5          4
     Installment                                  12          23          25         26         19

         Total recoveries                         29          96          29         31         23

Net charge-offs (recoveries)                      74          (4)          5         99        137

Provisions charged to operations                 116          60         166        281        100

Balance at end of year                        $1,469     $ 1,427      $1,363     $1,202     $1,020

Ratios of net charge-offs (recoveries)
  during the period to average loans
  outstanding during the period                  .09%       (.01%)       .01%       .15%       .24%
</TABLE>


The Company has a dedicated loan review function. All loans $150,000 or more are
reviewed  annually and placed into various loan grading  categories which assist
in  developing  lists of  potential  problem  loans.  These loans are  regularly
monitored  by the  loan  review  function  to  ensure  early  identification  of
deterioration.  The formal allowance for loan loss adequacy test is performed at
each  calendar  quarter end.  Specific  amounts of loss are estimated on problem
loans  and  historical  loss  percentages  are  applied  to the  balance  of the
portfolio using certain portfolio stratifications.  Additionally, the evaluation
takes into consideration such factors as changes in the nature and volume of the
loan portfolio, current economic conditions, regulatory examination results, and
the existence of loan concentrations.


                                       28
<PAGE>


TABLE 6
DEPOSITS

The average  balance of the deposits and the average rates paid on such deposits
are summarized for the periods indicated in the following table.

<TABLE>
<CAPTION>
                                                                           December 31,
                                                   1999                      1998                        1997
<S>                                       <C>                         <C>                        <C>
Deposits:
Non-interest bearing demand               $  18,275,259       -       $  15,970,054       -      $13,362,850        -
Interest bearing demand                      35,025,775     2.99%        26,784,495     2.88%     26,299,721       2.92%
Savings                                       9,606,416     2.00%         8,741,058     2.33%      9,226,456       2.79%
Time                                         57,723,166     5.27%        53,995,027     5.64%     48,487,156       5.62%
                                             ----------     ----         ----------     ----      ----------       ----

                                           $120,630,616                $105,490,634              $97,376,183
                                           ============                ============              ===========
</TABLE>


Maturities of time  certificates  of deposit of $100,000 or more  outstanding at
December 31, 1999 are summarized as follows:

Within 3 months                                         $ 1,355,054
After 3 through 6 months                                  2,125,702
After 6 through 12 months                                 4,440,588
After 12 months                                           2,260,938
                                                        -----------
                                                       $ 10,182,282
                                                       ============


                                       29

<PAGE>



TABLE 7
SELECTED RATIOS

The  following  table  sets out  certain  ratios  of the  Company  for the years
indicated.

                                         1999           1998           1997
                                         ----           ----           ----
Net income to:
     Average stockholders' equity       16.66%         16.61%         15.66%
     Average assets                      1.63%          1.71%          1.56%
Dividends to net income                 40.85%         35.43%         34.85%
Average equity to average assets         9.77%         10.28%          9.95%




                                       30
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS.

         The financial statements and the report of independent  accountants are
included in this report beginning at page F-1 of this Form 10-KSB.

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

         During the Bank's two most recent fiscal years, the Bank did not change
accountants  and had no  disagreement  with its  accountants  on any  matters of
accounting principles or practices or financial statement disclosure.


                                    PART III

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

         The  information   contained  under  the  headings  "Information  About
Nominees For  Directors,"  "Executive  Officers," and  "Compliance  with Section
16(a)" in the  definitive  Proxy  Statement  to be used in  connection  with the
solicitation  of proxies for the Company's  annual meeting of shareholders to be
held on May 1, 2000,  to be filed with the  Securities  and Exchange  Commission
("SEC"), is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION.

         The information contained under the heading "Executive Compensation" in
the definitive Proxy Statement to be used in connection with the solicitation of
proxies for the Bank's annual meeting of shareholders to be held on May 1, 2000,
to be filed with the SEC, is incorporated herein by reference.

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

         The information  contained under the heading  "Beneficial  Ownership of
Securities and Voting Rights" in the  definitive  Proxy  Statement to be used in
connection with the  solicitation of proxies for the Company's annual meeting of
shareholders  to be  held  on  May  1,  2000,  to be  filed  with  the  SEC,  is
incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information contained under the heading "Certain  Relationships and
Related  Transaction" in the definitive Proxy Statement to be used in connection
with the  solicitation  of  proxies  for all the  Company's  annual  meeting  of
shareholders  to be  held  on  May  1,  2000,  to be  filed  with  the  SEC,  is
incorporated herein by reference.


                                       31

<PAGE>

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

     (a) Financial Statements.

         The following financial  statements and notes thereto of the Registrant
         are located  beginning at page F-1 of this Form 10-KSB pursuant to Item
         7 of this Report:

             1.       Report of Independent Certified Public Accountants
             2.       Balance Sheets
                            December 31, 1999 and 1998
             3.       Statements of Earnings
                          For the Years Ended December 31, 1999, 1998, and 1997
             4.       Statements of Changes in Stockholders Equity
                          For the Years Ended December 31, 1999, 1998, and 1997
             5.       Statements of Cash Flows
                          For the Years Ended December 31, 1999, 1998, and 1997
             6.       Notes to Financial Statements


                                       32
<PAGE>


EXHIBITS

         The  following  exhibits  are  required to be filed with this Report on
10-KSB by Item 601 of Regulation S-B.

2.       Plan of  Reorganization  and  Agreement  of Merger by and among  Oconee
         Interim   Corporation,   Oconee  State  Bank,   and  Oconee   Financial
         Corporation, dated August 28, 1998 (included as Exhibit 2 to the Bank's
         10-KSB  filed with the SEC on March 30,  1999 and  incorporated  hereby
         reference).

3.1      Articles of Incorporation of Oconee Financial Corporation, dated August
         27, 1998.  (included as Exhibit 3.1 to the Bank's 10-KSB filed with the
         SEC on March 30, 1999 and incorporated hereby reference).

3.2      Bylaws of Oconee Financial Corporation, dated August 27, 1998 (included
         as  Exhibit  3.2 to the Bank's  10-KSB  filed with the SEC on March 30,
         1999 and incorporated hereby reference).

4.       See   Exhibits  3.1  and  3.2  for   provisions   of  the  Articles  of
         Incorporation  and Bylaws  which  define  the rights of the  holders of
         Common Stock of the Bank.

4.1      Form of Common Stock Certificate (included as Exhibit 4.1 to the Bank's
         10-KSB  filed with the SEC on March 30,  1999 and  incorporated  hereby
         reference).

10.1     Oconee State Bank 401 (k) Savings Incentive Plan (included as Exhibit 3
         to  the  Bank's  F-1  filed  with  the  FDIC  on  April  30,  1997  and
         incorporated hereby reference.)

10.2     Oconee State Bank  Officer's Cash Incentive Plan (included as Exhibit 3
         to  the  Bank's  F-1  filed  with  the  FDIC  on  April  30,  1997  and
         incorporated hereby reference.)

21.      Subsidiaries of Oconee Financial  Corporation.  (included as Exhibit 21
         to the  Bank's  10-KSB  filed  with  the  SEC on  March  30,  1999  and
         incorporated hereby reference).

24.      Power of Attorney (included herein on signature page).

27.      Financial Data Schedule (for SEC use only) is filed herewith.


     (b)   REPORTS ON FORM 8-K.

           The  Bank  did not file any  reports  on Form 8-k  during the fourth
quarter of 1999.


                                       33
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




To the Board of Directors and Stockholders
Oconee Financial Corporation:


We have audited the accompanying consolidated balance sheets of Oconee Financial
Corporation  and  subsidiary  as of December 31, 1999 and 1998,  and the related
consolidated   statements  of  earnings,   comprehensive   income,   changes  in
stockholders'  equity and cash  flows for each of the three  years in the period
ended December 31, 1999. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

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







Atlanta, Georgia
March 10, 2000




                                      F-1
<PAGE>


                                    OCONEE FINANCIAL CORPORATION

                                    Consolidated Balance Sheets

                                     December 31, 1999 and 1998

                                               Assets
                                               ------
<TABLE>
<CAPTION>

                                                                         1999             1998
                                                                    -------------      -----------
<S>                                                                 <C>                <C>
Cash and due from banks, including reserve
   requirements of $1,453,000 and $1,124,000                        $   6,437,789        4,428,512
Federal funds sold                                                      9,690,000        9,640,000
                                                                    -------------      -----------
           Cash and cash equivalents                                   16,127,789       14,068,512
Investment securities available for sale                               37,257,013       20,055,424
Investment securities held to maturity                                       --         15,303,990
Mortgage loans held for sale                                            1,867,390        1,835,300
Loans, net                                                             91,861,151       75,352,464
Premises and equipment, net                                             1,625,990        1,494,656
Accrued interest receivable and other assets                            3,399,235        2,542,037
                                                                    -------------      -----------

                                                                    $ 152,138,568      130,652,383
                                                                    =============      ===========

 Liabilities and Stockholders'  Equity
Deposits:
   Demand                                                           $  18,735,537       17,733,931
   Interest-bearing demand                                             37,398,067       36,341,561
   Savings                                                             11,190,553        8,875,677
   Time                                                                69,203,052       53,169,019
                                                                    -------------      -----------

           Total deposits                                             136,527,209      116,120,188

Securities sold under repurchase agreements                               865,908          558,169

Accrued interest payable and other liabilities                          1,730,832        1,475,842
                                                                    -------------      -----------

           Total liabilities                                          139,123,949      118,154,199
                                                                    -------------      -----------

Stockholders' equity:
   Common stock, par value $10, authorized 300,000 shares,
     issued and outstanding 179,994 in 1999 and 180,000 in 1998         1,799,940        1,800,000
   Additional paid-in capital                                           4,249,160        4,250,000
   Retained earnings                                                    7,701,769        6,398,412
   Accumulated other comprehensive income (loss)                         (736,250)          49,772
                                                                    -------------      -----------

           Total stockholders' equity                                  13,014,619       12,498,184


                                                                    $ 152,138,568      130,652,383
                                                                    =============      ===========
</TABLE>





See accompanying notes to consolidated financial statements.

                                                F-2
<PAGE>

                                          OCONEE FINANCIAL CORPORATION

                                      Consolidated Statements of Earnings
<TABLE>
<CAPTION>

                              For the Years Ended December 31, 1999, 1998 and 1997

                                                                          1999           1998          1997
                                                                      -----------     ---------     ----------
<S>                                                                   <C>             <C>            <C>
Interest income:
   Interest and fees on loans                                         $ 8,379,754     7,676,432      7,331,744
   Interest on federal funds sold                                         294,214       340,869        245,238
   Interest on investment securities:
     U. S. Treasuries                                                     116,719       204,356        272,193
     U. S. Government agencies                                          1,046,397       847,531        878,196
     State, county and municipal                                          808,336       704,153        461,016
                                                                      -----------     ---------     ----------

              Total interest income                                    10,645,420     9,773,341      9,188,387
                                                                      -----------     ---------     ----------

Interest expense:
   Interest-bearing demand deposits                                     1,045,860       771,894        767,773
   Savings deposits                                                       192,028       203,929        257,510
   Time deposits                                                        3,041,875     3,043,214      2,723,989
   Other                                                                   34,502        20,499         21,301
                                                                      -----------     ---------     ----------

              Total interest expense                                    4,314,265     4,039,536      3,770,573
                                                                      -----------     ---------     ----------

              Net interest income                                       6,331,155     5,733,805      5,417,814

Provision for loan losses                                                 116,000        60,720        166,200
                                                                      -----------     ---------     ----------

              Net interest income after provision for loan losses       6,215,155     5,673,085      5,251,614
                                                                      -----------     ---------     ----------

Other income:
   Service charges                                                        664,279       659,014        659,239
   Gain (loss) on sale of securities                                        9,171        14,250        (10,727)
   Miscellaneous                                                          654,811       610,030        431,710
                                                                      -----------     ---------     ----------

              Total other income                                        1,328,261     1,283,294      1,080,222
                                                                      -----------     ---------     ----------

Other expenses:
   Salaries and employee benefits                                       2,663,419     2,418,512      2,324,232
   Occupancy                                                              543,808       516,428        468,764
   Other operating                                                      1,299,133     1,174,378      1,113,638
                                                                      -----------     ---------     ----------

              Total other expenses                                      4,506,360     4,109,318      3,906,634
                                                                      -----------     ---------     ----------

              Earnings before income taxes                              3,037,056     2,847,061      2,425,202

Income tax expense                                                        833,729       815,167        720,674
                                                                      -----------     ---------     ----------

              Net earnings                                            $ 2,203,327     2,031,894      1,704,528
                                                                      ===========     =========     ==========

              Net earnings per share                                  $     12.24    $    11.29     $     9.47
                                                                      ===========     =========     ==========

              Weighted average shares outstanding                     $   179,998       180,000        180,000
                                                                      ===========     =========     ==========
</TABLE>



See accompanying notes to consolidated financial statements.



                                                      F-3
<PAGE>

                                           OCONEE FINANCIAL CORPORATION
<TABLE>
<CAPTION>

                                 Consolidated Statements of Comprehensive Income

                               For the Years Ended December 31, 1999, 1998 and 1997



                                                                          1999            1998           1997
                                                                      -----------      ----------      ---------

<S>                                                                   <C>               <C>            <C>
Net earnings                                                          $ 2,203,327       2,031,894      1,704,528
                                                                      -----------      ----------      ---------

Other comprehensive income, net of income taxes:
  Unrealized gains on securities
  available for sale:
   Holding gains (losses) arising during period,
      net of tax of $(484,420), $(14,332) and $39,415                    (791,712)        (23,424)        64,419
   Reclassification adjustment for gains (losses) included in net
      earnings, net of tax of $3,481, $5,410 and $(4,072)                   5,690           8,840         (6,655)
                                                                      -----------      ----------      ---------

           Total other comprehensive income (loss)                       (786,022)        (14,584)        57,764
                                                                      -----------      ----------      ---------

Comprehensive income                                                  $ 1,417,305       2,017,310      1,762,292
                                                                      ===========      ==========      =========
</TABLE>



See accompanying notes to consolidated financial statements.

                                                       F-4
<PAGE>

                                            OCONEE FINANCIAL CORPORATION
<TABLE>
<CAPTION>

                             Consolidated Statements of Changes in Stockholders' Equity

                                For the Years Ended December 31, 1999, 1998 and 1997


                                                                                          Accumulated
                                                           Additional                        Other
                                            Common          Paid-In        Retained      Comprehensive
                                             Stock          Capital        Earnings          Income        Total
                                           ---------       ---------       ---------     --------------  ----------

<S>                                      <C>               <C>             <C>               <C>         <C>
Balance, December 31, 1996               $ 1,800,000       3,250,000       4,975,990         6,592       10,032,582

Transfers                                        --        1,000,000      (1,000,000)           --            --

Cash dividends declared
  ($3.30) per share                              --             --          (594,000)           --         (594,000)

Net earnings                                     --             --         1,704,528            --        1,704,528


Change in net unrealized gain (loss)
  on investment securities available
  for sale, net of tax                          --              --              --          57,764           57,764
                                           ---------       ---------       ---------        ------       ----------

Balance, December 31, 1997                 1,800,000       4,250,000       5,086,518        64,356       11,200,874

Cash dividends declare
  ($4.00) per share                             --              --          (720,000)         --           (720,000)

Net earnings                                    --              --         2,031,894          --          2,031,894

Change in net unrealized gain (loss)
  on investment securities available
  for sale, net of tax                          --              --              --        (14,584)         (14,584)
                                           ---------       ---------       ---------        ------       ----------


Balance, December 31, 1998                 1,800,000       4,250,000       6,398,412        49,772       12,498,184


January 1, 2000 conversion of
  1 share of Oconee State Bank
  stock for 1 share of Oconee-
  Financial Corporation stock                   --              --              --            --                --

Purchase and retirement of common
    stock                                        (60)           (840)           --            --               (900)

Cash dividends declared
  ($5.00) per share                             --              --          (899,970)         --           (899,970)

Change in net unrealized gain (loss)
  on investment securities available
  for sale, net of tax                          --              --              --        (786,022)        (786,022)

Net earnings                                    --              --         2,203,327          --          2,203,327
                                           ---------       ---------       ---------        ------       ----------

Balance, December 31, 1999               $ 1,799,940       4,249,160       7,701,769      (736,250)      13,014,619
                                         ===========      ==========      ==========      ========      ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                                        F-5
<PAGE>

                                           OCONEE FINANCIAL CORPORATION
<TABLE>
<CAPTION>

                                       Consolidated Statements of Cash Flows
                               For the Years Ended December 31, 1999, 1998 and 1997

                                                                        1999             1998             1997
                                                                   ------------        ---------        ---------

<S>                                                                <C>                 <C>              <C>
Cash flows from operating activities:
   Net earnings                                                    $  2,203,327        2,031,894        1,704,528
   Adjustments to reconcile net earnings to net
     cash provided by operating activities:
       Depreciation, amortization and accretion                         248,192          214,733          250,457
       Provision for loan losses                                        116,000           60,720          166,200
       Provision for deferred taxes                                     (24,203)         (11,509)         (51,666)
       Loss (gain) on sale of investment securities                      (9,171)         (14,250)          10,727
       Loss (gain) on sale of premises and equipment                       --             21,428             --
       Change in:
         Accrued interest receivable                                   (256,152)        (178,321)          25,415
         Accrued interest payable                                       138,876          (33,326)          98,055
         Other assets                                                   (95,904)         (41,890)        (150,254)
         Other liabilities                                              (63,856)          50,353           88,672
         Mortgage loans held for sale                                   (32,090)      (1,173,453)        (378,227)
                                                                   ------------      -----------        ---------

                Net cash provided by operating activities             2,225,019          926,379        1,763,907
                                                                   ------------      -----------        ---------

Cash flows from investing activities:
   Purchase of investment securities available for sale             (10,236,926)     (13,590,609)      (5,692,077)
   Purchase of investment securities held to maturity                (1,854,069)      (2,602,423)      (6,729,454)
   Proceeds from calls and maturities of investment securities
     available for sale                                               4,788,162        7,683,927        4,039,880
   Proceeds from calls and maturities of investment securities
     held to maturity                                                   500,000          575,900          310,000
   Proceeds from sales of investment securities available
     for sale                                                         3,130,054        2,503,305        5,014,688
   Proceeds from sales of investment securities
     held to maturity                                                   505,000             --               --
   Net change in loans                                              (16,624,687)      (4,502,826)      (3,893,658)
   Purchases of premises and equipment                                 (367,136)        (241,276)         (70,058)
   Proceeds from sales of other real estate                                --               --            447,058
   Improvements to other real estate                                       --               --            (11,006)
                                                                   ------------      -----------        ---------

                Net cash used by investing activities               (20,159,602)     (10,174,002)      (6,584,627)
                                                                   ------------      -----------        ---------

Cash flows from financing activities:
   Net change in deposits                                            20,407,021       11,530,281        7,624,413
   Net change in securities sold under repurchase agreements            307,739          199,333          (56,740)
   Dividends paid                                                      (720,000)        (594,000)        (540,000)
   Purchase and retirement of stock                                        (900)            --               --
                                                                   ------------      -----------        ---------

                Net cash provided by financing activities            19,993,860       11,135,614        7,027,673
                                                                   ------------      -----------        ---------

Net increase in cash and cash equivalents                             2,059,277        1,887,991        2,206,953

Cash and cash equivalents at beginning of year                       14,068,512       12,180,521        9,973,568
                                                                   ------------      -----------        ---------

Cash and cash equivalents at end of year                           $ 16,127,789       14,068,512       12,180,521
                                                                   ============      ===========       ==========
</TABLE>

                                                       F-6
<PAGE>

                                      OCONEE FINANCIAL CORPORATION

                            Consolidated Statements of Cash Flows, continued

                          For the Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>

                                                                 1999           1998           1997
                                                             -----------      ---------      ---------
<S>                                                          <C>              <C>            <C>
Supplemental  disclosures  of cash flow  information:
 Cash paid during the year
   for:
     Interest                                                $ 4,175,389      4,072,862      3,674,518
     Income taxes                                            $   629,000        773,000        819,000

Noncash investing and financing activities:
   Change in net unrealized loss on investment
     securities available for sale, net of tax               $   786,022        (14,584)        57,764
   Transfer of loans to other real estate                    $      --             --          436,052
   Change in dividends payable                               $   179,970        126,000         54,000
   Transfer of investment securities held to maturity to
     available for sale                                      $16,159,794           --             --
</TABLE>




See accompanying notes to consolidated financial statements.


                                       F-7
<PAGE>

                          OCONEE FINANCIAL CORPORATION

                   Notes to Consolidated Financial Statements

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      Organization
      ------------
      Oconee  Financial  Corporation  ("OFC")  received  regulatory  approval to
      operate  as a  bank  holding  company  on  October  13,  1998,  and  began
      operations  effective  January 1, 1999. OFC is primarily  regulated by the
      Federal  Reserve  Bank,  and serves as the  one-bank  holding  company for
      Oconee State Bank.

      Oconee State Bank (the "Bank") commenced  business in 1960 upon receipt of
      its banking  charter  from the Georgia  Department  of Banking and Finance
      (the "DBF").  The Bank is  primarily  regulated by the DBF and the Federal
      Deposit Insurance Corporation and undergoes periodic examinations by these
      regulatory  agencies.  The Bank  provides a full range of  commercial  and
      consumer  banking  services  primarily  in Oconee and Clarke  counties  in
      Georgia.

      Principles of Consolidation
      ---------------------------
      The consolidated  financial statements include the financial statements of
      Oconee Financial Corporation and its wholly owned subsidiary, Oconee State
      Bank  (collectively  called the "Company").  All significant  intercompany
      balances and transactions have been eliminated in consolidation for 1999.

      Basis of Presentation
      ---------------------
      The  accounting  principles  followed by the  Company,  and the methods of
      applying  these  principles,  conform with generally  accepted  accounting
      principles ("GAAP") and with general practices in the banking industry. In
      preparing the financial statements in conformity with GAAP,  management is
      required  to make  estimates  and  assumptions  that  affect the  reported
      amounts  in  the  financial   statements.   Actual  results  could  differ
      significantly  from  these  estimates.  Material  estimates  common to the
      banking industry that are particularly  susceptible to significant  change
      in the near term include, but are not limited to, the determination of the
      allowance  for loan  losses  and  valuation  of real  estate  acquired  in
      connection with or in lieu of foreclosure on loans.

      Cash and Cash Equivalents
      -------------------------
      For purposes of reporting cash flows,  cash and cash  equivalents  include
      cash and due from banks and federal funds sold.

      Investment 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 sale 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.

      Available for sale securities are recorded at fair value. Held to maturity
      securities  are  recorded  at  cost,  adjusted  for  the  amortization  or
      accretion of premiums or 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
      stockholders'  equity  until  realized.  Transfers of  securities  between
      categories are recorded at fair value at the date of transfer.  Unrealized
      holding gains or losses  associated with transfers of securities from held
      to maturity to available for sale are recorded as a separate  component of
      stockholders'  equity.  The unrealized holding gains or losses included in
      the separate component of stockholders' equity for securities  transferred
      from  available for sale to held to maturity are  maintained and amortized
      into income over the  remaining  life of the security as an  adjustment to
      the yield in a manner  consistent  with the  amortization  or accretion of
      premium or discount on the associated security.

      A  decline  in the  market  value  of any  available  for  sale or held to
      maturity  security  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 and held to maturity are
      included in earnings  and are derived  using the  specific  identification
      method for determining the cost of securities sold.



                                       F-8
<PAGE>

                          OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
      Mortgage Loans Held for Sale
      ----------------------------
      Mortgage loans held for sale are carried at the lower of aggregate cost or
      market value.  At December 31, 1999 and 1998,  the cost of mortgage  loans
      held for sale approximates the market value.

      Loans and Allowance for Loan Losses
      -----------------------------------
      Loans are stated at the principal amount outstanding, net of the allowance
      for loan  losses.  Interest  on loans is  calculated  by using the  simple
      interest method on daily balances of the principal amount outstanding.

      Impaired loans are measured based on the present value of expected  future
      cash flows,  discounted at the loan's  effective  interest rate, or at the
      loan's observable market price, or the fair value of the collateral if the
      loan is collateral  dependent.  A loan is impaired when,  based on current
      information  and events,  it is probable that all amounts due according to
      the contractual terms of the loan will not be collected.

      Accrual of interest is discontinued  on a loan when  management  believes,
      after considering  economic  conditions and collection  efforts,  that the
      borrower's  financial  condition  is such that  collection  of interest is
      doubtful.  Interest  previously  accrued  but not  collected  is  reversed
      against  current period earnings when such loans are placed on non-accrual
      status.

      The allowance for loan losses is established  through a provision for loan
      losses  charged to earnings.  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,  will be  adequate  to absorb  probable  losses on
      existing loans that may become uncollectible.

      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 changes in the nature and volume
      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
      seven  different  categories.  Grades  four  through  seven  are  assigned
      allocations of loss based on standard  regulatory  loss  percentages.  All
      other loans are assigned loss allocations  based on historical credit loss
      percentages.  The  combination of these results are compared  quarterly to
      the recorded  allowance for loan losses.  Management uses an external loan
      review program to challenge and  corroborate  the internal  grading system
      and  provide  additional  analysis  in  determining  the  adequacy  of the
      allowance and the future provisions for estimated loan losses.

      While management uses available  information to 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 judgments different than
      those of management.

      Premises and Equipment
      ----------------------
      Premises and equipment are stated at cost less  accumulated  depreciation.
      Depreciation is computed primarily using the straight-line method over the
      estimated useful lives of the assets. When assets are retired or otherwise
      disposed  of, the cost and related  accumulated  depreciation  are removed
      from the  accounts,  and any gain or loss is reflected in earnings for the
      period. The cost of maintenance and repairs which 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  generally as
      follows:

         Buildings and improvements                     5 - 40 years
         Furniture and equipment                        3 - 10 years

      Securities Sold Under Repurchase Agreements
      -------------------------------------------
      Securities  sold under  repurchase  agreements  are  treated as  financing
      activities, and are carried at the amounts at which the securities will be
      repurchased as specified in the respective agreements.



                                       F-9
<PAGE>

                         OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
      Income Taxes
      ------------
      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.  Additionally,  the recognition of future tax benefits, such as
      net  operating  loss  carryforwards,   is  required  to  the  extent  that
      realization of such benefits is more likely than not.  Deferred tax assets
      and  liabilities are measured using enacted tax rates expected to apply to
      taxable  income in the  years in which  the  assets  and  liabilities  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 tax expense
      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 Company's  assets and
      liabilities   result  in  deferred  tax  assets,   an  evaluation  of  the
      probability of being able to realize the future benefits indicated by such
      assets is required.  A valuation  allowance is provided for the 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.

      Profit Sharing Plan
      -------------------
      The Company has a  contributory  profit sharing plan which is available to
      substantially   all   employees   subject  to  certain   age  and  service
      requirements.  Contributions  to the plan are  determined  annually by the
      Board of Directors.  The total  contribution by the Company for 1999, 1998
      and 1997 was approximately $127,100, $203,200 and $170,500, respectively.

      Net Earnings Per Common Share
      -----------------------------
      Earnings  per common  share are based on the  weighted  average  number of
      common shares outstanding during the period while the effects of potential
      common  shares  outstanding  during  the period  are  included  in diluted
      earnings per share. The Company had no potential common shares outstanding
      during 1999, 1998 and 1997.

      Reclassification
      ----------------
      Reclassifications  of  certain  amounts  in the 1998  and  1997  financial
      statements  have  been  made  to  conform  with  the  financial  statement
      presentation  for  1999.  The  reclassifications  have  no  effect  on net
      earnings or shareholders' equity as previously reported.

      Derivative Instruments and Hedging Activities
      ---------------------------------------------
      Effective  July 1,  1999,  the  Company  adopted  Statement  of  Financial
      Accounting Standards No. 133,  "Accounting for Derivative  Instruments and
      Hedging  Activities"  ("SFAS No. 133"),  which establishes  accounting and
      reporting standards for hedging activities and for derivative  instruments
      including derivative instruments embedded in other contracts.  It requires
      the fair value  recognition of derivatives as assets or liabilities in the
      financial  statements.  At the date of initial application,  an entity may
      transfer  any held to maturity  security  into the  available  for sale or
      trading  categories  without  calling into question the entity's intent to
      hold other  securities  to maturity in the  future.  In 1999,  the Company
      transferred  all held to maturity  investment  securities to available for
      sale under this provision of SFAS No. 133. The held to maturity securities
      had amortized costs of  approximately  $16,160,000 and net unrealized loss
      of  approximately  $41,000.  The result of the  transfer  was to  decrease
      stockholders'  equity by $25,000,  which represented the net of tax effect
      of the unrealized losses associated with the held to maturity  investments
      transferred.

                                      F-10
<PAGE>

                          OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(2)   CORPORATE REORGANIZATION
      Effective January 1, 1999, the Bank completed the process of converting to
      the holding company form of operation.  Oconee  Financial  Corporation has
      become the parent of the Bank. OFC is a Georgia, one-bank holding company,
      headquartered in Watkinsville, Georgia.

      The Bank's  shareholders  approved the holding company  reorganization  on
      December 15, 1998.  Regulatory  approval was received on October 13, 1998.
      The holding  company  conversion was completed  successfully on January 1,
      1999.  As a result  of the  conversion,  each  share of Bank $10 par value
      common stock was converted into one share of OFC $10 par value stock.  OFC
      is now the sole shareholder of the Bank.

(3)   INVESTMENT SECURITIES
      Investment securities at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>

                                                                                     December 31, 1999
                                                                 -------------------------------------------------------
                                                                                    Gross         Gross        Estimated
                                                                    Amortized     Unrealized    Unrealized       Fair
      SECURITIES AVAILABLE FOR SALE:                                  Cost          Gains         Losses         Value
                                                                 ------------     ----------    ----------     ---------
      <S>                                                        <C>                 <C>           <C>          <C>
      U.S. Treasuries and
      Government agencies                                        $  8,377,169        35,759        164,867      8,248,061
      State, county and municipal                                  16,698,398        48,493        633,186     16,113,705
      Mortgage-backed securities                                   13,368,181         2,665        475,599     12,895,247
                                                                   ----------        ------     ----------     ----------

      Total                                                      $ 38,443,748        86,917      1,273,652     37,257,013
                                                                   ==========        ======      =========     ==========
<CAPTION>

                                                                                     December 31, 1998
                                                                 -------------------------------------------------------
                                                                                    Gross         Gross        Estimated
                                                                    Amortized     Unrealized    Unrealized       Fair
                                                                      Cost         Gains         Losses         Value
                                                                 ------------     ----------    ----------     ---------
      U.S. Treasuries and
      Government agencies                                         $ 6,226,438        64,678           -         6,291,116
      Mortgage-backed securities                                   13,748,760        70,612         55,064     13,764,308
                                                                   ----------        ------         ------     ----------

      Total                                                      $ 19,975,198       135,290         55,064     20,055,424
                                                                   ==========       =======         ======     ==========
<CAPTION>

                                                                                    December 31, 1998
                                                                 -------------------------------------------------------
                                                                                    Gross         Gross        Estimated
                                                                    Amortized     Unrealized    Unrealized       Fair
       SECURITIES HELD TO MATURITY:                                   Cost         Gains         Losses         Value
                                                                 ------------     ----------    ----------     ---------

      State, county and municipal                                $ 15,303,990       788,399            674     16,091,715
                                                                   ==========       =======            ===     ==========
</TABLE>


                                      F-11
<PAGE>

                          OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(3)    INVESTMENT SECURITIES, CONTINUED
       The amortized cost and fair value of investment  securities available for
       sale at December  31, 1999,  by  contractual  maturity,  are shown below.
       Expected  maturities  will differ  from  contractual  maturities  because
       borrowers  have the right to call or prepay  obligations  with or without
       call or prepayment penalties.

                                                       Amortized      Estimated
                                                          Cost       Fair Value

            Due within one year                     $    460,000        465,043
            Due from one to five years                 5,276,105      5,234,296
            Due from five to ten years                 7,360,240      7,276,050
            Due after ten years                       11,979,222     11,386,377
            Mortgage-backed securities                13,368,181     12,895,247
                                                      ----------     ----------

                                                    $ 38,443,748     37,257,013
                                                      ==========     ==========

       Proceeds  from sales of  securities  available  for sale during 1999 were
       $3,130,054.  Gross gains of $7,895 along with gross losses of $7,546 were
       realized on 1999 sales.  Proceeds from sales of securities  available for
       sale during 1998 were $2,503,305. Gross gains of $14,695 and gross losses
       of $445 were  realized on 1998 sales.  Proceeds  from sales of securities
       available  for sale during 1997 were  $5,014,688.  Gross gains of $20,266
       and gross losses of $30,993 were realized on 1997 sales.

       During 1999, the Company  determined  that a municipal bond classified as
       held to maturity was deemed an unacceptable investment security for banks
       by the DBF. The bond was sold during 1999 for $505,000.  A gain of $8,822
       was realized on the sale.

       Securities  with  a  carrying  value  of  approximately  $14,747,000  and
       $14,966,000 at December 31, 1999 and 1998, respectively,  were pledged to
       secure public deposits and for other purposes as required by law.

(4)    LOANS
       Major  classifications  of  loans  at  December  31,  1999  and  1998 are
summarized as follows:
<TABLE>
<CAPTION>

                                                                           1999          1998
                                                                           ----          ----

              <S>                                                     <C>             <C>
              Commercial, financial and agricultural                  $ 12,714,342    11,332,765
              Real estate - mortgage                                    40,222,371    38,942,845
              Real estate - construction                                28,310,935    16,925,962
              Consumer                                                  12,082,629     9,578,312
                                                                        ----------     ---------

                    Total loans                                         93,330,277    76,779,884
              Less allowance for loan losses                             1,469,126     1,427,420
                                                                         ---------     ---------
                    Total net loans                                   $ 91,861,151    75,352,464
                                                                        ==========    ==========
</TABLE>

       The Bank grants loans and  extensions of credit  primarily to individuals
       and a variety  of firms  and  corporations  located  in  certain  Georgia
       counties including Oconee and Clarke. 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.


                                      F-12
<PAGE>

                         OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(4)    LOANS, CONTINUED
       Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>

                                                                                         1999         1998         1997
                                                                                         ----         ----         ----

<S>                                                                                <C>            <C>          <C>
           Balance at beginning of year                                            $ 1,427,420    1,362,530    1,202,201
           Amounts charged off                                                        (102,981)     (91,925)     (34,524)
           Recoveries on amounts previously charged off                                 28,687       96,095       28,653
           Provision for loan losses                                                   116,000       60,720      166,200
                                                                                     ---------    ---------    ---------

           Balance at end of year                                                  $ 1,469,126    1,427,420    1,362,530
                                                                                     =========    =========    =========
</TABLE>

(5)   PREMISES AND EQUIPMENT

      Major  classifications  of premises and  equipment  are  summarized  as
     follows:
<TABLE>
<CAPTION>

                                                                                                     1999         1998
                                                                                                  ---------    ---------
<S>                                                                                             <C>              <C>
           Land                                                                                 $   459,928      459,928
           Buildings and improvements                                                             1,721,022    1,704,111
           Furniture and equipment                                                                1,502,881    2,049,703
                                                                                                  ---------    ---------

                                                                                                  3,683,831    4,213,742
           Less accumulated depreciation                                                          2,057,841    2,719,086
                                                                                                  ---------    ---------

                                                                                                $ 1,625,990    1,494,656
                                                                                                  =========    =========
</TABLE>

      Depreciation  expense was  $235,802,  $222,525  and $231,827 for the years
      ended December 31, 1999, 1998 and 1997, respectively.

(6)   DEPOSITS
      The  aggregate  amounts of  certificates  of deposit,  each with a minimum
      denomination of $100,000, were approximately $10,182,000 and $5,542,000 at
      December 31, 1999 and 1998, respectively.

      At December 31, 1999, the scheduled maturities of certificates of deposits
      are as follows:

                2000                                      $     43,897,408
                2001                                            23,987,433
                2002                                               550,070
                2003                                               416,907
                2004 and thereafter                                351,234
                                                              ------------

                                                          $     69,203,052

(7)   INCOME TAXES
      The  components of income tax expense in the statements of earnings are as
follows:
<TABLE>
<CAPTION>

                                                                                         1999         1998         1997
                                                                                         ----         ----         ----

<S>                                                                                  <C>            <C>          <C>
      Current                                                                        $ 857,932      826,676      772,340
      Deferred                                                                         (24,203)     (11,509)     (51,666)
                                                                                       -------      -------      -------

      Total income tax expense                                                       $ 833,729      815,167      720,674
                                                                                       =======      =======      =======
</TABLE>

                                      F-13
<PAGE>

                          OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(7)   INCOME TAXES, CONTINUED
      The  differences  between  income tax expense  and the amount  computed by
      applying the statutory  federal income tax rate to earnings  before income
      taxes are as follows:
<TABLE>
<CAPTION>

                                                                                         1999         1998         1997
                                                                                         ----         ----         ----

<S>                                                                                <C>              <C>          <C>
             Pretax income at statutory rates                                      $ 1,032,599      968,000      824,569
             Add (deduct):
             Tax exempt interest income                                               (279,293)    (243,794)    (167,078)
             Non-deductible interest expense                                            34,719       37,162       26,844
             Other                                                                      45,704       53,799       36,339
                                                                                     ---------     --------      -------

                                                                                    $  833,729      815,167      720,674
                                                                                     =========      =======      =======
</TABLE>

      The  following  summarizes  the sources and expected tax  consequences  of
      future  taxable  deductions  (income)  which comprise the net deferred tax
      asset.  The net  deferred  tax  asset is a  component  of other  assets at
      December 31, 1999 and 1998.
<TABLE>
<CAPTION>

                                                                                                     1999         1998
                                                                                                    -------      -------
             <S>                                                                                  <C>            <C>
             Deferred income tax assets:
             Allowance for loan losses                                                            $ 471,478      454,064
             Other real estate                                                                       25,952       26,142
             Unrealized losses on investment securities available for sale                          450,484         -
             Other                                                                                   13,283         -
                                                                                                    -------      -------

             Total gross deferred income tax assets                                                 961,197      480,206
                                                                                                    -------      -------

             Deferred income tax liabilities:
             Unrealized gains on investment securities available for sale                              -         (30,454)
             Premises and equipment                                                                 (44,773)     (38,469)
                                                                                                    -------      -------

             Total gross deferred income tax liabilities                                            (44,773)     (68,923)
                                                                                                    -------      -------

             Net deferred income tax asset                                                        $ 916,424      411,283
                                                                                                    =======      =======
</TABLE>

(8)   FEDERAL HOME LOAN BANK ADVANCES
      The Bank has an agreement with the Federal Home Loan Bank ("FHLB") whereby
      the FHLB agreed to provide the Bank credit  facilities  under an Agreement
      for Advances and Security Agreement.  Any amounts advanced by the FHLB are
      secured  under a Blanket  Floating  Lien  covered by all of the Bank's 1-4
      family first mortgage  loans.  The Bank may draw advances up to 75% of the
      outstanding  balance of these loans based on the agreement  with the FHLB.
      The Bank has no borrowings from the FHLB as of December 31, 1999 or 1998.

 (9)  RELATED PARTY TRANSACTIONS
      The Company conducts  transactions with directors and executive  officers,
      including companies in which they have beneficial interests, in the normal
      course of business. It is the policy of the Company that loan transactions
      with  directors  and officers be made on  substantially  the same terms as
      those  prevailing at the time made for comparable  loans to other persons.
      The following is a summary of activity for related party loans for 1999:

             Beginning balance                                      $1,573,920
             New loans, including loans for new director             3,080,369
             Repayments                                             (2,151,582)
                                                                     ---------

             Ending balance                                         $2,502,707
                                                                     =========

      Deposits  with related  parties  totaled  approximately  $5,142,000  as of
December 31, 1999.



                                      F-14
<PAGE>

                         OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(10)  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,  standby  letters  of  credit  and  financial  guarantees.   Those
      instruments involve, to varying degrees, elements of credit risk in excess
      of the amount  recognized in the balance  sheet.  The contract  amounts of
      those  instruments  reflect  the  extent  of  involvement  the Bank has in
      particular classes of financial instruments.

      The  exposure to credit loss in the event of  nonperformance  by the other
      party to the financial  instrument  for  commitments  to extend credit and
      standby letters of credit and financial  guarantees written 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 does require  collateral or other  security to
      support financial instruments with credit risk.
<TABLE>
<CAPTION>

                                                                                           Contractual Amount
                                                                                           ------------------
                                                                                           1999           1998
                                                                                           ----           ----
<S>                                                                                   <C>              <C>
           Financial instruments whose contract amounts represent credit risk:
                Commitments to extend credit                                          $ 18,516,000     21,703,000
                Standby letters of credit and
                  financial guarantees written                                        $    609,000        269,000
</TABLE>

      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.
      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 Bank, upon extension of
      credit is based on management's credit evaluation.  Collateral held varies
      but may include  unimproved  and  improved  real estate,  certificates  of
      deposit, or personal property.

      Standby letters of credit and financial guarantees written are conditional
      commitments  issued by the  Company  to  guarantee  the  performance  of a
      customer  to a third  party.  Those  guarantees  are  primarily  issued to
      businesses  in the  Company's  delineated  trade  area.  The  credit  risk
      involved  in  issuing  letters of credit is  essentially  the same as that
      involved in extending loan facilities to customers. The Company holds real
      estate,  equipment,   automobiles  and  customer  deposits  as  collateral
      supporting those commitments for which collateral is deemed necessary.

(11)  REGULATORY MATTERS
      The  Company  is  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 financial statements. Under
      capital  adequacy  guidelines  and the  regulatory  framework  for  prompt
      corrective  action,  the Bank must meet specific  capital  guidelines that
      involve  quantitative  measures  of the  assets,  liabilities  and certain
      off-balance-sheet   items  as  calculated  under   regulatory   accounting
      practices.  The 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 Bank to maintain  minimum amounts and ratios (set forth in the
      table  below) of total and Tier 1 capital (as defined in the  regulations)
      to risk-weighted  assets (as defined),  and of Tier 1 capital (as defined)
      to average assets (as defined).  Management  believes,  as of December 31,
      1999, that the Bank meets all capital adequacy requirements to which it is
      subject.

      As of  December  31,  1999,  the most  recent  notification  from the FDIC
      categorized the Bank as well  capitalized  under the regulatory  framework
      for prompt corrective  action. To be categorized as well capitalized,  the
      Bank must maintain minimum total risk-based,  Tier 1 risk-based and Tier 1
      leverage  ratios as set forth in the  table.  There are no  conditions  or
      events since that notification  that management  believes have changed the
      institution's category.


                                      F-15
<PAGE>

                          OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(11)  Regulatory Matters, continued
      The capital  ratios for the Company are  essentially  the same as those of
      the Bank.  Therefore,  only the Bank's capital ratios are presented in the
      following table (in thousands):
<TABLE>
<CAPTION>
                                                                                                            To Be Well
                                                                                                          Capitalized Under
                                                                                       For Capital        Prompt Corrective
                                                                   Actual           Adequacy Purposes     Action Provisions
                                                           --------------------     -----------------     -----------------
                                                           Amount         Ratio     Amount      Ratio     Amount     Ratio
                                                           ------         -----     ------      -----     ------     -----
<S>                                                       <C>              <C>      <C>          <C>       <C>       <C>
As of December 31, 1999:
   Total Capital
     (to Risk-Weighted Assets)
       Bank                                               $ 14,966         14.6%    8,226        8.0%      10,283    10.0%
   Tier 1 Capital
     (to Risk-Weighted Assets)
       Bank                                               $ 13,678         13.3%    4,113        4.0%        6,170     6.0%
   Tier 1 Capital
     (to Average Assets)
       Bank                                               $ 13,678         9.2%     5,962        4.0%       7,452     5.0%
As of December 31, 1998
   Total Capital
     (to Risk-Weighted Assets)
       Bank                                               $ 13,483         16.3%    6,607        8.0%        8,258    10.0%
   Tier 1 Capital
     (to Risk-Weighted Assets)
       Bank                                               $ 12,448         15.1%    3,303        4.0%        4,955     6.0%
   Tier 1 Capital
     (to Average Assets)
       Bank                                               $ 12,448         10.5%    4,758        4.0%        5,947     5.0%
</TABLE>


(12)  DIVIDEND LIMITATIONS
      Dividends  paid by the Bank are the primary  source of funds  available to
      the Company for payment of  dividends  to its  shareholders  and for other
      working capital needs.  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 year's net  earnings,  and the ratio of equity  capital to total
      assets.  Approximately  $1,123,000  is available  for payment of dividends
      from the Bank to the Company in 2000.

(13)  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, 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 and federal funds sold, the carrying amount is
         a reasonable estimate of fair value.

         Investment Securities
         ---------------------
         Fair  values  for  investment  securities  are based on  quoted  market
prices.



                                      F-16
<PAGE>

                        OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(13)  FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
         Loans and Mortgage Loans Held for Sale
         --------------------------------------
         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.

         Deposits and Securities Sold Under Repurchase Agreements
         --------------------------------------------------------
         The fair value of demand  deposits,  interest-bearing  demand deposits,
         savings, and securities sold under repurchase  agreements 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.

         Commitments to Extend Credit and Standby Letters of Credit
         ----------------------------------------------------------
         Because  commitments to extend credit and standby letters of credit are
         made using variable rates, the contract value is a reasonable  estimate
         of fair value.

         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 the
         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, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>

                                                                               1999                       1998
                                                                       ----------------------    -----------------------
                                                                       Carrying     Estimated     Carrying     Estimated
                                                                        Amount      Fair Value     Amount     Fair Value
                                                                        ------      ----------     ------     ----------
                                                                           (In thousands)             (In thousands)
       <S>                                                               <C>           <C>          <C>          <C>
       Assets:
         Cash and cash equivalents                                       $ 16,128      16,128       14,069       14,069
         Investment securities available for sale                        $ 37,257      37,257       20,055       20,055
         Investment securities held to maturity                          $  -             -         15,304       16,092
         Loans and mortgage loans held for sale                          $ 93,729      95,232       77,188       77,156

       Liabilities:
         Deposits and securities sold under
              repurchase agreement                                       $137,393     137,409      116,678      117,074

       Unrecognized financial instruments:
         Commitments to extend credit                                    $ 18,516      18,516       21,703       21,703
         Standby letters of credit                                       $    609         609          269          269
</TABLE>


                                      F-17
<PAGE>

                          OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

 (14)  OTHER OPERATING EXPENSES
       Components  of other  operating  expenses  which are  greater  than 1% of
       interest income and other income are as follows:
<TABLE>
<CAPTION>

                                                                                          1999         1998         1997
                                                                                          ----         ----         ----

<S>                                                                                   <C>            <C>          <C>
       Postage expense                                                                $ 130,345      118,154      110,071

       Other service fees                                                              $ 88,891       75,298      121,185
</TABLE>


                                      F-18
<PAGE>

                          OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(15)   OCONEE FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION

                                   Balance Sheet

                                 December 31, 1999

                                      Assets
                                      ------
<TABLE>
<CAPTION>

<S>                                                                   <C>
Cash                                                                  $   970,959
Investment in subsidiary                                               12,941,972
Other assets                                                               10,959
                                                                      -----------

                                                                      $13,923,890
                                                                      ===========

                       Liabilities and Stockholders' Equity
                       ------------------------------------

Other liabilities                                                     $   909,271
Stockholders' equity                                                   13,014,619
                                                                      -----------

                                                                      $13,923,890
                                                                      ===========

                               Statement of Earnings

                       For the Year Ended December 31, 1999

Dividends from subsidiary                                             $ 1,015,947

Other expenses                                                             68,392
                                                                      -----------

     Earnings before income taxes and equity in
       undistributed earnings of subsidiary                               947,555

Income tax benefit                                                         25,962
                                                                      -----------

     Earnings before equity in undistributed earnings
       of subsidiary                                                      973,517

Equity in undistributed earnings of subsidiary                          1,229,810
                                                                      -----------

     Net earnings                                                     $ 2,203,327
                                                                      ===========
</TABLE>


                                       F-19
<PAGE>

                          OCONEE FINANCIAL CORPORATION

              Notes to Consolidated Financial Statements, continued

(15)     OCONEE   FINANCIAL   CORPORATION   (PARENT   COMPANY  ONLY)   FINANCIAL
         INFORMATION, CONTINUED

                                  Statement of Cash Flows

                           For the Year Ended December 31, 1999
<TABLE>
<CAPTION>

<S>                                                                           <C>
Cash flows from operating activities:
  Net earnings                                                                $ 2,203,327
  Adjustments to reconcile net earnings
     to net cash provided by operating activities:
       Equity in undistributed earnings of subsidiary                          (1,229,810)
       Change in:
         Other assets                                                             (10,959)
         Other liabilities                                                          9,301
                                                                              -----------

                  Net cash provided by operating activities                       971,859

Cash flows from financing activities:
  Purchase and retirement of common stock                                            (900)
                                                                              -----------

                  Net cash used in financing activities                              (900)
                                                                              -----------

Change in cash                                                                    970,959

Cash at beginning of year                                                           --
                                                                              -----------


Cash at end of year                                                           $   970,959
                                                                              ===========

Supplemental  disclosure  of cash  flow  information:  Noncash  investing
  activities:
     Change in unrealized gain on securities
       available for sale                                                     $   786,022
     Change in dividends payable                                              $   899,970
</TABLE>

                                           F-20
<PAGE>



SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Registrant has duly caused this Report on Form 10-KSB
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Watkinsville, State of Georgia, on the 29th of March, 2000.


                                       OCONEE STATE BANK
                                       (REGISTRANT)



                                        By: /s/ B. Amrey Harden
                                           -------------------------------------
                                                B. Amrey Harden
                                           Title:  President


POWER OF ATTORNEY AND SIGNATURES

     KNOW ALL MEN BY THESE  PRESENTS  that each person whose  signature  appears
below  constitutes and appoints B. Amrey Harden or Douglas D. Dickens and either
of  them  (with  full  power  in  each  to  act  alone),   as  true  and  lawful
attorneys-in-fact,  with full  power of  substitution,  for him and in his name,
place and  stead,  in any and all  capacities,  to sign any  amendments  to this
Report on Form 10-KSB and to file the same, with all exhibits  thereto and other
documents in connection therewith, with the SEC, hereby ratifying and confirming
all that said attorney-in-fact, or their substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.

     Pursuant to the  requirements of the Securities Act of 1934, this Report on
Form 10-KSB has been signed by the following persons in the capacities indicated
on the 29th day of March, 2000.



<PAGE>




SIGNATURE                          TITLE
---------                          -----

/s/ G. Robert Bishop               Director
-----------------------------
G. Robert Bishop

/s/ Steve W. Denman                Director
-----------------------------
Steve W. Denman

/s/ Douglas D. Dickens             Chairman of the Board of Directors
-----------------------------
Douglas D. Dickens

/s/ Walter T. Evans, Sr.           Director
-----------------------------
Walter T. Evans, Sr.

                                   Vice Chairman of the Board, Director
-----------------------------
John A. Hale

/s/ B. Amrey Harden                President and Chief Executive Officer,
-----------------------------      Director
B. Amrey Harden

/s/ Donald L. Jesweak              Senior Vice President and Senior Lending
-----------------------------      Officer
Donald L. Jesweak

                                   Director
-----------------------------
Henry C. Maxey

/s/ Carl R. Nichols                Director
-----------------------------
Carl R. Nichols

                                   Director
-----------------------------
Ann Breedlove Powers

/s/ Jerry K. Wages                 Executive Vice President and Chief Financial
-----------------------------
Jerry K. Wages                     Officer, Corporate Secretary, and Director

/s/ Virginia S. Wells              Director
-----------------------------
Virginia S. Wells

<PAGE>

                                  EXHIBIT INDEX
                                  -------------

         The  following  exhibits  are  required to be filed with this Report on
10-KSB by Item 601 of Regulation S-B.

2.       Plan of  Reorganization  and  Agreement  of Merger by and among  Oconee
         Interim   Corporation,   Oconee  State  Bank,   and  Oconee   Financial
         Corporation, dated August 28, 1998 (included as Exhibit 2 to the Bank's
         10-KSB  filed with the SEC on March 30,  1999 and  incorporated  hereby
         reference).

3.1      Articles of Incorporation of Oconee Financial Corporation, dated August
         27, 1998.  (included as Exhibit 3.1 to the Bank's 10-KSB filed with the
         SEC on March 30, 1999 and incorporated hereby reference).

3.2      Bylaws of Oconee Financial Corporation, dated August 27, 1998 (included
         as  Exhibit  3.2 to the Bank's  10-KSB  filed with the SEC on March 30,
         1999 and incorporated hereby reference).

4.       See   Exhibits  3.1  and  3.2  for   provisions   of  the  Articles  of
         Incorporation  and Bylaws  which  define  the rights of the  holders of
         Common Stock of the Bank.

4.1      Form of Common Stock Certificate (included as Exhibit 4.1 to the Bank's
         10-KSB  filed with the SEC on March 30,  1999 and  incorporated  hereby
         reference).

10.1     Oconee State Bank 401 (k) Savings Incentive Plan (included as Exhibit 3
         to  the  Bank's  F-1  filed  with  the  FDIC  on  April  30,  1997  and
         incorporated hereby reference).

10.2     Oconee State Bank  Officer's Cash Incentive Plan (included as Exhibit 3
         to  the  Bank's  F-1  filed  with  the  FDIC  on  April  30,  1997  and
         incorporated hereby reference).

21.      Subsidiaries of Oconee Financial  Corporation.  (included as Exhibit 21
         to the  Bank's  10-KSB  filed  with  the  SEC on  March  30,  1999  and
         incorporated hereby reference).

24.      Power of Attorney (included herein on signature page).

27.      Financial Data Schedule (for SEC use only) is filed herewith.