----

----

| x      | Annual Report Under Section 13 or      15(d) of the      Securities Exchange Act of 1934For the Fiscal Year Ended December      31, 2007 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                     |
|  ̈ | Transition Report Pursuant to      Section 13 or 15(d) of the Securities Exchange Act of      1934                                       |

| Oconee Financial      Corporation                   |
|-----------------------------------------------------|
| (Name of Small Business Issuer in      its Charter) |

| Georgia                                                                       |   | 58-2442250                                          |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State or Other Jurisdiction      of Incorporation or      Organization) |   | (I.R.S.      Employer Identification      No.) |

| 35 North Main Street,      Watkinsville, Georgia 30677-0205         |
|---------------------------------------------------------------------|
| (Address of Principal Executive      Offices)   (ZipCode) |

----

----

----

ITEM1.                      DESCRIPTION OFBUSINESS.

|                                                                                                     |   | Amount              |    |   | Percentage |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|------------|--------|
|                                                                                                          |   | (In      thousands) |    |   |       |   |
| Non-interest      bearing demand deposits                                                                     |   | $                   | 31,544  |   |       |   | 11.0 | % |
| Interest-bearing      NOW accounts                                                                            |   |                | 60,376  |   |       |   | 21.1 | % |
| Money      market deposit accounts                                                                            |   |                | 16,386  |   |       |   | 5.7 | % |
| Savings      deposits                                                                                         |   |                | 38,755  |   |       |   | 13.5 | % |
| Time      deposits of less than $100,000                                                                      |   |                | 64,727  |   |       |   | 22.6 | % |
| Time      deposits of $100,000 or more                                                                        |   |                | 64,191  |   |       |   | 22.4 | % |
| Individual      retirement accounts                                                                           |   |                | 10,546  |   |       |   | 3.7 | % |
|                Total      Deposits |   | $                   | 286,525 |   |       |   | 100.0 | % |

----

|                                             |   | Amount              |    |   | Percentage |   |
|--------------------------------------------------|--------|---------------------|---------|--------|------------|--------|
|                                             |   | (In      thousands) |    |   |       |   |
| Commercial,      financial and agricultural      |   | $                   | 22,230  |   |       |   | 11.1 | % |
| Real      estate – mortgage                |   |                | 104,703 |   |       |   | 52.4 | % |
| Real      estate – commercial construction |   |                | 62,970  |   |       |   | 31.5 | % |
| Real      estate – consumer construction   |   |                | 1,108   |   |       |   | 0.6 | % |
| Consumer                                         |   |                | 8,820   |   |       |   | 4.4 | % |
| Total      loans                                 |   | $                   | 199,831 |   |       |   | 100.0 | % |

|                               |   | 2007   |   |   | 2006   |   |   | 2005   |   |   | 2004  |   |   | 2003   |   |   | 2002   |   |   | 5-Year    Growth |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|--------|--------|--------|--------|--------|--------|------------------|--------|
| Loans                                                                                                                                                                          |   | $      | 199.8  |   |   | $      | 217.9  |   |   | $      | 206.5 |   |   | $      | 186.1  |   |   | $      | 171.2  |             |   | $ | 179.6 |   |   | $ | 20.2 |   |
| Deposits                                                                                                                                                                       |   |   | 286.5  |   |   |   | 304.0  |   |   |   | 256.8 |   |   |   | 231.8  |   |   |   | 228.6  |             |   |   | 211.4 |   |   |   | 75.1 |   |
| Capital                                                                                                                                                                        |   |   | 29.3   |   |   |   | 26.7   |   |   |   | 23.7  |   |   |   | 22.3   |   |   |   | 20.8   |             |   |   | 19.0 |   |   |   | 10.3 |   |
| TotalAssets                                                                                                                                                                    |   |   | 321.3  |   |   |   | 336.5  |   |   |   | 285.1 |   |   |   | 256.9  |   |   |   | 252.0  |             |   |   | 246.6 |   |   |   | 74.7 |   |

----

| (1)    | Credit risk, or the risk of      default of the issuer.  Government-sponsored      agency securities comprised 74.8% of the portfolio; the credit risk      associated with these securities is primarily limited to the risk of      default of the U.S. Government and its agencies.  State, County, and      Municipal bonds represent 23.4% of the portfolio with the credit risk      limited to the risk of default of the issuing authorities.  Other      debt securities comprised 1.8% of the portfolio with the credit risk being      the risk of default of the issuer of the debt    security.                                                          |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (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 on      its value.  For a discussion of the Bank’s interest rate risk      management policies and management, see “Management’s Discussion and      Analysis of Financial Condition or Plan of Operation – Asset/Liability and      Interest Rate Sensitivity  Management.”  |

----

|                                         |   | TotalDeposits |    |   | Deposit      MarketShare |   |
|----------------------------------------------|--------|---------------|---------|--------|--------------------------|--------|
| Oconee      State Bank                       |   | $             | 270,011 |   |                     |   | 45.6 | % |
| North      Georgia Bank                      |   |          | 128,114 |   |                     |   | 21.6 | % |
| Athens      First Bank & Trust Company   |   |          | 98,548  |   |                     |   | 16.6 | % |
| Bank      of America, N.A.                   |   |          | 53,646  |   |                     |   | 9.1 | % |
| Community      Bank & Trust              |   |          | 16,799  |   |                     |   | 2.8 | % |
| First      American Bank & Trust Company |   |          | 14,611  |   |                     |   | 2.5 | % |
| SunTrust      Bank                           |   |          | 10,635  |   |                     |   | 1.8 | % |
| Total      deposits                          |   |          | 592,364 |   |                     |   | 100.0.  | % |

----

|   | · | making or      servicing loans and certain types of  leases; |
|--------|--------|--------------------------------------------------------------|

|   | · | performing      certain data processingservices; |
|--------|--------|--------------------------------------------------|

|   | · | acting as      fiduciary or investment or financial  advisor; |
|--------|--------|---------------------------------------------------------------|

|   | · | providing      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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | lending,      exchanging, transferring, investing for others or safeguarding money or      securities; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | insuring,      guaranteeing, or indemnifying against loss, harm, damage, illness,      disability, or death, or providing and issuing annuities, and acting as      principal, agent, or broker with respect  thereto; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | providing      financial, investment, or economic advisory services, including advising      an investment company; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | issuing      or selling instruments representing interests in pools of assets      permissible for a bank to hold directly;and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | underwriting,      dealing in or making a market insecurities. |
|--------|--------|----------------------------------------------------------------|

----

| (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 than6%.                                                                                                                                                  |

----

|                                                              |   | 2007  |                     | 2006  |
|-------------------------------------------------------------------|--------|-------|--------------------------------------------------------------------------------------------------------------------|-------|
| Total Risk-Based      Capital                                     |   | 14.2% |                                                                                                               | 12.4% |
| Tier 1 Risk-Based      Capital                                    |   | 13.0% |                                                                                                               | 11.1% |
| Leverage      Ratio (Tier 1 Capital      to Average Total Assets) |   | 8.9%  |                                                                                                               | 8.6%  |

----

ITEM2.                      DESCRIPTION OFPROPERTIES.

|   | (1)    | Main      Office35      North Main StreetWatkinsville,      Georgia 30677 |
|--------|--------|---------------------------------------------------------------------------|
|   |   |                                                                      |
|   | (2)    | Bogart      BranchU.S.      Highway 78Bogart,      Georgia 30622          |
|   |   |                                                                      |

----

|   | (3)    | Butler’s Crossing      Branch2000      Experiment Station RoadWatkinsville,      Georgia 30677                                                                              |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                              |
|   | (4)    | Mortgage      Department/Operations Annex(Limited      Service/Support Offices for Main Office)Condominium      Units 10 and 12Durham      StreetWatkinsville,      Georgia 30677 |
|   |   |                                                                                                                                                                              |
|   | (5)    | Athens      Branch500      North Milledge AvenueAthens,      Georgia 30605                                                                                                        |
|   |   |                                                                                                                                                                              |
|   | (6)    | East Athens Wal-Mart      Supercenter(In-Store      Full Service Branch)4375      Lexington RoadAthens,      Georgia 30605                                                        |
|   |   |                                                                                                                                                                              |
|   | (7)    | University Parkway      Branch2500      Daniell’s Bridge RoadBuilding      200, Suite 1AAthens,      Georgia 30606                                                          |
|   |   |                                                                                                                                                                              |
|   | (8)    | Operations      Center7920      Macon HighwayWatkinsville,      Georgia 30677                                                                                                     |
|   |   |                                                                                                                                                                              |

----

ITEM3.                      LEGALPROCEEDINGS.

           Inthe ordinary course of operations, Oconee and the Bank are defendants in variouslegal proceedings.  In the opinion of management, there is no pendingor threatened proceeding in which an adverse decision could result in a materialadverse change in the consolidated financial condition or results of operationsof Oconee.

PARTII

ITEM 5.                      MARKET FOR COMMON EQUITY AND RELATEDSTOCKHOLDER MATTERS

|   |   | Number |   |   |      |   |           |    |            |              |
|--------|--------|--------|--------|--------|-----------|--------|----------------|---------|-----------------|-------------------|
|   |   | of     |   |   | Aggregate |   | Size of Trades |    | Price of Trades |              |
| Year   |   | Trades |   |   | Shares    |   | Smallest       | Largest |            | Lowest            |   |   | Highest |   |
| 2007   |   |   | 34     |   |      |   | 7,962          |    | 3      shares   | 2,450      shares |   | $ | 70.00 |   |   | $ | 90.00 |   |
| 2006   |   |   | 20     |   |      |   | 1,954          |    | 1      share    | 500      shares   |   | $ | 65.00 |   |   | $ | 100.00 |   |

----

| ITEM      6. | MANAGEMENT’S DISCUSSION AND      ANALYSIS AND PLAN OFOPERATION |
|--------------|----------------------------------------------------------------------|

----

|                                          |   | 2007                                               |    |   | 2006   |   |    | 2005   |   |   | 2004    |   |   | 2003   |    |
|-----------------------------------------------|--------|----------------------------------------------------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
|                                          |   | (Amounts in thousands, except per      share data) |    |
| Net interest      income                      |   | $                                                  | 11,443  |   |   | $      | 12,198  |   |   | $      | 11,111  |   |   | $      | 10,003  |   |   | $ | 9,033 |   |
| Otherincome                                   |   |                                               | 2,708   |   |   |   | 2,846   |   |   |   | 2,508   |   |   |   | 2,219   |   |   |   | 3,003 |   |
| Provision for loan      losses                |   |                                               | 330     |   |   |   | 200     |   |   |   | 612     |   |   |   | 394     |   |   |   | 645 |   |
| Netearnings                                   |   |                                               | 3,268   |   |   |   | 3,960   |   |   |   | 3,056   |   |   |   | 2,531   |   |   |   | 2,678 |   |
| Net earnings per common      share            |   |                                               | 3.63    |   |   |   | 4.40    |   |   |   | 3.40    |   |   |   | 2.81    |   |   |   | 2.98 |   |
| Totalassets                                   |   |                                               | 321,313 |   |   |   | 336,508 |   |   |   | 285,065 |   |   |   | 256,865 |   |   |   | 251,956 |   |
| Cash dividends declared per common      share |   |                                               | 1.15    |   |   |   | 1.25    |   |   |   | 1.10    |   |   |   | 1.00    |   |   |   | 1.00 |   |

----

|                                                                                                                                                                               |   | For the Years Ended December      31, |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-------------|
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                               |   | 2007                                  |        |   | 2006 |   |
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                               |   | Average                               |        |   |   |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |
|                                                                                                                                                                               |   | Balance                               |        |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets:                                                                                                                                                                            |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest earning      assets:                                                                                                                                                      |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      securities:                                                                                                                                                        |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                                                            |   | $                                     | 71,694,930  |   |   | $ | 3,767,024 |   |   |   | 5.25 | % |   | $ | 36,978,341 |   |   | $ | 1,708,908 |   |   |   | 4.62 | % |
| Non-taxable                                                                                                                                                                        |   |                                  | 21,008,857  |   |   |   | 954,220 |   |   |   | 4.54 | % |   |   | 18,358,643 |   |   |   | 884,178 |   |   |   | 4.82 | % |
| Other Investment      Securities                                                                                                                                                   |   |                                  | 1,713,171   |   |   |   | 103,331 |   |   |   | 6.03 | % |   |   | 1,910,456 |   |   |   | 113,611 |   |   |   | 5.94 | % |
| Federal funds      sold                                                                                                                                                            |   |                                  | 10,579,167  |   |   |   | 525,030 |   |   |   | 4.96 | % |   |   | 12,834,769 |   |   |   | 631,201 |   |   |   | 4.92 | % |
| Loans (including loan      fees)                                                                                                                                                   |   |                                  | 211,798,207 |   |   |   | 17,174,191 |   |   |   | 8.11 | % |   |   | 211,225,525 |   |   |   | 17,193,786 |   |   |   | 8.14 | % |
| Total interest-earning      assets                                                                                                                                                 |   |                                  | 316,794,332 |   |   |   | 22,523,796 |   |   |   | 7.11 | % |   |   | 281,307,734 |   |   |   | 20,531,684 |   |   |   | 7.30 | % |
| Allowance for loan      losses                                                                                                                                                     |   |                                  | (3,106,599  | )  |   |   |   |   |   |   |   |   |   |   | (3,060,225 | )  |   |   |   |   |   |   |   |   |
| Cash and due from      banks                                                                                                                                                       |   |                                  | 5,435,235   |   |   |   |   |   |   |   |   |   |   |   | 5,718,282 |   |   |   |   |   |   |   |   |   |
| Otherassets                                                                                                                                                                        |   |                                  | 10,941,461  |   |   |   |   |   |   |   |   |   |   |   | 9,014,142 |   |   |   |   |   |   |   |   |   |
| Totalassets                                                                                                                                                                        |   | $                                     | 330,064,429 |   |   |   |   |   |   |   |   |   |   | $ | 292,979,933 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and stockholders’      equity:                                                                                                                                   |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                                                                                                                 |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                                                          |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      demand                                                                                                                                                       |   | $                                     | 75,944,711  |   |   | $ | 2,344,299 |   |   |   | 3.09 | % |   | $ | 58,331,846 |   |   | $ | 1,391,965 |   |   |   | 2.39 | % |
| Savings                                                                                                                                                                            |   |                                  | 41,074,218  |   |   |   | 1,244,400 |   |   |   | 3.03 | % |   |   | 46,853,971 |   |   |   | 1,386,897 |   |   |   | 2.96 | % |
| Time                                                                                                                                                                               |   |                                  | 147,142,263 |   |   |   | 7,418,685 |   |   |   | 5.04 | % |   |   | 123,621,863 |   |   |   | 5,487,621 |   |   |   | 4.44 | % |
| Securities sold under repurchase      agreements                                                                                                                                   |   |                                  | 3,662,413   |   |   |   | 73,569 |   |   |   | 2.01 | % |   |   | 3,199,756 |   |   |   | 66,732 |   |   |   | 2.09 | % |
| Total interest bearing      liabilities                                                                                                                                            |   |                                  | 267,823,605 |   |   |   | 11,080,953 |   |   |   | 4.14 | % |   |   | 232,007,436 |   |   |   | 8,333,215 |   |   |   | 3.59 | % |
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest bearing      deposits                                                                                                                                                 |   |                                  | 32,771,278  |   |   |   |   |   |   |   |   |   |   |   | 34,307,448 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                                                                                                                                             |   |                                  | 1,416,935   |   |   |   |   |   |   |   |   |   |   |   | 1,104,093 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                                                                                                                                                             |   |                                  | 302,011,818 |   |   |   |   |   |   |   |   |   |   |   | 267,418,977 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders’      equity                                                                                                                                                    |   |                                  | 28,052,611  |   |   |   |   |   |   |   |   |   |   |   | 25,560,956 |   |   |   |   |   |   |   |   |   |
| Total liabilities and      stockholders’ equity                                                                                                                              |   | $                                     | 330,064,429 |   |   |   |   |   |   |   |   |   |   | $ | 292,979,933 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Excess of interest-bearing assets      over interest-bearing      liabilities                                                                                                      |   | $                                     | 48,970,727  |   |   |   |   |   |   |   |   |   |   | $ | 49,300,298 |   |   |   |   |   |   |   |   |   |
| Ratio of interest-earning assets      to interest -bearing      liabilities                                                                                                        |   |                                  | 118.28      | % |   |   |   |   |   |   |   |   |   |   | 121.25 | % |   |   |   |   |   |   |   |   |
| Net interest      income                                                                                                                                                           |   |                                  |        |   |   | $ | 11,442,843 |   |   |   |   |   |   |   |   |   |   | $ | 12,198,469 |   |   |   |   |   |
| Net interest      spread                                                                                                                                                           |   |                                  |        |   |   |   |   |   |   |   | 2.97 | % |   |   |   |   |   |   |   |   |   |   | 3.71 | % |
| Net interest margin (1)                                                                                                                                                            |   |                                  |        |   |   |   |   |   |   |   | 3.61 | % |   |   |   |   |   |   |   |   |   |   | 4.34 | % |
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                               |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Net interest margin is the net      return on interest-earning assets. It is computed by dividing net      interest income by average total interest-earning      assets. |   |                                  |        |   |   |

----

|                                             |   | 2007 over 2006Increase (decrease) due to changes      in: |      |
|--------------------------------------------------|--------|-----------------------------------------------------------|-----------|
|                                             |   | Volume                                                    |      |   | Rate |   |   | Total |   |
| Interest income      on:                         |   |                                                      |      |   |   |   |   |   |   |
| Investment      securities                       |   |                                                      |      |   |   |   |   |   |   |
| Taxable                                          |   | $                                                         | 1,797,092 |   |   | $ | 261,024 |   |   | $ | 2,058,116 |   |
| Non-taxable                                      |   |                                                      | 123,252   |   |   |   | (53,210 | ) |   |   | 70,042 |   |
| Other investment      securities                 |   |                                                      | (12,340   | ) |   |   | 2,060 |   |   |   | (10,280 | ) |
| Federal funds      sold                          |   |                                                      | (111,290  | ) |   |   | 5,119 |   |   |   | (106,171 | ) |
| Loans (including loan      fees)                 |   |                                                      | 45,411    |   |   |   | (65,006 | ) |   |   | (19,595 | ) |
| Total interest earning      assets               |   |                                                      | 1,842,125 |   |   |   | 149,987 |   |   |   | 1,992,112 |   |
|                                             |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Interest expense      on:                        |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Deposits:                                        |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Interest bearing      demand                     |   |                                                      | 483,416   |   |   |   | 468,918 |   |   |   | 952,334 |   |
| Savings                                          |   |                                                      | (174,617  | ) |   |   | 32,120 |   |   |   | (142,497 | ) |
| Time                                             |   |                                                      | 1,129,104 |   |   |   | 801,960 |   |   |   | 1,931,064 |   |
| Securities sold under repurchase      agreements |   |                                                      | 9,454     |   |   |   | (2,617 | ) |   |   | 6,837 |   |
|                                             |   |                                                      |      |   |   |   |   |   |   |   |   |   |
|                                             |   |                                                      | 1,447,357 |   |   |   | 1,300,381 |   |   |   | 2,747,738 |   |
| Total interest bearing      liabilities          |   |                                                      |      |   |   |   |   |   |   |   |   |   |
| Net interest      income                         |   | $                                                         | 394,768   |   |   | $ | (1,150,394 | ) |   | $ | (755,626 | ) |

----

----

|                               |   | 2007   |              |   | 2006   |   |
|------------------------------------|--------|--------|-------------------|--------|--------|--------|
| Available for      sale            |   |   |              |   |   |   |
| State, county and      municipal   |   | $      | 21,361,919        |   |   | $      | 20,809,703 |   |
| Government-sponsored      agencies |   |   | 49,862,513        |   |   |   | 59,343,821 |   |
| Mortgage-backed                    |   |   | 18,575,862        |   |   |   | 11,237,922 |   |
| Other debt      securities         |   |   | 1,633,900         |   |   |   | 980,800 |   |
| Totals                             |   | $      |   91,434,194 |   |   | $      |   92,372,246 |   |

----

|                          |   | Government-SponsoredAgencies |       |   | Mortgage-BackedSecurities      (2) |   |       | State, CountyandMunicipal |   |   |  Trust Preferred      Securities |   |   | WeightedAverage      Yields |      |
|-------------------------------|--------|------------------------------|------------|--------|------------------------------------|--------|------------|---------------------------|--------|--------|---------------------------------------|--------|--------|-----------------------------|-----------|
|                          |   |                         |       |   |                               |   |       |                      |   |   |                                  |   |   |                        |      |
| Within 1    year              |   | $                            | 11,017,210 |   |                               | $      | -          |                      |   | $      | 442,493                               |   |   | $                           | -         |   |   |   | 4.50 | % |
| After 1 through 5      years  |   |                         | 9,022,360  |   |                               |   | 1,557,830  |                      |   |   | 2,746,374                             |   |   |                        | -         |   |   |   | 4.42 | % |
| After 5 through 10      years |   |                         | 5,065,540  |   |                               |   | 1,674,032  |                      |   |   | 2,578,552                             |   |   |                        | 1,010,800 |   |   |   | 5.35 | % |
| After 10    years             |   |                         | 24,757,403 |   |                               |   | 15,344,000 |                      |   |   | 15,594,500                            |   |   |                        | 623,100   |   |   |   | 5.40 | % |
| Totals                        |   | $                            | 49,862,513 |   |                               | $      | 18,575,862 |                      |   | $      | 21,361,919                            |   |   | $                           | 1,633,900 |   |   |   | 5.15 | % |

| (1) | Expected maturities may differ      from contractual maturities because borrowers may have the right to call      or prepay obligations with or without call or prepayment      penalties. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | These securities are government      guaranteed securities. |
|-----|-------------------------------------------------------------|

|                                        |   | 2007   |                     |   | 2006   |   |              | 2005   |   |   | 2004              |   |   | 2003   |              |
|---------------------------------------------|--------|--------|--------------------------|--------|--------|--------|-------------------|--------|--------|--------|-------------------|--------|--------|--------|-------------------|
| Commercial, financial and      agricultural |   | $      |     22,229,689 |   |   |   |   20,468,788 |   |   |   |   21,012,994 |   |   |   |   21,625,371 |   |   |   |   21,208,190 |   |
| Real estate –      construction       |   |   | 64,077,793               |   |   |   | 87,264,251        |   |   |   | 72,533,344        |   |   |   | 55,157,066        |   |   |   | 43,831,025 |   |
| Real estate -      mortgage                 |   |   | 104,703,465              |   |   |   | 100,620,440       |   |   |   | 103,029,748       |   |   |   | 98,929,804        |   |   |   | 94,266,400 |   |
| Consumer                                    |   |   | 8,820,318                |   |   |   | 9,533,930         |   |   |   | 9,897,511         |   |   |   | 10,353,250        |   |   |   | 11,845,183 |   |
|                                        |   |   | 199,831,265              |   |   |   | 217,887,409       |   |   |   | 206,473,597       |   |   |   | 186,065,491       |   |   |   | 171,150,798 |   |
| Less: Allowance for loan      losses        |   |   | (3,335,825               | )      |   |   | (3,080,661        | )      |   |   | (2,945,256        | )      |   |   | (2,531,330        | ) |   |   | (2,669,204 | ) |
| Loans, net                                  |   | $      |   196,495,440       |   |   |   | 214,806,748       |   |   |   |  203,528,341 |   |   |   |  183,534,161 |   |   |   |  168,481,594 |   |

----

|   Maturity |   | Commercial, Financial and      Agricultural |       |   | RealEstate Construction |   |       |  Total |   |
|----------------------|--------|---------------------------------------------|------------|--------|-------------------------|--------|------------|-------------|--------|
| Within 1    year     |   | $                                           | 11,484,978 |   |                    | $      | 58,431,909 |        |   | $ | 69,916,887 |   |
| 1 to 5years          |   |                                        | 8,990,699  |   |                    |   | 5,645,884  |        |   |   | 14,636,583 |   |
| Over 5years          |   |                                        | 1,754,012  |   |                    |   | -          |        |   |   | 1,754,012 |   |
| Totals               |   | $                                           | 22,229,689 |   |                    | $      | 64,077,793 |        |   | $ | 86,307,482 |   |

|                                        |   | FixedInterestRates |      |   | Variable InterestRates |   |      |  Total |   |
|---------------------------------------------|--------|--------------------|-----------|--------|------------------------|--------|-----------|-------------|--------|
| Commercial, financial and      agricultural |   |               |      |   |                   |   |      |        |   |
| 1 to 5years                                 |   | $                  | 6,369,395 |   |                   | $      | 2,621,304 |        |   | $ | 8,990,699 |   |
| Over 5years                                 |   | $                  | 180,625   |   |                   | $      | 1,573,387 |        |   | $ | 1,754,012 |   |
|                                        |   |               |      |   |                   |   |      |        |   |   |   |   |
| Real estate      construction               |   |               |      |   |                   |   |      |        |   |   |   |   |
| 1 to 5years                                 |   | $                  | -         |   |                   | $      | 5,645,884 |        |   | $ | 5,645,884 |   |
| Over 5years                                 |   | $                  | -         |   |                   | $      | -         |        |   | $ | - |   |

----

|                                                                                                |   | 2007                                      |   |   | 2006   |   |   | 2005   |   |   | 2004   |   |   | 2003   |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                |   | (Amounts are presented in      thousands) |   |
| Balance at beginning of      year                                                                   |   | $                                         | 3,081  |   |   | $      | 2,945  |   |   | $      | 2,531  |   |   | $      | 2,669  |   |   | $ | 2,099 |   |
| Charges-offs:                                                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and      agricultural                                                         |   |                                      | 55     |   |   |   | -      |   |   |   | 160    |   |   |   | 453    |   |   |   | 35 |   |
| Installment                                                                                         |   |                                      | 53     |   |   |   | 60     |   |   |   | 80     |   |   |   | 273    |   |   |   | 76 |   |
| Real Estate                                                                                         |   |                                      | 10     |   |   |   | 50     |   |   |   | 13     |   |   |   | -      |   |   |   | 10 |   |
| Total      charge-offs                                                                              |   |                                      | 118    |   |   |   | 110    |   |   |   | 253    |   |   |   | 726    |   |   |   | 121 |   |
| Recoveries:                                                                                         |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and      agricultural                                                         |   |                                      | 10     |   |   |   | 20     |   |   |   | 40     |   |   |   | 178    |   |   |   | 28 |   |
| Installment                                                                                         |   |                                      | 31     |   |   |   | 26     |   |   |   | 15     |   |   |   | 16     |   |   |   | 18 |   |
| Real Estate                                                                                         |   |                                      | 2      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Total      recoveries                                                                               |   |                                      | 43     |   |   |   | 46     |   |   |   | 55     |   |   |   | 194    |   |   |   | 46 |   |
| Net    charge-offs                                                                                  |   |                                      | 75     |   |   |   | 64     |   |   |   | 198    |   |   |   | 532    |   |   |   | 75 |   |
| Provisions charged to      operations                                                               |   |                                      | 330    |   |   |   | 200    |   |   |   | 612    |   |   |   | 394    |   |   |   | 645 |   |
| Balance at end of      year                                                                         |   | $                                         | 3,336  |   |   | $      | 3,081  |   |   | $      | 2,945  |   |   | $      | 2,531  |   |   | $ | 2,669 |   |
| Ratio of net charge-offs during      the period to average loans outstanding during the      period |   |                                      | .04    | %      |   |   | .03    | %      |   |   | .10    | %      |   |   | .30    | % |   |   | .04 | % |

----

| As of December 31, 2007:                    |   | Allocation      of Allowance forLoan Losses |   |   | %      ofAllowance      forLoan Losses |   |   | %      of Loans by Category toTotal Loans |   |
|---------------------------------------------|--------|---------------------------------------------|--------|--------|----------------------------------------|--------|--------|-------------------------------------------|--------|
| Commercial,      financial and agricultural |   | $                                           | 48     |   |                                   |   | 1.4    | %                                         |   |   | 5.1 | % |
| Real      Estate - Commercial Construction  |   |                                        | 2,107  |   |                                   |   | 63.2   | %                                         |   |   | 36.4 | % |
| Consumer                                    |   |                                        | 46     |   |                                   |   | 1.4    | %                                         |   |   | 4.2 | % |
| Real      Estate - Mortgage                 |   |                                        | 918    |   |                                   |   | 27.5   | %                                         |   |   | 53.0 | % |
| Unallocated                                 |   |                                        | 217    |   |                                   |   | 6.5    | %                                         |   |   | 1.3 | % |
| Total                                       |   | $                                           | 3,336  |   |                                   |   | 100.0  | %                                         |   |   | 100.0 | % |

| As of December 31, 2006:                    |   | Allocation      of Allowance forLoan Losses |   |   | %      ofAllowance      forLoan Losses |   |   | %      of Loans by Category toTotal Loans |   |
|---------------------------------------------|--------|---------------------------------------------|--------|--------|----------------------------------------|--------|--------|-------------------------------------------|--------|
| Commercial,      financial and agricultural |   | $                                           | 87     |   |                                   |   | 2.8    | %                                         |   |   | 3.6 | % |
| Real      Estate - Commercial Construction  |   |                                        | 646    |   |                                   |   | 21.0   | %                                         |   |   | 17.1 | % |
| Consumer                                    |   |                                        | 50     |   |                                   |   | 1.6    | %                                         |   |   | 4.1 | % |
| Real      Estate - Mortgage                 |   |                                        | 1,453  |   |                                   |   | 47.2   | %                                         |   |   | 73.2 | % |
| Unallocated                                 |   |                                        | 845    |   |                                   |   | 27.4   | %                                         |   |   | 2.0 | % |
| Total                                       |   | $                                           | 3,081  |   |                                   |   | 100.0  | %                                         |   |   | 100.0 | % |

|                                                                             |   | December31, |           |
|----------------------------------------------------------------------------------|--------|-------------|----------------|
|                                                                             |   | 2007        |           |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                             |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Other real estate and      repossessions                                         |   | $           | -              |   |   | $ | 744,000 |   |   | $ | 327,000 |   |   | $ | 839,000 |   |   | $ | 1,077,000 |   |
| Accruing loans 90 days or more      past due                                     |   |        | -              |   |   |   | 623,000 |   |   |   | 632,000 |   |   |   | 5,064,000 |   |   |   | 583,000 |   |
| Non-accrual      loans                                                           |   |        | 9,057,000      |   |   |   | 678,000 |   |   |   | 2,151,000 |   |   |   | 1,080,000 |   |   |   | 1,503,000 |   |
| Interest on non-accrual loans      which would have been reported                |   |        | 408,000        |   |   |   | 91,000 |   |   |   | 95,000 |   |   |   | 44,000 |   |   |   | 63,000 |   |
| Interest recognized on non-accrual      loans prior to reclassification of loans |   |        |   285,000 |   |   |   |   14,000 |   |   |   |   86,000 |   |   |   |   18,000 |   |   |   |   37,000 |   |
| Restructured      debt                                                           |   |        | 3,240,000      | (1) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,189,000 |   |

----

|                             |   | December31,        |        |
|----------------------------------|--------|--------------------|-------------|
|                             |   | 2007               |        |   | 2006 |   |
|                             |   | Average    Balance |        |   | Rate |   |   | Average    Balance |   |   | Rate |   |
| Deposits:                        |   |               |        |   |   |   |   |   |   |   |   |   |
| Non-interest bearing      demand |   | $                  | 32,771,278  |   |   |   | - |   |   | $ | 34,307,448 |   |   |   | - |   |
| Interest bearing      demand     |   |               | 75,944,711  |   |   |   | 3.09 | % |   |   | 58,331,846 |   |   |   | 2.39 | % |
| Savings                          |   |               | 41,074,218  |   |   |   | 3.03 | % |   |   | 46,853,971 |   |   |   | 2.96 | % |
| Time                             |   |               | 147,142,263 |   |   |   | 5.04 | % |   |   | 123,621,863 |   |   |   | 4.44 | % |
|                             |   |               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   | $                  | 296,932,470 |   |   |   |   |   |   | $ | 263,115,128 |   |   |   |   |   |

| Within 3    months             |   | $      | 13,880,000 |   |
|--------------------------------|--------|--------|------------|--------|
| After 3 through 6      months  |   |   | 12,299,000 |   |
| After 6 through 12      months |   |   | 34,073,000 |   |
| After 12    months             |   |   | 4,848,000  |   |
|                           |   | $      | 65,100,000 |   |

----

----

|                                    |   | Risk-BasedCapital RatiosActual as of December 31,      2007 |   |
|-----------------------------------------|--------|-------------------------------------------------------------|--------|
|                                    |   |                                                        |   |
| Tier 1    Capital                       |   |                                                        | 13.0   | % |
| Tier 1 Capital minimum      requirement |   |                                                        | 4.0    | % |
| Excess                                  |   |                                                        | 9.0    | % |
|                                    |   |                                                        |   |   |
| Total    Capital                        |   |                                                        | 14.2   | % |
| Total Capital minimum      requirement  |   |                                                        | 8.0    | % |
| Excess                                  |   |                                                        | 6.2    | % |
|                                    |   |                                                        |   |   |
|                                    |   | Leverage RatioAtDecember 31,      2007                      |   |
|                                    |   |                                                        |   |   |
| Leverage    ratio                       |   |                                                        | 8.9    | % |
| Leverage ratio      requirement         |   |                                                        | 4.0    | % |
| Excess                                  |   |                                                        | 4.9    | % |

|                                    |   | 2007   |   |   | 2006   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|
| Net income    to:                       |   |   |   |   |   |   |
| Average stockholders’      equity |   |   | 11.65  | %      |   |   | 15.49 | % |
| Average    assets                       |   |   | 0.99   | %      |   |   | 1.35 | % |
| Dividends to net      income            |   |   | 31.66  | %      |   |   | 28.40 | % |
| Average equity to average      assets   |   |   | 8.50   | %      |   |   | 8.72 | % |

----

----

|                                               |   | At December 31,      2007Maturing or Repricing      in(dollars in      thousands) |         |
|----------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------------|
|                                               |   | Three Monthsor    Less                                                            |         |   | Four Monthsto12    Months |   |   | 1 to 5Years |   |   | Over 5Years |   |   | Total |   |
| Interest-earning      assets:                      |   |                                                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      securities                         |   | $                                                                                 | 1,702        |   |   | $ | 9,743 |   |   | $ | 13,322 |   |   | $ | 66,079 |   |   | $ | 90,846 |   |
| Federal funds      sold                            |   |                                                                              | 15,524       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 15,524 |   |
| Loans                                              |   |                                                                              | 98,302       |   |   |   | 39,665 |   |   |   | 52,638 |   |   |   | 61 |   |   |   | 190,666 |   |
|                                               |   |                                                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing      assets                 |   | $                                                                                 | 115,528      |   |   | $ | 49,408 |   |   | $ | 65,960 |   |   | $ | 66,140 |   |   | $ | 297,036 |   |
|                                               |   |                                                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                 |   |                                                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                          |   |                                                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings and      demand                            |   | $                                                                                 | 115,516      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 115,516 |   |
| Time    deposits                                   |   |                                                                              | 28,152       |   |   |   | 97,285 |   |   |   | 14,027 |   |   |   | - |   |   |   | 139,464 |   |
| Repurchase      agreements                         |   |                                                                              | 3,156        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,156 |   |
|                                               |   |                                                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing      liabilities            |   | $                                                                                 | 146,824      |   |   | $ | 97,285 |   |   | $ | 14,027 |   |   | $ | - |   |   | $ | 258,136 |   |
| Interest sensitive difference per      period      |   | $                                                                                 | (31,296      | ) |   | $ | (47,877 | ) |   | $ |   51,933 |   |   | $ |   66,140 |   |   | $ |   38,900 |   |
| Cumulative interest sensitivity      difference    |   | $                                                                                 | (31,296      | ) |   | $ | (79,173 | ) |   | $ | (27,240 | ) |   | $ |   38,900 |   |   |   |   |   |
| Cumulative difference to total      earning assets |   |                                                                              |   (10.5 | %) |   |   | (26.7 | %) |   |   | (9.2 | %) |   |   | 13.1 | % |   |   |   |   |

----

ITEM7.          FINANCIALSTATEMENTS.

ITEM8.

On November 20, 2006,the Audit Committee of the Board of Directors of the Company approved thedismissal of Porter Keadle Moore, LLP as its independent accountants andapproved the appointment of 
Mauldin & Jenkins, LLC as the Company’s new independentaccountants.

----

PARTIII

| ITEM      9. | DIRECTORS, EXECUTIVE OFFICERS,      PROMOTERS AND CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH      SECTION 16(a) OF THE EXCHANGEACT. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

ITEM10.        EXECUTIVECOMPENSATION.

ITEM11.        SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT

ITEM12.        CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS, AND DIRECTOR INDEPENDENCE.

ITEM13.        EXHIBITS.

|   | 1. | Report of Independent Registered      Public Accounting Firm |
|--------|----|--------------------------------------------------------------|

|   | 2. | Balance Sheets  - December      31, 2007 and 2006 |
|--------|----|--------------------------------------------------------|

----

|   | 3. | Statements of      Earnings  |
|--------|----|-----------------------------------|

|   | For the Years Ended December 31,      2007 and 2006 |
|--------|-----------------------------------------------------|

|   | 4. | Statements of Changes in      Stockholders Equity |
|--------|----|---------------------------------------------------|

|   | For the Years Ended December 31,      2007 and 2006 |
|--------|-----------------------------------------------------|

|   | 5. | Statements of Cash      Flows |
|--------|----|-------------------------------|

|   | For the Years Ended December 31,      2007 and 2006 |
|--------|-----------------------------------------------------|

|   | 6. | Notes to Consolidated Financial      Statements |
|--------|----|-------------------------------------------------|

| 3.1      | Articles of Incorporation of      Oconee Financial Corporation, dated August 27, 1998 (included as Exhibit      3.1 to Oconee’s 10-KSB filed with the SEC on      March 30, 2004 and incorporated herein by    reference). |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2      | Amended and Restated Bylaws of      Oconee Financial Corporation, dated May 7, 2001 (included as Exhibit 3.2      to Oconee’s 10-KSB filed with the SEC on      April 1, 2002 and incorporated herein by  reference).      |
| 4        | See Exhibits 3.1 and 3.2 for      provisions of the Articles of Incorporation and Amended and Restated      Bylaws which define the rights of the holders of Common Stock of      Oconee.                                        |
| 4.1      | Form of Common Stock Certificate      (included as Exhibit 4.1 to Oconee’s 10-KSB filed with the SEC on      March 31, 2005 and incorporated herein by    reference).                                                      |
| 10.1     | Oconee State Bank Officers’ Cash      Incentive Plan (included as Exhibit 10.1 to the Bank’s 10-KSB filed with      the SEC on April 1, 2002 and incorporated herein by      reference).                             |
| 14       | Code of Ethical Conduct (included      as Exhibit 14 to Oconee’s 10-KSB filed with the SEC on      March 31, 2006 and incorporated herein by    reference).                                                                |
| 21       | Subsidiaries of Oconee Financial      Corporation.                                                                                                                                                                               |
| 24  | Power of Attorney (included herein      on the signature page).                                                                                                                                                                  |
| 31.1     | Certification      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.                                                                                                                    |
| 31.2     | Certification      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.                                                                                                                    |
| 32.1     | Section      1350 Certification of Chief Executive Officer.                                                                                                                                                                      |
| 32.2     | Section      1350 Certification of Chief FinancialOfficer.                                                                                                                                                                       |

----

|   |  |
|--------|--|

----

|                                                          |   | 2007   |        |   | 2006   |   |
|---------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Assets                                                        |   |
|                                                          |   |   |        |   |   |   |
| Cash      and due from banks, including reserve               |   |   |        |   |   |   |
| requirements of $25,000 and      $25,000                      |   | $      | 5,365,937   |   |   |   | 4,753,988 |   |
| Federal      funds sold                                       |   |   | 15,524,000  |   |   |   | 10,324,000 |   |
|                                                          |   |   |        |   |   |   |   |   |
| Cash and cash      equivalents                                |   |   | 20,889,937  |   |   |   | 15,077,988 |   |
|                                                          |   |   |        |   |   |   |   |   |
| Investment      securities available for sale                 |   |   | 91,434,194  |   |   |   | 92,372,246 |   |
| Other      investments                                        |   |   | 706,729     |   |   |   | 670,329 |   |
| Mortgage      loans held for sale                             |   |   | 1,063,183   |   |   |   | 1,976,000 |   |
| Loans,      net                                               |   |   | 196,495,440 |   |   |   | 214,806,748 |   |
| Premises      and equipment, net                              |   |   | 7,394,096   |   |   |   | 6,458,527 |   |
| Accrued      interest receivable and other assets             |   |   | 3,329,403   |   |   |   | 5,146,240 |   |
|                                                          |   |   |        |   |   |   |   |   |
|                                                          |   | $      | 321,312,982 |   |   |   | 336,508,078 |   |
|                                                          |   |   |        |   |   |   |   |   |
| Liabilities and      Stockholders’ Equity               |   |
|                                                          |   |   |        |   |   |   |   |   |
| Deposits:                                                     |   |   |        |   |   |   |   |   |
| Demand                                                        |   | $      | 31,544,102  |   |   |   | 33,688,316 |   |
| Interest-bearing      demand                                  |   |   | 76,761,239  |   |   |   | 75,527,885 |   |
| Savings                                                       |   |   | 38,754,825  |   |   |   | 44,174,005 |   |
| Time                                                          |   |   | 139,464,402 |   |   |   | 150,604,745 |   |
|                                                          |   |   |        |   |   |   |   |   |
| Total deposits                                                |   |   | 286,524,568 |   |   |   | 303,994,951 |   |
|                                                          |   |   |        |   |   |   |   |   |
| Securities      sold under repurchase agreements              |   |   | 3,156,300   |   |   |   | 3,159,575 |   |
| Accrued      interest payable and other liabilities           |   |   | 2,297,382   |   |   |   | 2,640,376 |   |
|                                                          |   |   |        |   |   |   |   |   |
| Total liabilities                                             |   |   | 291,978,250 |   |   |   | 309,794,902 |   |
|                                                          |   |   |        |   |   |   |   |   |
| Stockholders’      equity:                              |   |   |        |   |   |   |   |   |
| Common stock, par value $2,      authorized 1,500,000 shares, |   |   |        |   |   |   |   |   |
| issued and outstanding 899,815      shares                    |   |   | 1,799,630   |   |   |   | 1,799,630 |   |
| Additional paid-in      capital                               |   |   | 4,243,332   |   |   |   | 4,243,332 |   |
| Retained earnings                                             |   |   | 22,927,131  |   |   |   | 20,693,448 |   |
| Accumulated other comprehensive      income (loss)            |   |   | 364,639     |   |   |   | (23,234 | ) |
|                                                          |   |   |        |   |   |   |   |   |
| Total stockholders’      equity                         |   |   | 29,334,732  |   |   |   | 26,713,176 |   |
|                                                          |   |   |        |   |   |   |   |   |
|                                                          |   | $      | 321,312,982 |   |   |   | 336,508,078 |   |
|                                                          |   |   |        |   |   |   |   |   |
|                                                          |   |   |        |   |   |   |   |   |

----

|                                                            |   | 2007   |       |   | 2006   |   |
|-----------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Interest      income:                                           |   |   |       |   |   |   |
| Interest and fees on      loans                                 |   | $      | 17,174,191 |   |   |   | 17,193,786 |   |
| Interest on federal funds      sold                             |   |   | 525,030    |   |   |   | 631,201 |   |
| Interest and dividends on      securities:                      |   |   |       |   |   |   |   |   |
| U. S. government      agencies                                  |   |   | 3,767,024  |   |   |   | 1,708,908 |   |
| State, county and      municipal                                |   |   | 954,220    |   |   |   | 884,178 |   |
| Other                                                           |   |   | 103,331    |   |   |   | 113,611 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Total interest    income                                        |   |   | 22,523,796 |   |   |   | 20,531,684 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Interest      expense:                                          |   |   |       |   |   |   |   |   |
| Interest-bearing demand      deposits                           |   |   | 2,344,299  |   |   |   | 1,391,965 |   |
| Savings deposits                                                |   |   | 1,244,400  |   |   |   | 1,386,897 |   |
| Time deposits                                                   |   |   | 7,418,685  |   |   |   | 5,487,621 |   |
| Other                                                           |   |   | 73,569     |   |   |   | 66,732 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Total interest      expense                                     |   |   | 11,080,953 |   |   |   | 8,333,215 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Net interest    income                                          |   |   | 11,442,843 |   |   |   | 12,198,469 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Provision      for loan losses                                  |   |   | 330,000    |   |   |   | 200,000 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Net interest income after      provision for loan losses        |   |   | 11,112,843 |   |   |   | 11,998,469 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Other      income:                                              |   |   |       |   |   |   |   |   |
| Service charges                                                 |   |   | 1,539,808  |   |   |   | 1,452,266 |   |
| Gain (loss) on sale of      securities                          |   |   | (2,308     | )      |   |   | (10,605 | ) |
| Gain      (loss) on sale of other real estate owned             |   |   | (25,758    | )      |   |   | 366,513 |   |
| Gain      (loss) on sale and disposal of premises and equipment |   |   | (4,741     | )      |   |   | 62,959 |   |
|     Mortgage      origination fee income    |   |   | 395,004    |   |   |   | 377,086 |   |
| Miscellaneous                                                   |   |   | 805,883    |   |   |   | 597,440 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Total otherincome                                               |   |   | 2,707,888  |   |   |   | 2,845,659 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Other      expenses:                                            |   |   |       |   |   |   |   |   |
| Salaries and employee      benefits                             |   |   | 5,567,192  |   |   |   | 5,616,459 |   |
| Occupancy                                                       |   |   | 1,515,034  |   |   |   | 1,258,032 |   |
| Other operating                                                 |   |   | 2,174,789  |   |   |   | 2,169,951 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Total other    expenses                                         |   |   | 9,257,015  |   |   |   | 9,044,442 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Earnings before income      taxes                               |   |   | 4,563,716  |   |   |   | 5,799,686 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Income      tax expense                                         |   |   | 1,295,246  |   |   |   | 1,839,439 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Net earnings                                                    |   | $      | 3,268,470  |   |   |   | 3,960,247 |   |
|                                                            |   |   |       |   |   |   |   |   |
| Net earnings per      share                                     |   | $      | 3.63       |   |   |   | 4.40 |   |
|                                                            |   |   |       |   |   |   |   |   |

----

|                                                                   |   | 2007   |      |   | 2006   |   |
|------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                   |   |   |      |   |   |   |
| Net      earnings                                                      |   | $      | 3,268,470 |   |   |   | 3,960,247 |   |
|                                                                   |   |   |      |   |   |   |   |   |
| Other      comprehensive income, net of income taxes:                  |   |   |      |   |   |   |   |   |
| Unrealized gains on securities      available for sale:                |   |   |      |   |   |   |   |   |
| Holding gains arising during      period, net of tax                   |   |   |      |   |   |   |   |   |
|    expense of      $236,449 and $83,832                 |   |   | 386,441   |   |   |   | 137,013 |   |
| Reclassification adjustment for      losses included in net            |   |   |      |   |   |   |   |   |
|    earnings, net      of benefit tax of $876 and $4,026 |   |   | 1,432     |   |   |   | 6,579 |   |
|                                                                   |   |   |      |   |   |   |   |   |
| Total other comprehensive      income                                  |   |   | 387,873   |   |   |   | 143,592 |   |
|                                                                   |   |   |      |   |   |   |   |   |
| Comprehensive      income                                              |   | $      | 3,656,343 |   |   |   | 4,103,839 |   |
|                                                                   |   |   |      |   |   |   |   |   |
|                                                                   |   |   |      |   |   |   |   |   |

----

|                                      |   |        |      |   | Additional    |   |      |     |   |   | AccumulatedOther |   |   |   |     |
|-------------------------------------------|--------|-------------|-----------|--------|---------------|--------|-----------|----------|--------|--------|------------------|--------|--------|--------|----------|
|                                      |   | Common      |      |   | Paid-In       |   |      | Retained |   |   | Comprehensive    |   |   |   |     |
|                                      |   |  Stock |      |   |  Capital |   |      | Earnings |   |   | Income (Loss)    |   |   | Total  |     |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |
| Balance,      December 31, 2005           |   | $           | 1,799,630 |   |          |   | 4,243,332 |     |   |   | 17,857,970       |   |   |   | (166,826 | ) |   |   | 23,734,106 |   |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| Cash      dividends declared              |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| ($1.25      per share)                    |   |        | -         |   |          |   | -         |     |   |   | (1,124,769       | )      |   |   | -        |   |   |   | (1,124,769 | ) |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| Change      in net unrealized gain (loss) |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| on      investment securities available   |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| for      sale, net of tax                 |   |        | -         |   |          |   | -         |     |   |   | -                |   |   |   | 143,592  |   |   |   | 143,592 |   |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| Net      earnings                         |   |        | -         |   |          |   | -         |     |   |   | 3,960,247        |   |   |   | -        |   |   |   | 3,960,247 |   |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| Balance,      December 31, 2006           |   |        | 1,799,630 |   |          |   | 4,243,332 |     |   |   | 20,693,448       |   |   |   | (23,234  | ) |   |   | 26,713,176 |   |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| Cash      dividends declared              |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| ($1.15      per share)                    |   |        | -         |   |          |   | -         |     |   |   | (1,034,787       | )      |   |   | -        |   |   |   | (1,034,787 | ) |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| Change      in net unrealized gain (loss) |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| on      investment securities available   |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| for      sale, net of tax                 |   |        | -         |   |          |   | -         |     |   |   | -                |   |   |   | 387,873  |   |   |   | 387,873 |   |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| Net      earnings                         |   |        | -         |   |          |   | -         |     |   |   | 3,268,470        |   |   |   | -        |   |   |   | 3,268,470 |   |
|                                      |   |        |      |   |          |   |      |     |   |   |             |   |   |   |     |   |   |   |   |   |
| Balance,      December 31, 2007           |   | $           | 1,799,630 |   |          |   | 4,243,332 |     |   |   | 22,927,131       |   |   |   | 364,639  |   |   |   | 29,334,732 |   |

----

|                                                             |   | 2007   |        |   | 2006   |   |
|------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Cash      flows from operating activities:                       |   |   |        |   |   |   |
| Net earnings                                                     |   | $      | 3,268,470   |   |   |   | 3,960,247 |   |
| Adjustments to reconcile net      earnings to net                |   |   |        |   |   |   |   |   |
| cash provided by operating      activities:                      |   |   |        |   |   |   |   |   |
| Depreciation, amortization and      accretion                    |   |   | 657,610     |   |   |   | 603,398 |   |
| Provision for loan      losses                                   |   |   | 330,000     |   |   |   | 200,000 |   |
| Provision for deferred      taxes                                |   |   | (122,414    | )      |   |   | 79,663 |   |
| (Gain) Loss on sale of investment      securities                |   |   | 2,308       |   |   |   | 10,605 |   |
| (Gain)      Loss on sale and disposal of fixed assets            |   |   | 4,741       |   |   |   | (62,959 | ) |
| (Gain) Loss on sale of other real      estate                    |   |   | 25,758      |   |   |   | (366,513 | ) |
| Change in:                                                       |   |   |        |   |   |   |   |   |
| Accrued interest receivable and      other assets                |   |   | 962,149     |   |   |   | (2,066,314 | ) |
| Accrued interest payable and      other liabilities              |   |   | (253,012    | )      |   |   | 217,578 |   |
| Mortgage loans originated and      held for sale                 |   |   | 912,817     |   |   |   | (691,000 | ) |
|                                                             |   |   |        |   |   |   |   |   |
| Net cash provided by operating      activities                   |   |   | 5,788,427   |   |   |   | 1,884,705 |   |
|                                                             |   |   |        |   |   |   |   |   |
| Cash      flows from investing activities:                       |   |   |        |   |   |   |   |   |
| Purchase of investment securities      available for sale        |   |   | (24,579,037 | )      |   |   | (53,191,532 | ) |
| Proceeds from calls and maturities      of investment securities |   |   |        |   |   |   |   |   |
| available forsale                                                |   |   | 20,168,478  |   |   |   | 11,780,714 |   |
| Proceeds from sales of investment      securities available      |   |   |        |   |   |   |   |   |
| for sale                                                         |   |   | 6,032,693   |   |   |   | 638,372 |   |
|     Purchase      of other investments       |   |   | (36,400     | )      |   |   | (55,900 | ) |
| Net change inloans                                               |   |   | 17,981,308  |   |   |   | (11,625,057 | ) |
| Purchases of premises and      equipment                         |   |   | (1,659,111  | )      |   |   | (1,363,899 | ) |
| Proceeds from sales of fixed      assets                         |   |   | -           |   |   |   | 139,184 |   |
| Proceeds from sales of other real      estate                    |   |   | 714,018     |   |   |   | 685,269 |   |
|                                                             |   |   |        |   |   |   |   |   |
| Net cash used by investing      activities                       |   |   | 18,621,949  |   |   |   | (52,992,849 | ) |
|                                                             |   |   |        |   |   |   |   |   |
| Cash      flows from financing activities:                       |   |   |        |   |   |   |   |   |
| Net change in    deposits                                        |   |   | (17,470,383 | )      |   |   | 47,195,927 |   |
| Net change in securities sold      under repurchase agreements   |   |   | (3,275      | )      |   |   | 915,343 |   |
| Dividends paid                                                   |   |   | (1,124,769  | )      |   |   | (989,797 | ) |
|                                                             |   |   |        |   |   |   |   |   |
| Net cash provided by financing      activities                   |   |   | (18,598,427 | )      |   |   | 47,121,473 |   |
|                                                             |   |   |        |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents        |   |   | 5,811,949   |   |   |   | (3,986,671 | ) |
|                                                             |   |   |        |   |   |   |   |   |
| Cash      and cash equivalents at beginning of year              |   |   | 15,077,988  |   |   |   | 19,064,659 |   |
|                                                             |   |   |        |   |   |   |   |   |
| Cash      and cash equivalents at end of year                    |   | $      | 20,889,937  |   |   |   | 15,077,988 |   |
|                                                             |   |   |        |   |   |   |   |   |

----

|                                                    |   | 2007   |       |   | 2006   |   |
|---------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                    |   |   |       |   |   |   |
| Supplemental      disclosures of cash flow information: |   |   |       |   |   |   |
| Cash paid during the year      for:                     |   |   |       |   |   |   |
| Interest                                                |   | $      | 11,081,348 |   |   |   | 7,892,721 |   |
| Income taxes                                            |   | $      | 1,310,500  |   |   |   | 2,197,000 |   |
|                                                    |   |   |       |   |   |   |   |   |
| Noncash investing and financing      activities:        |   |   |       |   |   |   |   |   |
| Change in net unrealized gain on      investment        |   |   |       |   |   |   |   |   |
| securities available for sale,      net of tax          |   | $      | 387,873    |   |   |   | 143,592 |   |
| Transfer of loans to other real      estate             |   | $      | -          |   |   |   | 146,650 |   |

----

| (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. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      accounting principles followed by the Company, and the methods of applying      these principles, conform with accounting principles generally accepted in      the United States of America (“GAAP”) and with general practices 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, deferred taxes, fair value of financial      instruments, 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 fundssold. |
|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | 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. At      December 31, 2007 and 2006, the Company had classified all of its      investment securities as available forsale. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Available      for sale securities are recorded at fair value. 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 untilrealized. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | OCONEE      FINANCIAL CORPORATION |
|--------|-----------------------------------|

| (1)    | Summary      of Significant Accounting Policies, continued |
|--------|------------------------------------------------------------|
|   | Other      Investments                                     |

|   | Other      investments include Federal Home Loan Bank stock and other equity      securities.  No ready market exists for these securities and      there is no quoted fair value.  These investment securities are      carried at cost. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Mortgage Loans Held      for Sale |
|--------|-----------------------------------|

|   | Mortgage      loans held for sale are carried at the lower of aggregate cost or market      value. At December 31, 2007 and 2006, the cost of mortgage loans held for      sale approximates the market value. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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.  Loan origination and commitment fees, net of      certain origination costs, are considered insignificant and are recognized      immediately. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 and interest is recognized on a cash basis      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 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. The allowance consists of specific, general and unallocated      components.  The specific component relates to loans that are      classified as either doubtful, substandard or special      mention.  The general component covers non-classified loans and      is based on historical loss experience adjusted for qualitative      factors.  An unallocated component is maintained to cover      uncertainties that could affect management’s estimate of probable      losses.  The unallocated component of the allowance reflects the      margin of imprecision inherent in the underlying assumptions used in the      methodologies for estimating specific and general losses in the      portfolio.  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 loanlosses. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. Leasehold improvements are amortized      over the shorter period of the useful life of the asset or the lease      term.  When assets are retired or otherwise disposed, 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 earnings as incurred, whereas      significant improvements are capitalized. The range of estimated useful      lives for premises and equipment are generally as  follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (1)  | Summary of Significant      Accounting Policies, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      | Other Real      Estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|      | Properties      acquired through foreclosure are carried at the lower of cost (defined as      fair value at foreclosure) or fair value less estimated costs to      dispose.  Accounting guidance defines fair value as the amount      that is expected to be received in a current sale between a willing buyer      and seller other than in a forced or liquidation sale. Fair values at      foreclosure are based on appraisals.  Losses arising from the      acquisition of foreclosed properties are charged against the allowance for      loan losses.  Subsequent write-downs are provided by a charge to      income through the allowance for losses on other real estate in the period      in which the need arises.  The carrying amount of foreclosed      assets at December 31, 2007 and 2006 was $1 and $739,777,      respectively. |

|   | 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 respectiveagreements. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 enactmentdate. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Mortgage Banking      Income |
|--------|------------------------------|

|   | Mortgage      banking income represents net gains from the sale of mortgage loans and      fees received from borrowers and loan investors related to the Bank’s      origination of single-family residential mortgage  loans. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Earnings Per      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 share equivalents outstanding during      2007 and 2006.  For each of those years, earnings per share is      calculated using the weighted average shares outstanding during the period      of 899,815. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | OCONEE      FINANCIAL CORPORATION |
|--------|-----------------------------------|

----

|   | OCONEE      FINANCIAL CORPORATION |
|--------|-----------------------------------|

|   | Investment      securities available for sale at December 31, 2007 and 2006 are as      follows: |
|--------|--------------------------------------------------------------------------------------------------|

|                               |   | December 31, 2007 |       |
|------------------------------------|--------|-------------------|------------|
|                               |   | AmortizedCost     |       |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFair Value |   |
|                               |   |              |       |   |   |   |   |   |   |   |   |   |
| Government      sponsored agencies |   | $                 | 49,204,411 |   |   |   | 675,410 |   |   |   | 17,308 |   |   |   | 49,862,513 |   |
| State,      county and municipal   |   |              | 21,318,254 |   |   |   | 207,101 |   |   |   | 163,436 |   |   |   | 21,361,919 |   |
| Mortgage-backed      securities    |   |              | 18,700,736 |   |   |   | 52,747 |   |   |   | 177,621 |   |   |   | 18,575,862 |   |
| Other      debt securities         |   |              | 1,623,045  |   |   |   | 10,855 |   |   |   | - |   |   |   | 1,633,900 |   |
|                               |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                              |   | $                 | 90,846,446 |   |   |   | 946,113 |   |   |   | 358,365 |   |   |   | 91,434,194 |   |

|                               |   | December 31, 2006 |       |
|------------------------------------|--------|-------------------|------------|
|                               |   | AmortizedCost     |       |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|                               |   |              |       |   |   |   |   |   |   |   |   |   |
| Government      sponsored agencies |   | $                 | 59,385,623 |   |   |   | 146,467 |   |   |   | 188,269 |   |   |   | 59,343,821 |   |
| State,      county and municipal   |   |              | 20,555,014 |   |   |   | 295,841 |   |   |   | 41,152 |   |   |   | 20,809,703 |   |
| Mortgage-backed      securities    |   |              | 11,469,059 |   |   |   | 19,787 |   |   |   | 250,924 |   |   |   | 11,237,922 |   |
| Other      debt securities         |   |              | 1,000,000  |   |   |   | - |   |   |   | 19,200 |   |   |   | 980,800 |   |
|                               |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                              |   | $                 | 92,409,696 |   |   |   | 462,095 |   |   |   | 499,545 |   |   |   | 92,372,246 |   |

|                               |   | December      31, 2007   |      |
|------------------------------------|--------|--------------------------|-----------|
|                               |   | Less      than 12 Months |      |   | 12      Months or More |   |
|                               |   | EstimatedFairValue       |      |   | UnrealizedLosses |   |   | EstimatedFairValue |   |   | UnrealizedLosses |   |
|                               |
|                               |   |                     |      |   |   |   |   |   |   |   |   |   |
| Government      sponsored agencies |   | $                        | 998,440   |   |   |   | 6,179 |   |   |   | 5,480,010 |   |   |   | 11,129 |   |
| State, county and      municipal   |   |                     | 4,898,455 |   |   |   | 97,728 |   |   |   | 3,780,628 |   |   |   | 65,708 |   |
| Mortgage-backed      securities    |   |                     | 3,701,205 |   |   |   | 11,074 |   |   |   | 7,048,299 |   |   |   | 166,547 |   |
|                               |   |                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | $                        | 9,598,100 |   |   |   | 114,981 |   |   |   | 16,308,937 |   |   |   | 243,384 |   |

|                               |   | December      31, 2006   |       |
|------------------------------------|--------|--------------------------|------------|
|                               |   | Less      than 12 Months |       |   | 12      Months or More |   |
|                               |   | EstimatedFairValue       |       |   | UnrealizedLosses |   |   | EstimatedFairValue |   |   | UnrealizedLosses |   |
|                               |
|                               |   |                     |       |   |   |   |   |   |   |   |   |   |
| Government      sponsored agencies |   | $                        | 22,542,160 |   |   |   | 39,683 |   |   |   | 9,835,781 |   |   |   | 148,586 |   |
| State, county and      municipal   |   |                     | 4,009,783  |   |   |   | 6,419 |   |   |   | 1,666,512 |   |   |   | 34,733 |   |
| Mortgage-backed      securities    |   |                     | -          |   |   |   | - |   |   |   | 8,242,891 |   |   |   | 250,924 |   |
| Other debt      securities         |   |                     | -          |   |   |   | - |   |   |   | 980,800 |   |   |   | 19,200 |   |
|                               |   |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | $                        | 26,551,943 |   |   |   | 46,102 |   |   |   | 20,725,984 |   |   |   | 453,443 |   |

----

|   | OCONEE      FINANCIAL CORPORATION |
|--------|-----------------------------------|

|                            |   | Amortized Cost |       |   | EstimatedFair Value |   |
|---------------------------------|--------|---------------------|------------|--------|---------------------|--------|
| Due      within one year        |   | $                   | 11,444,610 |   |                |   | 11,459,703 |   |
| Due      from one to five years |   |                | 11,749,693 |   |                |   | 11,768,735 |   |
| Due      from five to ten years |   |                | 8,476,907  |   |                |   | 8,654,890 |   |
| Due      after ten years        |   |                | 40,474,500 |   |                |   | 40,975,004 |   |
| Mortgage-backed      securities |   |                | 18,700,736 |   |                |   | 18,575,862 |   |
|                            |   |                |       |   |                |   |   |   |
|                            |   | $                   | 90,846,446 |   |                |   | 91,434,194 |   |

|   | Major      classifications of loans at December 31, 2007 and 2006 are summarized as      follows: |
|--------|---------------------------------------------------------------------------------------------------|

|                                             |   | 2007   |        |   | 2006   |   |
|--------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                             |   |   |        |   |   |   |
| Commercial,      financial and agricultural      |   | $      | 22,229,689  |   |   |   | 20,468,788 |   |
| Real      estate – mortgage                |   |   | 104,703,465 |   |   |   | 100,620,440 |   |
| Real      estate – commercial construction |   |   | 62,969,984  |   |   |   | 83,998,612 |   |
| Real      estate – consumer construction   |   |   | 1,107,809   |   |   |   | 3,265,639 |   |
| Consumer                                         |   |   | 8,820,318   |   |   |   | 9,533,930 |   |
|                                             |   |   |        |   |   |   |   |   |
| Total loans                                      |   |   | 199,831,265 |   |   |   | 217,887,409 |   |
| Less      allowance for loan losses              |   |   | 3,335,825   |   |   |   | 3,080,661 |   |
| Total net loans                                  |   | $      | 196,495,440 |   |   |   | 214,806,748 |   |

----

|   | OCONEE      FINANCIAL CORPORATION |
|--------|-----------------------------------|

|   | Notes      to Consolidated Financial Statements,continued |
|--------|-----------------------------------------------------------|

|   | At      December 31, 2007 and 2006, the recorded investment in loans that were      considered to be impaired and on nonaccrual was approximately $9,057,000      and $678,000, respectively.  In addition, the Company had      approximately $0 and $623,000 in loans past due more than ninety days and      still accruing interest at December 31, 2007 and 2006,      respectively.  These accounts are deemed to be well      collateralized and in the process of collection.  The related      allowance for loan losses on impaired loans was approximately $1,359,000      and $102,000 at December 31, 2007 and 2006, respectively.  The      average recorded investment in impaired loans for the twelve months ended      December 31, 2007 and 2006 was approximately $1,664,000 and $1,439,000,      respectively.  For the years ended December 31, 2007 and 2006,      the Company recognized approximately $285,000 and $14,000, respectively,      of interest income on impairedloans. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Changes      in the allowance for loan losses were as  follows: |
|--------|-----------------------------------------------------------------|

|                                              |   | 2007   |      |   | 2006   |   |
|---------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                              |   |   |      |   |   |   |
| Balance      at beginning of year                 |   | $      | 3,080,661 |   |   |   | 2,945,256 |   |
| Provision      for loan losses                    |   |   | 330,000   |   |   |   | 200,000 |   |
| Amounts      charged off                          |   |   | (117,876  | )      |   |   | (110,317 | ) |
| Recoveries      on amounts previously charged off |   |   | 43,040    |   |   |   | 45,722 |   |
|                                              |   |   |      |   |   |   |   |   |
| Balance      at end of year                       |   | $      | 3,335,825 |   |   |   | 3,080,661 |   |

|                               |   | 2007   |       |   | 2006   |   |
|------------------------------------|--------|--------|------------|--------|--------|--------|
|                               |   |   |       |   |   |   |
| Land                               |   | $      | 1,354,181  |   |   |   | 1,354,181 |   |
| Buildings      and improvements    |   |   | 5,887,088  |   |   |   | 5,089,489 |   |
| Furniture      and equipment       |   |   | 5,732,113  |   |   |   | 4,934,972 |   |
| Leasehold      improvements        |   |   | 115,673    |   |   |   | - |   |
| Construction      in process       |   |   | -          |   |   |   | 60,924 |   |
|                               |   |   | 13,089,055 |   |   |   | 11,439,566 |   |
|                               |   |   |       |   |   |   |   |   |
| Less      accumulated depreciation |   |   | 5,694,959  |   |   |   | 4,981,039 |   |
|                               |   |   |       |   |   |   |   |   |
|                               |   | $      | 7,394,096  |   |   |   | 6,458,527 |   |

| Years      Ending December 31,    |   |   |    |
|-----------------------------------|--------|--------|---------|
| 2008                              |   | $      | 143,250 |   |
| 2009                              |   |   | 129,936 |   |
| 2010                              |   |   | 95,218  |   |
| 2011                              |   |   | 93,659  |   |
| 2012                              |   |   | 95,449  |   |
| Thereafter                        |   |   | 391,857 |   |
|                              |   |   |    |   |
| Total      minimum lease payments |   | $      | 949,369 |   |

----

| 2008   |   | $      | 125,436,774 |   |
|--------|--------|--------|-------------|--------|
| 2009   |   |   | 10,740,705  |   |
| 2010   |   |   | 2,680,576   |   |
| 2011   |   |   | 253,140     |   |
| 2012   |   |   | 353,207     |   |
|   |   | $      | 139,464,402 |   |

|                          |   | 2007   |      |   | 2006   |   |
|-------------------------------|--------|--------|-----------|--------|--------|--------|
| Current                       |   | $      | 1,417,660 |   |   |   | 1,760,776 |   |
| Deferred                      |   |   | (122,414  | )      |   |   | 78,663 |   |
| Total      income tax expense |   | $      | 1,295,246 |   |   |   | 1,839,439 |   |

|   | 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: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                    |   | 2007   |      |   | 2006   |   |
|-----------------------------------------|--------|--------|-----------|--------|--------|--------|
| Pretax      income at statutory rates   |   | $      | 1,551,663 |   |   |   | 1,971,893 |   |
| Add      (deduct):                      |   |   |      |   |   |   |   |   |
| Tax      exempt interest income         |   |   | (326,056  | )      |   |   | (302,235 | ) |
| Non-deductible      interest expense    |   |   | 48,613    |   |   |   | 36,578 |   |
| State      taxes, net of federal effect |   |   | 122,901   |   |   |   | 180,799 |   |
| Other                                   |   |   | (101,875  | )      |   |   | (47,596 | ) |
|                                    |   | $      | 1,295,246 |   |   |   | 1,839,439 |   |

|                                                                                                                     |   | 2007   |      |   | 2006   |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Deferred      income tax assets:                                                                                         |   |   |      |   |   |   |
| Allowance      for loan losses                                                                                           |   | $      | 1,158,747 |   |   |   | 1,071,415 |   |
| Other      real estate                                                                                                   |   |   | 14,062    |   |   |   | 14,062 |   |
| Unrealized      gains on investment securities available for sale                                                        |   |   | -         |   |   |   | 14,216 |   |
| Total      gross deferred income tax assets                                                                              |   |   | 1,172,809 |   |   |   | 1,099,693 |   |
| Deferred      income tax liabilities:                                                                                    |   |   |      |   |   |   |   |   |
| Unrealized      gains on investment securities available for sale                                                        |   |   | (223,109  | )      |   |   | - |   |
| Premises and      equipment                                                                                              |   |   | (456,281  | )      |   |   | (491,363 | ) |
|                                                                                                                     |   |   |      |   |   |   |   |   |
|             Total      gross deferred income tax liabilities |   |   | (679,390  | )      |   |   | (491,363 | ) |
| Net      deferred income tax asset                                                                                       |   | $      | 493,419   |   |   |   | 608,330 |   |

----

|   | 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 are 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: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Beginning      balance |   | $      | 6,326,109  |   |
|------------------------|--------|--------|------------|--------|
| New      loans         |   |   | 2,649,483  |   |
| Repayments             |   |   | (1,529,938 | )      |
|                   |   |   |       |   |
| Ending      balance    |   | $      | 7,445,654  |   |

|   | The      Company is a party to financial instruments with off-balance-sheet risk in      the normal course of business to meet the financing needs of its      customers. These financial instruments include commitments to extend      credit and standby letters of credit. Those instruments involve, to      varying degrees, elements of credit risk in excess of the amount      recognized in the balance sheets. The contract amounts of those      instruments reflect the extent of involvement the Company has in      particular classes of financialinstruments. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |   | Contractual Amount |       |
|-------------------------------------------|--------|--------------------|------------|
|                                      |   | 2007               |       |   | 2006 |   |
| Financial      instruments whose contract |   |               |       |   |   |   |
| amounts represent credit      risk:       |   |               |       |   |   |   |
| Commitments to extend      credit         |   | $                  | 36,398,000 |   |   |   | 42,490,000 |   |
| Standby letters of      credit            |   | $                  | 785,000    |   |   |   | 276,000 |   |

|   | 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 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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company has $7,000,000 available for the purchase of overnight federal      funds from two correspondent financial institutions as of December 31,      2007 and 2006. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 contributions by the Company for 2007 and      2006 were $319,445 and $377,500,respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                           |   |  Actual |   |   | For      CapitalAdequacy Purposes |   |   | To      Be WellCapitalized      UnderPrompt      CorrectiveAction      Provisions |   |
|--------------------------------|--------|--------------|--------|--------|-----------------------------------|--------|--------|-----------------------------------------------------------------------------------|--------|
|                           |   | Amount       |   |   | Ratio                             |   |   | Amount                                                                            |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| As      of December 31, 2007:  |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |
| Total Capital                  |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |
| (to Risk-Weighted      Assets) |   | $            | 31,701 |   |                              |   | 14.2   | %                                                                                 |   | $ | 17,809 |   |   |   | 8.0 | % |   | $ | 22,261 |   |   |   | 10.0 | % |
| Tier 1 Capital                 |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Risk-Weighted      Assets) |   | $            | 28,912 |   |                              |   | 13.0   | %                                                                                 |   | $ | 8,905 |   |   |   | 4.0 | % |   | $ | 13,357 |   |   |   | 6.0 | % |
| Tier 1 Capital                 |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Average    Assets)         |   | $            | 28,912 |   |                              |   | 8.9    | %                                                                                 |   | $ | 13,038 |   |   |   | 4.0 | % |   | $ | 16,298 |   |   |   | 5.0 | % |
|                           |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As      of December 31, 2006:  |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Capital                  |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Risk-Weighted      Assets) |   | $            | 29,646 |   |                              |   | 12.4   | %                                                                                 |   | $ | 19,183 |   |   |   | 8.0 | % |   | $ | 23,978 |   |   |   | 10.0 | % |
| Tier 1 Capital                 |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Risk-Weighted      Assets) |   | $            | 26,648 |   |                              |   | 11.1   | %                                                                                 |   | $ | 9,591 |   |   |   | 4.0 | % |   | $ | 14,387 |   |   |   | 6.0 | % |
| Tier 1 Capital                 |   |         |   |   |                              |   |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Average    Assets)         |   | $            | 26,648 |   |                              |   | 8.6    | %                                                                                 |   | $ | 12,431 |   |   |   | 4.0 | % |   | $ | 15,538 |   |   |   | 5.0 | % |

----

|   | Notes      to Consolidated Financial Statements,continued |
|--------|-----------------------------------------------------------|

|   | For      cash, due from banks, and federal funds sold, the carrying amount is a      reasonable estimate of fair value. |
|--------|-------------------------------------------------------------------------------------------------------------------------|

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

|   | The      carrying amount of other investments approximates fair    value. |
|--------|---------------------------------------------------------------------------|

|   | 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. Mortgage loans      held for sale are valued based on the current price at which these loans      could be sold into the secondarymarket. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 ofCredit |
|--------|----------------------------------------------------------------|

----

|                                                                |   | 2007     |    |   | 2006       |   |
|---------------------------------------------------------------------|--------|----------|---------|--------|------------|--------|
|                                                                |   | Carrying |    |   | Estimated  |   |   | Carrying |   |   | Estimated |   |
|                                                                |   | Amount   |    |   | Fair Value |   |   | Amount |   |   | Fair Value |   |
| Assets:                                                             |   |     |    |   |       |   |   |   |   |   |   |   |
| Cash and cash      equivalents                                      |   | $        | 20,890  |   |       |   | 20,890 |   |   |   | 15,078 |   |   |   | 15,078 |   |
| Investment      securities                                          |   | $        | 91,434  |   |       |   | 91,434 |   |   |   | 92,372 |   |   |   | 92,372 |   |
| Otherinvestments                                                    |   | $        | 706     |   |       |   | 706 |   |   |   | 670 |   |   |   | 670 |   |
| Mortgage loans held for      sale                                   |   | $        | 1,063   |   |       |   | 1,063 |   |   |   | 1,976 |   |   |   | 1,976 |   |
| Loans, net                                                          |   | $        | 196,495 |   |       |   | 197,211 |   |   |   | 214,807 |   |   |   | 216,826 |   |
|                                                                |   |     |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                        |   |     |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Deposits and securities sold      under                             |   |     |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
|        repurchase      agreement |   | $        | 289,681 |   |       |   | 290,752 |   |   |   | 307,155 |   |   |   | 305,208 |   |

|                                    |   | 2007   |    |   | 2006   |   |
|-----------------------------------------|--------|--------|---------|--------|--------|--------|
| Other      Income                       |   |   |    |   |   |   |   |   |
| Income      and fees from ATM's         |   | $      | 438,425 |   |   | $      | 357,245 |   |
| Other      Expenses                     |   |   |    |   |   |   |   |   |
| Professional      fees                  |   | $      | 338,026 |   |   |   | 399,709 |   |
| ATM      process and settlement charges |   | $      | 269,790 |   |   |   | 291,791 |   |

|                                            |   | 2007   |       |   | 2006   |   |
|-------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Assets                                          |   |   |       |   |   |   |
| Cash                                            |   | $      | 1,093,678  |   |   |   | 1,212,854 |   |
| Investment      in subsidiary                   |   |   | 29,276,533 |   |   |   | 26,624,768 |   |
| Other      assets                               |   |   | -          |   |   |   | 323 |   |
|                                            |   |   |       |   |   |   |   |   |
|                                            |   | $      | 30,370,211 |   |   |   | 27,837,945 |   |
| Liabilities and      Stockholders’ Equity |   |   |       |   |   |   |   |   |
| Other      liabilities                          |   | $      | 1,035,479  |   |   |   | 1,124,769 |   |
| Stockholders’      equity                 |   |   | 29,334,732 |   |   |   | 26,713,176 |   |
|                                            |   | $      | 30,370,211 |   |   |   | 27,837,945 |   |

----

| Statements      of Earnings                        |
|----------------------------------------------------|
|                                               |   |   |
| For      the Years Ended December 31, 2007 and2006 |

|                                                  |   | 2007   |      |   | 2006   |   |
|-------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                  |   |   |      |   |   |   |
| Dividends      from subsidiary                        |   | $      | 1,034,787 |   |   |   | 1,174,769 |   |
|                                                  |   |   |      |   |   |   |   |   |
| Other      expenses                                   |   |   | 48,694    |   |   |   | 56,564 |   |
|                                                  |   |   |      |   |   |   |   |   |
| Earnings before income taxes      and equity in       |   |   |      |   |   |   |   |   |
| undistributed earnings of      subsidiary             |   |   | 986,093   |   |   |   | 1,118,205 |   |
|                                                  |   |   |      |   |   |   |   |   |
| Income      tax benefit                               |   |   | 18,484    |   |   |   | 21,472 |   |
|                                                  |   |   |      |   |   |   |   |   |
| Earnings before equity in      undistributed earnings |   |   |      |   |   |   |   |   |
| of subsidiary                                         |   |   | 1,004,577 |   |   |   | 1,139,677 |   |
|                                                  |   |   |      |   |   |   |   |   |
| Equity      in undistributed earnings of subsidiary   |   |   | 2,263,893 |   |   |   | 2,820,570 |   |
|                                                  |   |   |      |   |   |   |   |   |
| Net earnings                                          |   | $      | 3,268,470 |   |   |   | 3,960,247 |   |

|                                                |   | 2007   |       |   | 2006   |   |
|-----------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash      flows from operating activities:          |   |   |       |   |   |   |
| Net earnings                                        |   | $      | 3,268,470  |   |   |   | 3,960,247 |   |
| Adjustments to reconcile net      earnings          |   |   |       |   |   |   |   |   |
| to net cash provided by      operating activities:  |   |   |       |   |   |   |   |   |
| Equity in undistributed      earnings of subsidiary |   |   | (2,263,893 | )      |   |   | (2,820,570 | ) |
| Change in:                                          |   |   |       |   |   |   |   |   |
| Other assets                                        |   |   | 323        |   |   |   | (151 | ) |
| Other    liabilities                                |   |   | 693        |   |   |   | - |   |
| Net cash provided by operating      activities      |   |   | 1,005,593  |   |   |   | 1,139,526 |   |
| Cash      flows from financing activities:          |   |   |       |   |   |   |   |   |
|    Dividends      paid               |   |   | (1,124,769 | )      |   |   | (989,797 | ) |
|                                                |   |   |       |   |   |   |   |   |
| Net      cash used by financing activities          |   |   | (1,124,769 | )      |   |   | (989,797 | ) |
|                                                |   |   |       |   |   |   |   |   |
| Change      in cash                                 |   |   | (119,176   | )      |   |   | 149,729 |   |
| Cash      at beginning of year                      |   |   | 1,212,854  |   |   |   | 1,063,125 |   |
| Cash      at end of year                            |   | $      | 1,093,678  |   |   |   | 1,212,854 |   |
|                                                |   |   |       |   |   |   |   |   |

----

SIGNATURES

|   | OCONEE FINANCIAL      CORPORATION(Registrant) By:   /s/ B.Amrey      HardenB.Amrey HardenPresident and Chief Executive      Officer |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| Signature                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Title                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                          |                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| /s/ G. Robert      Bishop                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| G. Robert      Bishop                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| /s/ Jimmy L.      Christopher                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Jimmy L.      Christopher                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Douglas D.      Dickens                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Chairman of the Board of      Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| /s/ Douglas D.      Dickens                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Vice Chairman of the Board of      Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| John A.Hale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| /s/ B. Amrey      Harden                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | President and Chief Executive      Officer, Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| B. Amrey    Harden                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| /s/ Henry C.      Maxey                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Henry C.    Maxey                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

|                          |                                                         |
|-------------------------------|--------------------------------------------------------------|
| /s/ Carl R.      Nichols      | Director                                                     |
| Carl R.    Nichols            |                                                         |
|                          |                                                         |
|                          |                                                         |
| /s/ Ann Breedlove      Powers | Director                                                     |
| Ann Breedlove      Powers     |                                                         |
|                          |                                                         |
|                          |                                                         |
| /s/      Steven A. Rogers     | Vice      President and Controller, Chief Accounting Officer |
| Steven      A. Rogers         |                                                         |
|                          |                                                         |
|                          |                                                         |
| /s/ Jerry K.      Wages       | Senior Executive Vice President      and Chief Financial     |
| Jerry K.    Wages             | Officer, Corporate Secretary, and      Director              |
|                          |                                                         |
|                          |                                                         |
| /s/      Virginia S. Wells    | Director                                                     |
| Virginia      S. Wells        |                                                         |
|                          |                                                         |
|                          |                                                         |
| /s/ Tom F.      Wilson        | Executive      Vice President and Chief Loan Officer,        |
| Tom F.    Wilson              | Director                                                     |

----