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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the fiscal year ended December 31, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 0-22891
 GEORGIA-CAROLINA BANCSHARES, INC.
 (Exact name of registrant as specified in its charter)
 Georgia
    
    58-2326075(State of Incorporation)
    
    (I.R.S. Employer Identification Number)3527 Wheeler RoadAugusta, Georgia
    
    30909(Address of Principal Executive Offices)
    
    (Zip Code)
 (706) 731-6600  (Registrants telephone number, including area code)
 Securities registered under Section 12(b) of the Act:
 Title of Each Class
    
    Name of each exchange on which registeredNone
    
    None
 Securities registered under Section 12(g) of the Exchange Act:
 
 o þ
 o þ
 þ o
 o
  o o þ
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



GEORGIA-CAROLINA BANCSHARES, INC.
2006 Form 10-K Annual Report
 TABLE OF CONTENTS
 Item Number
    
    
    
    Page orIn Form 10-K
    
    Description
    
    LocationPART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    9Item 1B.
    
    Unresolved Staff Comments
    
    
    13Item 2.
    
    Properties
    
    
    13Item 3.
    
    Legal Proceedings
    
    
    14Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    14PART IIItem 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    14Item 6.
    
    Selected Financial Data
    
    
    16Item 7.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operation
    
    
    17Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 8.
    
    Financial Statements and Supplementary Data
    
    
    36Item 9.
    
    Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
    
    
    36Item 9A.
    
    Controls and Procedures
    
    
    36Item 9A(T).
    
    Controls and Procedures
    
    
    36Item 9B.
    
    Other Information
    
    
    36PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    37Item 11.
    
    Executive Compensation
    
    
    37Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    37Item 13.
    
    Certain Relationships and Related Transactions
    
    
    37Item 14.
    
    Principal Accountant Fees and Services
    
    
    37PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    37SignaturesEX-10.6 SEVERANCE PROTECTION AGREEMENTEX-10.7 COMPENSATION ARRANGEMENTSEX-10.8 FIRST BANK OF GEORGIA ANNUAL INCENTIVE PLANEX-10.9 COMPENSATION ARRANGEMENTSEX-21.1 SUBSIDIARIES OF THE REGISTRANTEX-23.1 CONSENT OF CHERRY BEKAERT & HOLLAND, L.L.P.EX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF ACTING PFOEX-32.1 SECTION 906 CERTIFICATIONS OF CEO AND ACTING PFOEX-99.1 FINANCIAL STATEMENTS




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Special Note Regarding Forward-Looking Statements
  
 PART I
 
 Item 1 . Business
 General




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Branch
    
    Date OpenedHill Street Office, Thomson, Georgia
    
    January 1989Daniel Village Office, Augusta, Georgia
    
    March 1999West Town Office, Martinez, Georgia
    
    October 1999Medical Center Office, Augusta, Georgia
    
    January 2001Furys Ferry Road Office, Martinez, Georgia
    
    April 2002Main Office, Augusta, Georgia
    
    September 2005
    Market Area and Competition
   Asset/Liability Management
  2




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Correspondent Banking
   Data Processing
  Employees
  Monetary Policies
  Supervision and Regulation
  3




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The Company
 Bank Holding Company Regulation.
 
    
    acquiring direct or indirect ownership or control of more than 5% of the voting shares
of any bank;
    
    taking any action that causes a bank to become a subsidiary of a bank holding company;
    
    merging or consolidating with another bank holding company; or
    
    acquiring most other operating companies.
   Financial Services Modernization
 
    
    allows bank holding companies that qualify as financial holding companies to engage in
a substantially broader range of non-banking activities than was permissible under prior
law;
    
    allows insurers and other financial services companies to acquire banks;
    
    allows national banks, and some state banks, either directly or through operating
subsidiaries, to engage in certain non-banking financial activities;
    
    removes various restrictions that applied to bank holding company ownership of
securities firms and mutual fund advisory companies; and
    
    establishes the overall regulatory structure applicable to bank holding companies that
also engage in insurance and securities operations.
  4




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Transactions with Affiliates.
 Tie-In Arrangements.
 Source of Strength.
 Subsidiary Dividends.
  5




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State Law Restrictions.
 The Bank
 General
 Community Reinvestment Act.
 Insider Credit Transactions
 Federal Deposit Insurance Corporation Improvement Act
 Interstate Banking and Branching.
 6




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Deposit Insurance and Assessments.
 Capital Adequacy
    7




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Other Laws and Regulations
 International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001.
  Sarbanes-Oxley Act of 2002
  Privacy.
 8




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Future Legislation.
 
 Item 1A. Risk Factors
  An economic downturn, especially one affecting Richmond, Columbia and McDuffie counties, could
adversely affect our business.
  If real estate values in our market decline or become stagnant, our business could be adversely
affected.
  Our loan portfolio includes a substantial amount of commercial real estate and construction and
development loans, which may have more risks than residential or consumer loans
  9




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Many of our borrowers have more than one loan or credit relationship with us.
  Our decisions regarding credit risk and reserves for loan losses may materially and adversely
affect our business.
  
    
    the duration of the credit;
    
    credit risks of a particular customer;
    
    changes in economic and industry conditions; and
    
    in the case of a collateralized loan, risks resulting from uncertainties about the
future value of the collateral.
  We face strong competition for customers, which could prevent us from obtaining customers and may
cause us to pay higher interest rates to attract deposits.
  10




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Changes in interest rates may reduce our profitability.
  Our recent operating results may not be indicative of our future operating results.
  We could be adversely affected by the loss of one or more key personnel or by an inability to
attract and retain employees.
   The success of our growth strategy depends on our ability to identify and recruit individuals with
experience and relationships in the markets in which we intend to expand.
  11




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We will face risks with respect to future expansion and acquisitions or mergers.
  Our growth may require us to raise additional capital that may not be available when it is needed
or may not be available on terms acceptable to us.
  We are subject to extensive regulation that could limit or restrict our activities.
   12




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Efforts to comply with the Sarbanes-Oxley Act will involve significant expenditures, and
non-compliance with the Sarbanes-Oxley Act may adversely affect us.
   
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  Branch
    
    Date OpenedHill Street Office, Thomson, Georgia
    
    January 1989Daniel Village Office, Augusta, Georgia
    
    March 1999West Town Office, Martinez, Georgia
    
    October 1999Medical Center Office, Augusta, Georgia
    
    January 2001Furys Ferry Road Office, Martinez, Georgia
    
    April 2002Main Office, Augusta, Georgia
    
    September 2005
   13




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Item 3 . Legal Proceedings
  
 Item 4 . Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Market Information
  High
    
    LowFiscal year ended December 31, 2006First Quarter
    
    $
    16.00
    
    
    $
    13.82Second Quarter
    
    $
    15.50
    
    
    $
    13.50Third Quarter
    
    $
    16.60
    
    
    $
    13.95Fourth Quarter
    
    $
    16.65
    
    
    $
    12.80Fiscal year ended December 31, 2005First Quarter
    
    $
    17.60
    
    
    $
    15.60Second Quarter
    
    $
    19.50
    
    
    $
    14.75Third Quarter
    
    $
    16.35
    
    
    $
    15.00Fourth Quarter
    
    $
    15.05
    
    
    $
    13.10
 Holders of Common Stock
  14




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Dividends
    Equity Compensation Plan Information
  Number of securitiesNumber of securities
    
    Weighted-average
    
    remainingto be issued upon
    
    exercise price of
    
    available for future issuanceexercise of outstanding
    
    outstanding
    
    under equity compensationoptions, warrants and
    
    options, warrants
    
    plans (excluding securitiesrights
    
    and rights
    
    reflected in column (a))Plan category
    
    (a)
    
    (b)
    
    (c)Equity compensation plans
approved by security
holders:1997 Stock Option Plan
    
    
    291,055
    
    
    $
    6.90
    
    
    
    2004 Incentive Plan
    
    
    39,505
    
    
    $
    14.79
    
    
    
    290,620Equity compensation plans
not approved by security
holders
    
    
    N/A
    
    
    
    N/A
    
    
    
    83,860
 Recent Sales of Unregistered Securities; Issuer Stock Purchases
  15




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Item 6. Selected Financial Data
  At and for the Years Ended December 31,($ in thousands, except per share data)2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Selected Balance Sheet Data:Assets
    
    $
    417,471
    
    
    $
    349,481
    
    
    $
    332,393
    
    
    $
    266,025
    
    
    $
    257,362Investment securities
    
    
    55,404
    
    
    
    39,362
    
    
    
    43,375
    
    
    
    35,594
    
    
    
    28,916Loans, held for investment
    
    
    280,883
    
    
    
    248,311
    
    
    
    216,728
    
    
    
    174,567
    
    
    
    145,370Loans, held for sale
    
    
    56,758
    
    
    
    40,064
    
    
    
    56,729
    
    
    
    34,219
    
    
    
    67,927Allowance for loan losses
    
    
    4,386
    
    
    
    3,756
    
    
    
    3,416
    
    
    
    3,164
    
    
    
    2,436Deposits
    
    
    341,342
    
    
    
    304,440
    
    
    
    257,780
    
    
    
    221,656
    
    
    
    201,619Short-term borrowings
    
    
    38,561
    
    
    
    13,342
    
    
    
    46,987
    
    
    
    19,993
    
    
    
    35,745Accrued interest
    
    
    3,214
    
    
    
    1,539
    
    
    
    785
    
    
    
    531
    
    
    
    1,110Long-term debt
    
    
    700
    
    
    
    800
    
    
    
    900
    
    
    
    1,000
    
    
    
    1,000Other liabilities
    
    
    1,528
    
    
    
    751
    
    
    
    573
    
    
    
    981
    
    
    
    993Shareholders equity
    
    
    32,126
    
    
    
    28,609
    
    
    
    25,368
    
    
    
    21,864
    
    
    
    16,895Selected Results of Operations Data:Interest income
    
    
    25,335
    
    
    
    20,876
    
    
    
    16,088
    
    
    
    15,159
    
    
    
    13,368Interest expense
    
    
    11,969
    
    
    
    8,420
    
    
    
    4,468
    
    
    
    4,911
    
    
    
    5,172Net interest income
    
    
    13,366
    
    
    
    12,456
    
    
    
    11,620
    
    
    
    10,248
    
    
    
    8,196Provision for loan losses
    
    
    898
    
    
    
    1,022
    
    
    
    808
    
    
    
    880
    
    
    
    451Net interest income after provision for
provision for loan losses
    
    
    12,468
    
    
    
    11,434
    
    
    
    10,812
    
    
    
    9,368
    
    
    
    7,745Noninterest income
    
    
    9,800
    
    
    
    10,331
    
    
    
    10,571
    
    
    
    15,540
    
    
    
    10,397Noninterest expense
    
    
    17,911
    
    
    
    16,368
    
    
    
    15,714
    
    
    
    16,503
    
    
    
    12,879Income before taxes
    
    
    4,357
    
    
    
    5,397
    
    
    
    5,669
    
    
    
    8,405
    
    
    
    5,263Income tax expense
    
    
    1,460
    
    
    
    1,942
    
    
    
    2,167
    
    
    
    3,373
    
    
    
    1,932Net income
    
    $
    2,897
    
    
    $
    3,455
    
    
    $
    3,502
    
    
    $
    5,032
    
    
    $
    3,331Per Share DataNet income  basic
    
    $
    0.86
    
    
    $
    1.04
    
    
    $
    1.06
    
    
    $
    1.53
    
    
    $
    1.02Net income  diluted
    
    $
    0.83
    
    
    $
    0.98
    
    
    $
    0.99
    
    
    $
    1.41
    
    
    $
    0.95Book value
    
    $
    9.51
    
    
    $
    8.53
    
    
    $
    7.65
    
    
    $
    6.63
    
    
    $
    5.17Weighted average number of shares
outstanding:Basic
    
    
    3,370,277
    
    
    
    3,336,834
    
    
    
    3,305,534
    
    
    
    3,281,130
    
    
    
    3,253,662Diluted
    
    
    3,489,564
    
    
    
    3,524,294
    
    
    
    3,521,876
    
    
    
    3,560,495
    
    
    
    3,518,055
 At and for the Years Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Performance Ratios:Return on average assets
    
    
    0.78
    %
    
    
    1.00
    %
    
    
    1.19
    %
    
    
    1.92
    %
    
    
    1.44
    %Return on average equity
    
    
    9.57
    %
    
    
    12.80
    %
    
    
    14.86
    %
    
    
    25.97
    %
    
    
    22.14
    %Net interest margin (1)
    
    
    3.81
    %
    
    
    3.78
    %
    
    
    4.14
    %
    
    
    3.96
    %
    
    
    4.12
    %Efficiency ratio (2)
    
    
    77.39
    %
    
    
    71.45
    %
    
    
    70.81
    %
    
    
    63.98
    %
    
    
    68.72
    %Loan to deposit ratio
    
    
    98.92
    %
    
    
    94.72
    %
    
    
    106.08
    %
    
    
    94.19
    %
    
    
    105.79
    %
 16




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At and for the Years Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Asset Quality Ratios:Nonperforming loans to total loans
    
    
    0.68
    %
    
    
    0.59
    %
    
    
    0.61
    %
    
    
    0.51
    %
    
    
    0.28
    %Nonperforming assets to total assets
    
    
    0.69
    %
    
    
    0.61
    %
    
    
    0.63
    %
    
    
    0.42
    %
    
    
    0.35
    %Net charge-offs to average total loans
    
    
    0.09
    %
    
    
    0.24
    %
    
    
    0.23
    %
    
    
    0.07
    %
    
    
    0.12
    %Allowance for loan losses to
nonperforming loans
    
    
    191.86
    %
    
    
    219.91
    %
    
    
    205.29
    %
    
    
    299.05
    %
    
    
    408.04
    %Allowance for loan losses to total loans
    
    
    1.30
    %
    
    
    1.30
    %
    
    
    1.25
    %
    
    
    1.52
    %
    
    
    1.14
    %Capital Ratios:Average equity to average assetsLeverage ratio
    
    
    7.85
    %
    
    
    8.14
    %
    
    
    7.98
    %
    
    
    8.48
    %
    
    
    6.81
    %Tier 1 risk-based capital ratio
    
    
    9.25
    %
    
    
    9.91
    %
    
    
    9.11
    %
    
    
    10.38
    %
    
    
    8.68
    %Total risk-based capital ratio
    
    
    10.50
    %
    
    
    11.16
    %
    
    
    10.34
    %
    
    
    11.89
    %
    
    
    9.93
    %Growth Ratios and Other Data:Percentage change in net income
    
    
    (16.2
    %)
    
    
    (1.3
    %)
    
    
    (30.4
    %)
    
    
    51.1
    %
    
    
    98.9
    %Percentage change in diluted net
income per share
    
    
    (15.3
    %)
    
    
    (1.0
    %)
    
    
    (29.8
    %)
    
    
    48.4
    %
    
    
    93.9
    %Percentage change in assets
    
    
    19.5
    %
    
    
    5.1
    %
    
    
    24.9
    %
    
    
    3.4
    %
    
    
    25.0
    %Percentage change in loans
    
    
    17.1
    %
    
    
    5.5
    %
    
    
    31.0
    %
    
    
    (2.1
    %)
    
    
    22.6
    %Percentage change in deposits
    
    
    12.1
    %
    
    
    18.1
    %
    
    
    16.3
    %
    
    
    9.94
    %
    
    
    34.8
    %Percentage change in equity
    
    
    12.3
    %
    
    
    12.8
    %
    
    
    16.0
    %
    
    
    29.4
    %
    
    
    28.0
    %
 
 (1)
    
    Non-tax equivalent.(2)
    
    Computed by dividing noninterest expense by the sum of net interest income
and noninterest income, excluding gains and losses on the sale of assets. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Critical Accounting Policies
   17




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Accounting for Contingencies, Accounting by Creditors for Impairment of a Loan.
   18




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Consolidated Financial Information
  2006
    
    2005
    
    2004Total Assets
    
    Net Income
    
    Total Assets
    
    Net Income
    
    Total Assets
    
    Net Income(Dollar amounts in thousands)Consolidated
    
    $
    417,471
    
    
    $
    2,897
    
    
    $
    349,481
    
    
    $
    3,455
    
    
    $
    332,393
    
    
    $
    3,502Bank only
    
    $
    417,154
    
    
    $
    3,040
    
    
    $
    349,368
    
    
    $
    3,604
    
    
    $
    332,325
    
    
    $
    3,696
   The Bank
 Results of Operations  Comparison of 2006 and 2005
   19




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Comparison of 2005 and 2004
  20




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Distribution of Assets, Liabilities and Shareholders Equity; Interest Rates and Interest
Differential
  22




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AVERAGE BALANCE SHEETS
(Dollar amounts in thousands)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Yield /
    
    
    Average
    
    
    Income/
    
    
    Yield /
    
    
    Average
    
    
    Income/
    
    
    Yield /Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateASSETSINTEREST-EARNING ASSETSLoans, net of unearned income
    
    $
    302,778
    
    
    $
    23,144
    
    
    
    7.64
    %
    
    $
    286,924
    
    
    $
    19,263
    
    
    
    6.71
    %
    
    $
    242,158
    
    
    $
    14,713
    
    
    
    6.07
    %Investment securities
    
    
    47,153
    
    
    
    2,053
    
    
    
    4.35
    %
    
    
    40,951
    
    
    
    1,549
    
    
    
    3.78
    %
    
    
    38,416
    
    
    
    1,368
    
    
    
    3.56
    %Fed funds sold & cash in banks
    
    
    2,788
    
    
    
    138
    
    
    
    4.95
    %
    
    
    2,008
    
    
    
    64
    
    
    
    3.19
    %
    
    
    373
    
    
    
    7
    
    
    
    1.88
    %Total interest-earning assets
    
    
    352,719
    
    
    
    25,335
    
    
    
    7.18
    %
    
    
    329,883
    
    
    
    20,876
    
    
    
    6.33
    %
    
    
    280,947
    
    
    
    16,088
    
    
    
    5.73
    %NON-INTEREST-EARNING ASSETSCash and due from banks
    
    
    7,404
    
    
    
    
    
    
    
    
    
    
    
    6,235
    
    
    
    
    
    
    
    
    
    
    
    6,647Bank premises and fixed assets
    
    
    10,879
    
    
    
    
    
    
    
    
    
    
    
    9,555
    
    
    
    
    
    
    
    
    
    
    
    7,351Accrued interest receivable
    
    
    1,779
    
    
    
    
    
    
    
    
    
    
    
    1,479
    
    
    
    
    
    
    
    
    
    
    
    1,225Other assets
    
    
    4,010
    
    
    
    
    
    
    
    
    
    
    
    2,598
    
    
    
    
    
    
    
    
    
    
    
    1,528Allowance for loan losses
    
    
    (4,039
    )
    
    
    
    
    
    
    
    
    
    
    (3,877
    )
    
    
    
    
    
    
    
    
    
    
    (3,439
    )Total assets
    
    $
    372,752
    
    
    
    
    
    
    
    
    
    
    $
    345,873
    
    
    
    
    
    
    
    
    
    
    $
    294,259LIABILITIES AND SHAREHOLDERS
EQUITYINTEREST-BEARING DEPOSITSNOW accounts
    
    $
    29,395
    
    
    $
    497
    
    
    
    1.69
    %
    
    $
    32,212
    
    
    $
    494
    
    
    
    1.53
    %
    
    $
    36,681
    
    
    $
    417
    
    
    
    1.14
    %Savings accounts
    
    
    53,603
    
    
    
    1,994
    
    
    
    3.72
    %
    
    
    56,234
    
    
    
    1,542
    
    
    
    2.74
    %
    
    
    62,431
    
    
    
    941
    
    
    
    1.51
    %Money market accounts
    
    
    18,782
    
    
    
    555
    
    
    
    2.96
    %
    
    
    13,001
    
    
    
    348
    
    
    
    2.68
    %
    
    
    9,520
    
    
    
    97
    
    
    
    1.02
    %Time accounts
    
    
    178,982
    
    
    
    7,760
    
    
    
    4.34
    %
    
    
    145,226
    
    
    
    4,742
    
    
    
    3.27
    %
    
    
    99,153
    
    
    
    2,384
    
    
    
    2.40
    %Total interest-bearing deposits
    
    
    280,762
    
    
    
    10,806
    
    
    
    3.85
    %
    
    
    246,673
    
    
    
    7,126
    
    
    
    2.89
    %
    
    
    207,785
    
    
    
    3,839
    
    
    
    1.85
    %OTHER INTEREST-BEARING
LIABILITIESBorrowed funds
    
    
    21,592
    
    
    
    1,163
    
    
    
    5.39
    %
    
    
    34,052
    
    
    
    1,294
    
    
    
    3.80
    %
    
    
    30,681
    
    
    
    629
    
    
    
    2.05
    %Total interest-bearing
liabilities
    
    
    302,354
    
    
    
    11,969
    
    
    
    3.96
    %
    
    
    280,725
    
    
    
    8,420
    
    
    
    3.00
    %
    
    
    238,466
    
    
    
    4,468
    
    
    
    1.87
    %NON-INTEREST-BEARING
LIABILITIES AND SHAREHOLDERS
EQUITYDemand deposits
    
    
    36,717
    
    
    
    
    
    
    
    
    
    
    
    36,273
    
    
    
    
    
    
    
    
    
    
    
    30,837Other liabilities
    
    
    3,433
    
    
    
    
    
    
    
    
    
    
    
    1,887
    
    
    
    
    
    
    
    
    
    
    
    1,438Shareholders equity
    
    
    30,248
    
    
    
    
    
    
    
    
    
    
    
    26,988
    
    
    
    
    
    
    
    
    
    
    
    23,518Total liabilities and
shareholders equity
    
    $
    372,752
    
    
    
    
    
    
    
    
    
    
    $
    345,873
    
    
    
    
    
    
    
    
    
    
    $
    294,259Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.22
    %
    
    
    
    
    
    
    
    
    
    
    3.33
    %
    
    
    
    
    
    
    
    
    
    
    3.86
    %Net interest income
    
    
    
    
    
    $
    13,366
    
    
    
    
    
    
    
    
    
    
    $
    12,456
    
    
    
    
    
    
    
    
    
    
    $
    11,620Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.79
    %
    
    
    
    
    
    
    
    
    
    
    3.78
    %
    
    
    
    
    
    
    
    
    
    
    4.14
    %Average interest-earning
assets to average total assets
    
    
    
    
    
    
    
    
    
    
    94.63
    %
    
    
    
    
    
    
    
    
    
    
    95.38
    %
    
    
    
    
    
    
    
    
    
    
    95.48
    %Average loans to average
deposits
    
    
    
    
    
    
    
    
    
    
    95.37
    %
    
    
    
    
    
    
    
    
    
    
    101.41
    %
    
    
    
    
    
    
    
    
    
    
    101.48
    %
 23




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##### Table of Contents



Rate/Volume Analysis of Net Interest Income
  Year Ended December 31, 2006
    
    
    Year Ended December 31, 2005Compared with
    
    
    Compared withYear Ended December 31, 2005
    
    
    Year Ended December 31, 2004(in thousands)Increase (Decrease) Due toVolume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    TotalInterest earned on:Tax-exempt securities
    
    $
    31
    
    
    $
    28
    
    
    $
    59
    
    
    $
    37
    
    
    $
    (21
    )
    
    $
    16Taxable securities
    
    
    200
    
    
    
    245
    
    
    
    445
    
    
    
    54
    
    
    
    111
    
    
    
    165Federal funds sold and cash in
banks
    
    
    23
    
    
    
    51
    
    
    
    74
    
    
    
    54
    
    
    
    2
    
    
    
    56Net loans and loans held for sale
    
    
    1,064
    
    
    
    2,817
    
    
    
    3,881
    
    
    
    2,715
    
    
    
    1,836
    
    
    
    4,551Total interest income
    
    $
    1,318
    
    
    $
    3,141
    
    
    $
    4,459
    
    
    $
    2,860
    
    
    $
    1,928
    
    
    $
    4,788Interest paid on:NOW deposits
    
    
    (43
    )
    
    
    46
    
    
    
    3
    
    
    
    (49
    )
    
    
    126
    
    
    
    77Money market deposits
    
    
    155
    
    
    
    52
    
    
    
    207
    
    
    
    35
    
    
    
    216
    
    
    
    251Savings deposits
    
    
    (72
    )
    
    
    524
    
    
    
    452
    
    
    
    (91
    )
    
    
    692
    
    
    
    601Time deposits
    
    
    1,102
    
    
    
    1,916
    
    
    
    3,018
    
    
    
    1,095
    
    
    
    1,263
    
    
    
    2,358Borrowed funds
    
    
    (473
    )
    
    
    342
    
    
    
    (131
    )
    
    
    51
    
    
    
    564
    
    
    
    615Total interest expense
    
    $
    669
    
    
    $
    2,880
    
    
    $
    3,549
    
    
    $
    1,041
    
    
    $
    2,861
    
    
    $
    3,902Increase (decrease) in net
interest income
    
    $
    649
    
    
    $
    261
    
    
    $
    910
    
    
    $
    1,819
    
    
    $
    (933
    )
    
    $
    886
 Deposits
  24




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##### Table of Contents



Year Ended
    
    Year Ended
    
    Year EndedDecember 31, 2006
    
    December 31, 2005
    
    December 31, 2004Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageAverage
    
    Rate
    
    Average
    
    Rate
    
    Average
    
    RateDeposit Category
    
    Amount
    
    Paid
    
    Amount
    
    Paid
    
    Amount
    
    PaidNon-interest
bearing demand
deposits
    
    $
    36,717
    
    
    
    
    
    
    $
    36,273
    
    
    
    
    
    
    $
    30,837
    
    
    
    NOW and money
market deposits
    
    
    48,177
    
    
    
    2.18
    %
    
    
    45,213
    
    
    
    1.86
    %
    
    
    46,201
    
    
    
    1.11
    %Savings deposits
    
    
    53,603
    
    
    
    3.72
    %
    
    
    56,234
    
    
    
    2.74
    %
    
    
    62,431
    
    
    
    1.51
    %Time deposits
    
    
    178,982
    
    
    
    4.34
    %
    
    
    145,226
    
    
    
    3.27
    %
    
    
    99,153
    
    
    
    2.40
    %
  Three months or less
    
    $
    36,679Over three months through six months
    
    
    29,758Over six months through twelve months
    
    
    43,124Over twelve months
    
    
    29,808Total
    
    $
    139,369
 Short-Term Borrowings
     25




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##### Table of Contents



Loan Portfolio
        26




---



##### Table of Contents



December 31,Type of Loan
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(In thousands)Commercial, financial and
agricultural
    
    $
    27,692
    
    
    $
    29,945
    
    
    $
    30,820
    
    
    $
    24,552
    
    
    $
    24,105Real estate  construction
    
    
    73,502
    
    
    
    55,737
    
    
    
    46,581
    
    
    
    37,201
    
    
    
    26,117Real estate  mortgage
    
    
    169,141
    
    
    
    152,497
    
    
    
    127,691
    
    
    
    99,179
    
    
    
    79,374Installment and consumer
    
    
    10,609
    
    
    
    10,189
    
    
    
    11,705
    
    
    
    15,500
    
    
    
    15,832Subtotal
    
    $
    280,944
    
    
    $
    248,368
    
    
    $
    216,797
    
    
    $
    176,432
    
    
    $
    145,428Less:Unearned income and deferred
loan fees
    
    
    (61
    )
    
    
    (57
    )
    
    
    (69
    )
    
    
    (65
    )
    
    
    (58
    )Allowance for possible loan
losses
    
    
    (4,386
    )
    
    
    (3,756
    )
    
    
    (3,416
    )
    
    
    (3,164
    )
    
    
    (2,436
    )Total (net of allowance)
    
    $
    276,497
    
    
    $
    244,555
    
    
    $
    213,312
    
    
    $
    173,203
    
    
    $
    142,934
   Due in 1Year or
    
    
    Due in 1 to
    
    
    Due AfterType of Loan
    
    Less
    
    
    5 Years
    
    
    5 Years
    
    
    Total(In thousands)Commercial, financial
and agricultural
    
    $
    14,558
    
    
    $
    11,309
    
    
    $
    1,825
    
    
    $
    27,692Real estate-construction
    
    
    71,479
    
    
    
    2,023
    
    
    
    
    
    
    
    73,502Total
    
    $
    86,037
    
    
    $
    13,332
    
    
    $
    1,825
    
    
    $
    101,194
  Loans due after 1 year with predetermined interest rates
    
    $
    11,937Loans due after 1 year with floating interest rates
    
    $
    3,220
 27




---



##### Table of Contents



December 31,2006
    
    2005
    
    2004
    
    2002
    
    2001(Dollars in thousands)Loans accounted
for on a
non-accrual basisNumber
    
    
    49
    
    
    
    73
    
    
    
    75
    
    
    
    58
    
    
    
    43Amount
    
    $
    2,286
    
    
    $
    1,708
    
    
    $
    1,664
    
    
    $
    1,057
    
    
    $
    597Accruing loans
which are
contractually past
due 90 days or more
as to principal and
interest paymentsNumber
    
    
    2
    
    
    
    10
    
    
    
    6
    
    
    
    13
    
    
    
    3Amount
    
    $
    71
    
    
    $
    297
    
    
    $
    444
    
    
    $
    496
    
    
    $
    91
    28




---



##### Table of Contents



Summary of Loan Loss Experience
  Years Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002(Dollar amounts in thousands)Allowance, beginning of year
    
    $
    3,756
    
    
    $
    3,416
    
    
    $
    3,164
    
    
    $
    2,436
    
    
    $
    2,187Charge-offs:Commercial, financial and
agricultural
    
    
    106
    
    
    
    521
    
    
    
    240
    
    
    
    55
    
    
    
    11Installment and consumer
    
    
    95
    
    
    
    129
    
    
    
    127
    
    
    
    141
    
    
    
    195Real estate  mortgage
    
    
    98
    
    
    
    73
    
    
    
    333
    
    
    
    10
    
    
    
    7299
    
    
    
    723
    
    
    
    700
    
    
    
    206
    
    
    
    213Recoveries:Commercial, financial and
agricultural
    
    
    16
    
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    1Installment and consumer
    
    
    7
    
    
    
    7
    
    
    
    14
    
    
    
    53
    
    
    
    6Real estate  mortgage
    
    
    8
    
    
    
    
    
    
    
    130
    
    
    
    1
    
    
    
    431
    
    
    
    41
    
    
    
    144
    
    
    
    54
    
    
    
    11Net (charge-offs) recoveries
    
    
    (268
    )
    
    
    (682
    )
    
    
    (556
    )
    
    
    (152
    )
    
    
    (202
    )Provision charged to operations
    
    
    898
    
    
    
    1,022
    
    
    
    808
    
    
    
    880
    
    
    
    451Allowance, end of year
    
    $
    4,386
    
    
    $
    3,756
    
    
    $
    3,416
    
    
    $
    3,164
    
    
    $
    2,436Ratio of net (charge-offs)
recoveries during the period
to average loans outstanding
during the period
    
    
    (.09
    %)
    
    
    (.24
    %)
    
    
    (.23
    %)
    
    
    (.07
    %)
    
    
    (.11
    %)
 Loan Loss Allowance
  29




---



##### Table of Contents



2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollar amounts in thousands)Commercial,
financial and
agricultural
    
    $
    883
    
    
    
    9.9
    %
    
    $
    543
    
    
    
    12.1
    %
    
    $
    581
    
    
    
    14.2
    %
    
    $
    410
    
    
    
    13.9
    %
    
    $
    330
    
    
    
    16.6
    %Real estate -
construction
    
    
    1,442
    
    
    
    26.2
    %
    
    
    1,312
    
    
    
    22.4
    %
    
    
    1,165
    
    
    
    21.5
    %
    
    
    1,100
    
    
    
    21.1
    %
    
    
    704
    
    
    
    17.9
    %Real estate -
Mortgage
    
    
    1,760
    
    
    
    60.2
    %
    
    
    1,671
    
    
    
    61.4
    %
    
    
    1,432
    
    
    
    58.9
    %
    
    
    1,385
    
    
    
    56.2
    %
    
    
    920
    
    
    
    54.6
    %Consumer and
installment
    
    
    191
    
    
    
    3.7
    %
    
    
    136
    
    
    
    4.1
    %
    
    
    152
    
    
    
    5.4
    %
    
    
    249
    
    
    
    8.8
    %
    
    
    387
    
    
    
    10.9
    %Unallocated
    
    
    110
    
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    86
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    95
    
    
    
    Total
    
    $
    4,386
    
    
    
    
    
    
    $
    3,756
    
    
    
    
    
    
    $
    3,416
    
    
    
    
    
    
    $
    3,164
    
    
    
    
    
    
    $
    2,436
      30




---



##### Table of Contents



Investments
   December 31,2006
    
    
    2005
    
    
    2004(In thousands)Obligations of the U.S. Treasury and other U.S
government agencies
    
    $
    26,177
    
    
    $
    16,681
    
    
    $
    15,887Mortgage-backed securities
    
    
    21,415
    
    
    
    17,041
    
    
    
    20,232Obligations of States and political subdivisions
    
    
    5,681
    
    
    
    3,607
    
    
    
    3,279Corporate obligations
    
    
    
    
    
    
    1,008
    
    
    
    1,557Total investment securities
    
    $
    53,273
    
    
    $
    38,337
    
    
    $
    40,955Federal Home Loan Bank stock
    
    
    2,131
    
    
    
    1,025
    
    
    
    2,420Total investment securities and FHLB stock
    
    $
    55,404
    
    
    $
    39,362
    
    
    $
    43,375
 31




---



##### Table of Contents



Maturities of Investment SecuritiesAfter One
    
    After FiveWithin
    
    Through
    
    Through
    
    AfterOne Year
    
    Five Years
    
    Ten Years
    
    Ten Years(In thousands)Obligations of the U.S. Treasury and other U.S.
government agencies
    
    
    5,426
    
    
    
    7,046
    
    
    
    12,190
    
    
    
    1,515Mortgage-backed securities
    
    
    595
    
    
    
    5,533
    
    
    
    
    
    
    
    15,287Obligations of States and political subdivisions
    
    
    
    
    
    
    539
    
    
    
    2,320
    
    
    
    2,822Corporate obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Federal home loan bank stock
    
    
    2,131
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    8,152
    
    
    
    13,118
    
    
    
    14,510
    
    
    
    19,624
 Weighted Average YieldsAfter One
    
    After FiveWithin
    
    Through
    
    Through
    
    AfterOne Year
    
    Five Years
    
    Ten Years
    
    Ten YearsObligations of the U.S. Treasury and other U.S.
government agencies
    
    
    3.11
    %
    
    
    5.08
    %
    
    
    5.73
    %
    
    
    6.00
    %Mortgage-backed securities
    
    
    3.46
    %
    
    
    3.75
    %
    
    
    
    
    
    
    4.85
    %Obligations of States and political subdivisions
    
    
    
    
    
    
    3.92
    %
    
    
    5.96
    %
    
    
    6.10
    %Corporate obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Federal home loan bank stock
    
    
    5.90
    %
    
    
    
    
    
    
    
    
    
    
    Total weighted average yield
    
    
    3.88
    %
    
    
    4.47
    %
    
    
    5.73
    %
    
    
    5.05
    %
   Return on Equity and Assets
  December 31,2006
    
    2005
    
    2004Return on Average Assets
    
    
    0.78
    %
    
    
    1.00
    %
    
    
    1.19
    %Return on Average Equity
    
    
    9.57
    %
    
    
    12.80
    %
    
    
    14.86
    %Dividend Payout
    
    
    
    
    
    
    
    
    
    
    Equity to Assets
    
    
    7.70
    %
    
    
    8.19
    %
    
    
    7.63
    %
 32




---



##### Table of Contents



Liquidity and Interest Rate Sensitivity
     5 years0- 3 mos.
    
    
    3  12 mos.
    
    
    1  5 years
    
    
    or more
    
    
    TotalTaxable securities
    
    $
    
    
    
    $
    6,021
    
    
    $
    12,579
    
    
    $
    28,992
    
    
    $
    47,592Tax-exempt securities
    
    
    
    
    
    
    
    
    
    
    539
    
    
    
    5,142
    
    
    
    5,681Federal funds sold and cash in banks
    
    
    12,291
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,291Loans
    
    
    191,742
    
    
    
    23,925
    
    
    
    118,393
    
    
    
    3,581
    
    
    
    337,641Total rate sensitive assets
    
    
    204,033
    
    
    
    29,946
    
    
    
    131,511
    
    
    
    37,715
    
    
    
    403,205NOW and money market deposits
    
    
    41,169
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,169Savings deposits
    
    
    53,606
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,606Time deposits
    
    
    51,989
    
    
    
    108,658
    
    
    
    46,047
    
    
    
    25
    
    
    
    206,719Total rate sensitive deposits
    
    
    146,764
    
    
    
    108,658
    
    
    
    46,047
    
    
    
    25
    
    
    
    301,494Borrowed funds
    
    
    38,561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,561Total rate sensitive liabilities
    
    
    185,325
    
    
    
    108,658
    
    
    
    46,047
    
    
    
    24
    
    
    
    340,055Excess of rate sensitive assets less rate
sensitive liabilities
    
    $
    18,708
    
    
    $
    (78,712
    )
    
    $
    85,464
    
    
    $
    37,690
    
    
    $
    63,150Cumulative ratio of rate sensitive assets
to liabilities
    
    
    110
    %
    
    
    80
    %
    
    
    107
    %
    
    
    119
    %Cumulative gap
    
    $
    18,708
    
    
    $
    (60,004
    )
    
    $
    25,460
    
    
    $
    63,150
 33




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##### Table of Contents



Capital Resources
    MinimumBank
    
    December 31, 2006
    
    Regulatory RequirementTier 1 Capital ratio
    
    
    9.32
    %
    
    
    4.0
    %Total risk-based capital ratio
    
    
    10.57
    %
    
    
    8.0
    %Leverage ratio
    
    
    8.77
    %
    
    
    4.0
    %Company  ConsolidatedTier 1 Capital ratio
    
    
    9.25
    %
    
    
    4.0
    %Total risk-based capital ratio
    
    
    10.50
    %
    
    
    8.0
    %Leverage ratio
    
    
    7.85
    %
    
    
    4.0
    %
   Market Risk
   34




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##### Table of Contents



Off-Balance Sheet Arrangements
   At
    
    
    AtDecember 31, 2006
    
    
    December 31, 2005(In thousands)Commitments to extend credit
    
    $
    79,828
    
    
    $
    66,262Standby letters of credit
    
    
    2,389
    
    
    
    1,947$
    82,217
    
    
    $
    68,209
 Contractual Obligations
  Payments Due by Period (in thousands)
 Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLong-Term Debt
    
    $
    889
    
    
    $
    147
    
    
    $
    401
    
    
    $
    341
    
    
    
    Capital Lease Obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    811
    
    
    
    288
    
    
    
    523
    
    
    
    
    
    
    
    Time Deposits
    
    
    216,495
    
    
    
    168,182
    
    
    
    47,971
    
    
    
    295
    
    
    
    47$
    218,195
    
    
    $
    168,617
    
    
    $
    48,895
    
    
    $
    636
    
    
    $
    47
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  35




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##### Table of Contents



Item 8 . Financial Statements and Supplementary Data
         
 Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
  
 Item 9A . Controls and Procedures
  
 Item 9A(T) . Controls and Procedures
  
 Item 9B . Other Information
  36




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##### Table of Contents



PART III
  
 Item 10 . Directors and Executive Officers of the Registrant
  
 Item 11 . Executive Compensation
  
 Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
  
 Item 13 . Certain Relationships and Related Transactions
  
 Item 14 . Principal Accountant Fees and Services
  
 PART IV
 
 Item 15 . Exhibits and Financial Statement Schedules
 (a)1.
 37




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##### Table of Contents



(a)2.
  (a)3 & (b). :
 ExhibitNumber
    
    
    
    Description of Exhibit3.1
    
    -
    
    Articles of Incorporation of the Company
(incorporated herein by reference to the exhibit of
the same number in the Companys Registration
Statement on Form SB-2 under the Securities Act of
1933, as amended, Registration No. 333-69763,
previously filed with the Commission).3.1.1
    
    -
    
    Articles of Amendment to the Articles of
Incorporation of the Company (incorporated herein by
reference to the exhibit of the same number in the
Companys Annual Report on Form 10-KSB for the year
ended December 31, 2000, previously filed with the
Commission).3.2
    
    -
    
    By-Laws of the Company (incorporated herein by
reference to the exhibit of the same number in the
Companys Registration Statement on Form SB-2 under
the Securities Act of 1933, as amended (Registration
No. 333-69763)).10.1
    
    -
    
    Employment Agreement dated October 6, 1997 between
the Company and Patrick G. Blanchard (incorporated
herein by reference to the exhibit of the same
number in the Companys Quarterly Report on Form
10-QSB for the quarter ended September 30, 1997,
previously filed with the Commission).
 38




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit10.1.1
    
    -
    
    Amendment No. 1 to Employment Agreement dated
October 6, 1997 between First Bank of Georgia, the
Company and Patrick G. Blanchard, dated September
30, 1998 (incorporated herein by reference to the
exhibit of the same number in the Companys
Registration Statement on Form SB-2, as amended,
Registration No. 333-69763, previously filed with
the Commission).10.1.2
    
    -
    
    Amendment No. 2 to Employment Agreement dated
October 6, 1997 between First Bank of Georgia, the
Company and Patrick G. Blanchard, dated December 23,
1998 (incorporated herein by reference to the
exhibit of the same number in the Companys
Registration Statement on Form SB-2, as amended,
Registration No. 333-69763, previously filed with
the Commission).10.2
    
    -
    
    1997 Stock Option Plan (incorporated herein by
reference to the exhibit of the same number in the
Companys Annual Report on Form 10-KSB for the year
ended December 31, 2002, previously filed with the
Commission).10.3
    
    -
    
    Directors Stock Purchase Plan (incorporated herein
by reference to the exhibit of the same number in
the Companys Annual Report on Form 10-KSB for the
year ended December 31, 2002, previously filed with
the Commission).10.4
    
    -
    
    2005 Incentive Plan (incorporated herein by
reference to Appendix A of the Companys Proxy
Statement for its 2005 Annual Meeting of
Shareholders, filed with the Commission on May 5,
2005).10.5
    
    -
    
    Form of Incentive Stock Option Agreement under the
Companys 2005 Incentive Plan (incorporated herein
by reference to the exhibit of the same number in
the Companys Annual Report on Form 10-KSB for the
year ended December 31, 2005, previously filed with
the Commission).* 10.6
    
    -
    
    Severance Protection Agreement between First Bank of
Georgia and Remer Y. Brinson, III, dated September
4, 2000.* 10.7
    
    -
    
    Compensation Arrangements with Remer Y. Brinson, III.* 10.8
    
    -
    
    First Bank of Georgia Annual Incentive Plan for
Patrick G. Blanchard and Remer Y. Brinson, III.* 10.9
    
    -
    
    Compensation Arrangements with Patrick G. Blanchard.10.10
    
    -
    
    Severance Protection Agreement between First Bank of
Georgia and Bradley J. Gregory, dated August 24,
2006 (incorporated herein by reference from Exhibit
10.1 contained in the Current Report on Form
 39




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Exhibit8-K dated August 24, 2006, previously filed with the Commission).10.11
    
    -
    
    Compensation Arrangements with Bradley J. Gregory
(incorporated herein by reference from Exhibit 10.1
contained in the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2006, previously
filed with the Commission).14.1
    
    -
    
    Code of Ethics (incorporated herein by reference
from Exhibit 99.2 contained in the Companys Annual
Report on Form 10-KSB for the year ended December
31, 2004, previously filed with the Commission).* 21.1
    
    -
    
    Subsidiaries of the Registrant.* 23.1
    
    -
    
    Consent of Cherry, Bekaert & Holland, L.L.P.* 31.1
    
    -
    
    Certification of President and Chief Executive
Officer Pursuant to Section 302 of Sarbanes-Oxley
Act of 2002.* 31.2
    
    -
    
    Certification of Acting Principal Financial Officer
Pursuant to Section 302 of Sarbanes-Oxley Act of
2002.* 32.1
    
    -
    
    Certifications Pursuant to Section 906 of
Sarbanes-Oxley Act of 2002.* 99.1
    
    -
    
    Financial Statements.
 
 *
    
    Filed herewith. 40




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##### Table of Contents



SIGNATURES
  GEORGIA-CAROLINA BANCSHARES, INC.By:
    /s/ Patrick G. BlanchardDate:  March 28, 2007
    
    Patrick G. BlanchardPresident and Chief Executive Officer
(principal executive officer)Date:  March 28, 2007
    By:
    /s/ Bradley J. Gregory, Sr.Bradley J. Gregory, Sr.Senior Vice President & Chief Financial Officer
(principal financial and accounting officer) 41




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##### Table of Contents



DIRECTORS
    
    DATE/s/ Patrick G. Blanchard

Patrick G. Blanchard
        March 28, 2007/s/ Remer Y. Brinson, III

Remer Y. Brinson, III
        March 28, 2007/s/ Larry DeMeyers

Larry DeMeyers
        March 28, 2007/s/ Philip G. Farr

Philip G. Farr
        March 28, 2007/s/ Samuel A. Fowler, Jr.

Samuel A. Fowler, Jr.
        March 28, 2007/s/ Arthur J. Gay, Jr.

Arthur J. Gay, Jr.
        March 28, 2007/s/ Joseph D. Greene

Joseph D. Greene
        March 28, 2007/s/ J. Randall Hall

J. Randall Hall
        March 28, 2007/s/ John W. Lee

John W. Lee
        March 28, 2007/s/ Robert N. Wilson, Jr.

Robert N. Wilson, Jr.
        March 28, 2007/s/ Hugh L. Hamilton, Jr.

Hugh L. Hamilton, Jr.
        March 28, 2007/s/ William G. Hatcher, Sr.

William G. Hatcher
        March 28, 2007/s/ George H. Inman

George H. Inman
        March 28, 2007/s/ David W. Joesbury, Sr.

David W. Joesbury
        March 28, 2007/s/ James L. Lemley, M.D.

James L. Lemley, M.D.
        March 28, 2007/s/ Julian W. Osbon

Julian W. Osbon
        March 28, 2007/s/ Bennye M. Young

Bennye M. Young
        March 28, 2007/s/ A. Montague Miller

A. Montague Miller
        March 28, 2007 42




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##### Table of Contents



EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT10.6
    
    Severance Protection Agreement between First Bank of Georgia and
Remer Y. Brinson, III, dated September 4, 200010.7
    
    Compensation Arrangements with Remer Y. Brinson, III10.8
    
    First Bank of Georgia Annual Incentive Plan for Patrick G. Blanchard
and Remer Y. Brinson, III10.9
    
    Compensation Arrangements with Patrick G. Blanchard21.1
    
    Subsidiaries of the Registrant23.1
    
    Consent of Cherry, Bekaert & Holland, L.L.P.31.1
    
    Certification of President and Chief Executive Officer Pursuant to
Section 302 of Sarbanes-Oxley Act of 200231.2
    
    Certification of Acting Principal Financial Officer Pursuant to
Section 302 of Sarbanes-Oxley Act of 200232.1
    
    Certifications Pursuant to Section 906 of Sarbanes-Oxley Act of 200299.1
    
    Financial Statements