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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB



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(Mark One)





|x | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------



For fiscal year ended December 31, 2003



OR



| ̈ | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------



For the transition period from  to



Commission file number 0-24153



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First Georgia Community Corp.

(Name of Small Business Issuer in its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Georgia                                                        |  | 58-2261088                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|150 Covington Street, Jackson, GA                              |  | 30233                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          



(770) 504-1090

(Registrants Telephone Number, Including Area Code)



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

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



Common Stock, $5.00 par value

(Title of Class)



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Indicate by check mark whether the registrant : (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for past 90 days.    Yes  x    No ̈



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



The aggregate market value of the voting stock held by non-affiliates of the registrant at December 31, 2003 was $7,949,339 based on recent private sales known to the registrant at a price of $18.50 per share. There is no established
trading market for the registrants stock.



Number of
shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 930,208 shares of Common Stock at March 15, 2004.



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the Registrants Annual Report to Shareholders for the fiscal year ended December 31, 2003 are incorporated by reference into Part II.



Portions of the Registrants Proxy Statement for the
Annual Meeting of Shareholders, scheduled to be held on April 21, 2004, are incorporated by reference into Part III.



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PART I



ITEM 1. BUSINESS



Background



First
Georgia Community Corp. (the Company), Jackson, Georgia, was incorporated as a Georgia business corporation for the purpose of becoming a bank holding company by acquiring all of the common stock of First Georgia Community Bank, Jackson,
Georgia (the Bank) upon its formation. The Company filed applications with the Board of Governors of the Federal Reserve System (the Federal Reserve) and the Georgia Department of Banking and Finance (the DBF) for
prior approval to become a bank holding company. The Company received Federal Reserve approval on December 24, 1996 and DBF approval on December 3, 1996. The Company became a bank holding company within the meaning of the Federal Bank Holding
Company Act and the Georgia bank holding company law upon the acquisition of all of the common stock of the Bank, which occurred in September 1997.



The Bank is the sole operating subsidiary of the Company. On October 11, 1996, the Bank received approval of its Articles of Incorporation from the DBF.
Its permit to begin business was issued, and it opened for business on September 8, 1997. The deposits at the Bank are insured by the FDIC, initial approval by the FDIC having been obtained on September 30, 1996.



Business of the Issuer



The Bank conducts a general commercial banking business in its primary service area, emphasizing the banking needs of
individuals and small- to medium-sized businesses. The Company conducts business from its office located at 150 Covington Street, Jackson, Georgia 30233.



The Company is authorized to engage in any activity permitted by law to a corporation, subject to applicable federal regulatory restrictions on the
activities of bank holding companies. The Company was formed for the purpose of becoming a holding company to own 100% of the stock of the Bank. The holding company structure provides the Company with greater flexibility than the Bank. While the
Company has no present plans to engage actively in any nonbanking business activities, management anticipates studying the feasibility of establishing or acquiring subsidiaries to engage in other business activities to the extent permitted by law.



The principal business of the Bank is to accept deposits from
the public and to make loans and other investments in and around Butts County, Georgia, as well as the geographically adjacent counties, its primary service area.



The Bank offers a full range of deposit services that are typically available from financial institutions. The Bank offers
personal and business checking accounts, interest-bearing checking accounts, savings accounts, money market funds and various types of certificates of deposit. The Bank also offers installment loans, real estate loans, second mortgage loans,
commercial loans and home equity lines of credit. In addition, the Bank provides such services as official bank checks and money orders, MasterCard and VISA credit cards, safe deposit boxes, travelers checks, bank by mail, direct deposit of
payroll and social security checks, and U.S. Savings Bonds. All deposit accounts are insured by the FDIC up to the maximum amount currently permitted by law.



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The Banks lending philosophy is to make loans, taking into consideration the safety of the
Banks depositors funds, the preservation of the Banks liquidity, the interest of the Companys shareholders, and the welfare of the community. Interest income from the Banks lending operations is the principal component
of the Banks income, so therefore prudent lending is essential for the prosperity of the Bank.



The principal sources of income for the Bank are interest and fees collected on loans, interest and dividends collected on other investments, and mortgage
brokerage fees. The principal expenses of the Bank are interest paid on deposits, employee compensation, office expenses, and other overhead expenses.



The Banks business plan relies principally upon local advertising and promotional activity and upon personal contacts by its directors, officers and
shareholders to attract business and to acquaint potential customers with the Banks personalized services. The Bank emphasizes a high degree of personalized client service in order to be able to provide for each customers banking needs.
The Banks marketing approach emphasizes the advantages of dealing with an independent, locally-owned and managed state chartered bank to meet the particular needs of individuals, professionals and small-to-medium-size businesses in the
community. All banking services are continually evaluated with regard to their profitability. The Bank does not presently offer trust or permissible securities services.



Employees



As of March 1, 2004, the Bank had 38 full-time employees and 5 part-time employees. The Company does not have any employees who are not also employees of
the Bank. The Company and the Bank are not parties to any collective bargaining agreement, and management believes the Bank has good relations with its employees.



Supervision and Regulation



Both the Company and the Bank are subject to extensive state and federal banking regulations that impose restrictions on and provide for general
regulatory oversight of their operations. These laws generally are intended to protect depositors and not shareholders. The following discussion describes the material elements of the regulatory framework that applies to us.



The Company



Since the Company owns all of the capital stock of the Bank, it is a bank holding company under the federal Bank
Holding Company Act of 1956. As a result, the Company is primarily subject to the supervision, examination, and reporting requirements of the Bank Holding Company Act and the regulations of the Federal Reserve. As a bank holding company located in
Georgia, the Georgia Department of Banking and Finance also regulates and monitors all significant aspects of the Companys operations.



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Acquisitions of Banks.The Bank Holding Company Act requires every bank holding
company to obtain the Federal Reserves prior approval before:



| |  | acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control
more than 5% of the banks voting shares;
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| |  | acquiring all or substantially all of the assets of any bank; or
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| |  | merging or consolidating with any other bank holding company.
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Additionally, the Bank Holding Company Act provides that the Federal Reserve may not approve any of these transactions if it would result in or tend to
create a monopoly or, substantially lessen competition or otherwise function as a restraint of trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned and the convenience and needs of the community to be
served. The Federal Reserves consideration of financial resources generally focuses on capital adequacy, which is discussed below.



Under the Bank Holding Company Act, if adequately capitalized and adequately managed, the Company or any other bank holding company located in Georgia may
purchase a bank located outside of Georgia. Conversely, an adequately capitalized and adequately managed bank holding company located outside of Georgia may purchase a bank located inside Georgia. In each case, however, restrictions may be placed on
the acquisition of a bank that has only been in existence for a limited amount of time or will result in specified concentrations of deposits. Currently, Georgia law prohibits acquisitions of banks that have been incorporated for less than three
years. Because the Bank has been incorporated for more than three years, this limitation does not apply to the Bank or to the Company.



Change in Bank Control. Subject to various exceptions, the Bank Holding Company Act and the Change in Bank Control Act, together with
related regulations, require Federal Reserve approval prior to any person or company acquiring control of a bank holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of
voting securities of the bank holding company. Control is refutably presumed to exist if a person or company acquires 10% or more, but less than 25%, of any class of voting securities and either:



| |  | The bank holding company has registered securities under Section 12 of the Securities Act of 1934; or
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| |  | no other person owns a greater percentage of that class of voting securities immediately after the transaction.
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Our common stock [is/is not] registered under the Securities Exchange Act of 1934. The
regulations also provide a procedure for challenging the rebuttable presumption of control.



Permitted Activities. A bank holding company is generally permitted under the Bank Holding Company Act to engage in or acquire direct or indirect control of more than 5% of the voting
shares of any company engaged in the following activities:



| |  | Banking or managing or controlling banks; and
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| |  | Any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking.
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Activities that the Federal Reserve has found to be so closely related to
banking as to be a proper incident to the business of banking include:



| |  | Factoring accounts receivable;
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| |  | Making, acquiring, brokering or servicing loans and usual related activities;
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| |  | Leasing personal or real property;
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| |  | Operating a non-bank depository institution, such as a savings association;
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| |  | Trust company functions;
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| |  | Financial and investment advisory activities;
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| |  | Conducting discount securities brokerage activities;
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| |  | Underwriting and dealing in government obligations and money market instruments;
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| |  | Providing specified management consulting and counseling activities;
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| |  | Performing selected data processing services and support services;
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| |  | Acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and
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| |  | Performing selected insurance underwriting activities.
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Despite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding companys continued ownership, activity or control constitutes a serious risk to the financial safety, soundness, or stability of it or any of
its bank subsidiaries.



In addition to the permissible bank
holding company activities listed above, a bank holding company may qualify and elect to become a financial holding company, permitting the bank holding company to engage in activities that are financial in nature or incidental or complementary to
financial activity. The Bank Holding Company Act expressly lists the following activities as financial in nature:



| |  | Lending, trust and other banking activities;
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| |  | Insuring, guaranteeing, or indemnifying against loss or harm, or providing and issuing annuities, and acting as principal, agent, or broker for these purposes, in any state;
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| |  | Providing financial, investment, or advisory services;
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| |  | Issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly;
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| |  | Underwriting, dealing in or making a market in securities;
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| |  | Other activities that the Federal Reserve may determine to be so closely related to banking or managing or controlling banks as to be a proper incident to managing or controlling
banks;
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| |  | Foreign activities permitted outside of the United States if the Federal Reserve has determined them to be usual in connection with banking operations abroad;
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| |  | Merchant banking through securities or insurance affiliates; and
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| |  | Insurance company portfolio investments.
| | - | ----------------------------------------



To qualify to become a financial holding company, the Bank and any other depository institution subsidiary of the Company must be well capitalized and
well managed and must have a Community Reinvestment Act rating of at least satisfactory. Additionally, the Company must file an election with the Federal Reserve to become a financial holding company and must provide the Federal Reserve
with 30 days written notice prior to engaging in a permitted financial activity. The Company has not elected, and has no current plans to elect, to become a financial holding company.



Support of Subsidiary Institutions. Under Federal Reserve
policy, the Company is expected to act as a source of financial strength for the Bank and to commit resources to support the Bank. This support may be required at times when, without this Federal Reserve policy, the Company might not be inclined to
provide it. In addition, any capital loans made by the Company to the Bank will be repaid only after its deposits and various other obligations are repaid in full. In the unlikely event of the Companys bankruptcy, any commitment by it to a
federal bank regulatory agency to maintain the capital of the Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.



The Bank



The Bank is subject to extensive state and federal banking regulations that impose restrictions on and provide for general regulatory oversight of our
operations. These laws are generally intended to protect depositors and not shareholders. The following discussion describes the material elements of the regulatory framework that applies to us.



Since the Bank is a commercial bank chartered under the laws of the State of
Georgia, it is primarily subject to the supervision, examination and reporting requirements of the FDIC and the Georgia Department of Banking and Finance. The FDIC and Georgia Department of Banking and Finance regularly examine the Banks
operations and have the authority to approve or disapprove



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mergers, the establishment of branches and similar corporate actions. Both regulatory agencies have the power to prevent
the continuance or development of unsafe or unsound banking practices or other violations of law. Additionally, the Banks deposits are insured by the FDIC to the maximum extent provided by law. The Bank is also subject to numerous state and
federal statutes and regulations that affect its business, activities and operations.



Branching. Under current Georgia law, the Bank may open branch offices throughout Georgia with the prior approval of the Georgia Department of Banking and Finance. In addition, with prior regulatory
approval, the Bank may acquire branches of existing banks located in Georgia. the Bank and any other national or state-chartered bank generally may branch across state lines by merging with banks in other states if allowed by the applicable
states laws. Georgia law, with limited exceptions, currently permits branching across state lines through interstate mergers.



Under the Federal Deposit Insurance Act, states may opt-in and allow out-of-state banks to branch into their state by establishing a new
start-up branch in the state. Currently, Georgia has not opted-in to this provision. Therefore, interstate merger is the only method through which a bank located outside of Georgia may branch into Georgia. This provides a limited barrier of entry
into the Georgia banking market, which protects us from an important segment of potential competition. However, because Georgia has elected not to opt-in, our ability to establish a new start-up branch in another state may be limited. Many states
that have elected to opt-in have done so on a reciprocal basis, meaning that an out-of-state bank may establish a new start-up branch only if their home state has also elected to opt-in. Consequently, until Georgia changes its election, the only way
we will be able to branch into states that have elected to opt-in on a reciprocal basis will be through interstate merger.



Prompt Corrective Action.The Federal Deposit Insurance Corporation Improvement Act of 1991 establishes a system of prompt corrective
action to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking regulators have established five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized) in which all institutions are placed. The federal banking agencies have also specified by regulation the relevant capital levels for each of the other categories. At December 31, 2003, the Bank
qualified for the well capitalized category.



Federal banking
regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital
category in which the institution is placed. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized.



An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. A bank holding company must guarantee that a subsidiary depository institution meets its capital
restoration plan, subject to various limitations. The controlling holding companys obligation to fund a capital restoration plan is limited to the lesser of 5% of an undercapitalized subsidiarys assets at the time it became
undercapitalized or the amount required to meet regulatory capital requirements. An undercapitalized institution is also generally prohibited from increasing its average total assets, making acquisitions, establishing any branches or engaging in any
new line of business, except under an accepted capital restoration plan or with FDIC approval. The regulations also establish procedures for downgrading an institution to a lower capital category based on supervisory factors other than capital.



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FDIC Insurance Assessments. The FDIC has adopted a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. The system assigns an institution to one of three capital categories: (1) well capitalized; (2)
adequately capitalized; and (3) undercapitalized. These three categories are substantially similar to the prompt corrective action categories described above, with the undercapitalized category including institutions that are
undercapitalized, significantly undercapitalized, and critically undercapitalized for prompt corrective action purposes. The FDIC also assigns an institution to one of three supervisory subgroups based on a supervisory evaluation that the
institutions primary federal regulator provides to the FDIC and information that the FDIC determines to be relevant to the institutions financial condition and the risk posed to the deposit insurance funds. Assessments range from 0 to 27
cents per $100 of deposits, depending on the institutions capital group and supervisory subgroup. In addition, the FDIC imposes assessments to help pay off the $780 million in annual interest payments on the $8 billion Financing Corporation
bonds issued in the late 1980s as part of the government rescue of the thrift industry. This assessment rate is adjusted quarterly and is set at 1.54 per $100 of deposits for the first quarter of 2004.



The FDIC may terminate its insurance of deposits if it finds that the
institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.



Community Reinvestment Act. The Community Reinvestment
Act requires that, in connection with examinations of financial institutions within their respective jurisdictions, the Federal Reserve or the FDIC shall evaluate the record of each financial institution in meeting the credit needs of its local
community, including low and moderate-income neighborhoods. These facts are also considered in evaluating mergers, acquisitions, and applications to open a branch or facility. Failure to adequately meet these criteria could impose additional
requirements and limitations on the Bank.Since our aggregate assets are not more than $250 million, under the Gramm-Leach-Bliley Act, we are generally subject to a Community Reinvestment Act examination only once every 60 months if we
receive an outstanding rating, once every 48 months if we receive a satisfactory rating and as needed if our rating is less than satisfactory. Additionally, we must publicly disclose the terms of various Community
Reinvestment Act-related agreements.



Other
Regulations. Interest and other charges collected or contracted for by the Bank are subject to state usury laws and federal laws concerning interest rates. For example, under the Soldiers and Sailors Civil Relief Act of
1940, a lender is generally prohibited from charging an annual interest rate in excess of 6% on any obligation for which the borrower is a person on active duty with the United States military.



The Banks loan operations are also subject to federal laws applicable
to credit transactions, such as the:



| |  | federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
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| |  | Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution
is fulfilling its obligation to help meet the housing needs of the community it serves;
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| |  | Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
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| |  | Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;
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| |  | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;
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| |  | Soldiers and Sailors Civil Relief Act of 1940, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; and
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| |  | rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
| | - | -------------------------------------------------------------------------------------------------------------------------



In addition to the federal and state laws noted above, the Georgia Fair
Lending Act (GAFLA) imposes restrictions and procedural requirements on most mortgage loans made in Georgia, including home equity loans and lines of credit. On August 5, 2003, the Office of the Comptroller of the Currency issued a
formal opinion stating that the entirety of GAFLA is preempted by federal law for national banks and their operating subsidiaries. GAFLA contains a provision that preempts GAFLA as to state banks in the event that the Office of the Comptroller of
the Currency preempts GAFLA as to national banks. Therefore, the Bank is exempt from the requirements of GAFLA.



The deposit operations of the Bank are subject to:



| |  | the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative
subpoenas of financial records; and
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| |  | the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and
customers rights and liabilities arising from the use of automated teller machines and other electronic banking services.
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Capital Adequacy



The Company and the Bank are required to comply with the capital adequacy standards established by the Federal Reserve, in the case of the Company, and
the FDIC, in the case of the Bank. The Federal Reserve has established a risk-based and a leverage measure of capital adequacy for bank holding companies. Since the Companys consolidated total assets are less than $150 million, under the
Federal Reserves capital guidelines, our capital adequacy is measured on a bank-only basis, as opposed to a consolidated basis. The Bank is also subject to risk-based and leverage capital requirements adopted by the FDIC, which are
substantially similar to those adopted by the Federal Reserve for bank holding companies.



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The risk-based capital standards are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets. Assets and off-balance-sheet items, such as letters of credit and unfunded loan
commitments, are assigned to broad risk categories, each with appropriate risk weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.



The minimum guideline for the ratio of total capital to risk-weighted assets
is 8%. Total capital consists of two components, Tier 1 Capital and Tier 2 Capital. Tier 1 Capital generally consists of common stock, minority interests in the equity accounts of consolidated subsidiaries, noncumulative perpetual preferred stock,
and a limited amount of qualifying cumulative perpetual preferred stock, less goodwill and other specified intangible assets. Tier 1 Capital must equal at least 4% of risk-weighted assets. Tier 2 Capital generally consists of subordinated debt,
other preferred stock, and a limited amount of loan loss reserves. The total amount of Tier 2 Capital is limited to 100% of Tier 1 Capital. At December 31, 2003, the Banks ratio of total capital to risk-weighted assets was 11.10% and our ratio
of Tier 1 Capital to risk-weighted assets was 9.85%.



In
addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum ratio of Tier 1 Capital to average assets, less goodwill and other specified intangible assets, of 3%
for bank holding companies that meet specified criteria, including having the highest regulatory rating and implementing the Federal Reserves risk-based capital measure for market risk. All other bank holding companies generally are required
to maintain a leverage ratio of at least 4%. At December 31, 2003, our leverage ratio was 10.95 %. The guidelines also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels without reliance on intangible assets. The Federal Reserve considers the leverage ratio and other indicators of capital strength in evaluating proposals for expansion or new
activities.



Failure to meet capital guidelines could subject a
bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and certain other restrictions on its
business. As described above, significant additional restrictions can be imposed on FDIC-insured depository institutions that fail to meet applicable capital requirements.



Payment of Dividends



The Company is a legal entity separate and distinct from the Bank. The principal sources of the Companys cash flow, including cash flow to pay
dividends to its shareholders, are dividends that the Bank pays to its sole shareholder, the Company. Statutory and regulatory limitations apply to the Banks payment of dividends. If, in the opinion of the federal banking regulator, the Bank
were engaged in or about to engage in an unsafe or unsound practice, the federal banking regulator could require, after notice and a hearing, that it stop or refrain from engaging in the questioned practice. The federal banking agencies have
indicated that paying dividends that deplete a depository institutions capital base to an inadequate level would be an unsafe and unsound banking practice.



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Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any
dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings. See The BankPrompt Corrective Action.



The Georgia Department of Banking and Finance also regulates the Banks dividend payments and must approve dividend payments that would exceed 50% of
the Banks net income for the prior year. Our payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines.



Restrictions on Transactions with Affiliates



The Company and the Bank are subject to the provisions of Section 23A
of the Federal Reserve Act. Section 23A places limits on the amount of:



| |  | a banks loans or extensions of credit to affiliates;
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| |  | a banks investment in affiliates;
| | - | ----------------------------------



| |  | assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve;
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| |  | loans or extensions of credit made by a bank to third parties collateralized by the securities or obligations of affiliates; and
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| |  | a banks guarantee, acceptance or letter of credit issued on behalf of an affiliate.
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The total amount of the above transactions is limited in amount, as to any one affiliate, to 10% of a banks capital
and surplus and, as to all affiliates combined, to 20% of a banks capital and surplus. In addition to the limitation on the amount of these transactions, each of the above transactions must also meet specified collateral requirements. The Bank
must also comply with other provisions designed to avoid the taking of low-quality assets.



The Company and the Bank are also subject to the provisions of Section 23B of the Federal Reserve Act which, among other things, prohibit an institution from engaging in the above transactions with affiliates unless
the transactions are on terms substantially the same, or at least as favorable to the institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.



The Bank is also subject to restrictions on extensions of credit to its
executive officers, directors, principal shareholders and their related interests. These extensions of credit (1) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable
transactions with third parties, and (2) must not involve more than the normal risk of repayment or present other unfavorable features.



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Privacy



Financial institutions are required to disclose their policies for collecting and protecting confidential information. Customers generally may prevent
financial institutions from sharing nonpublic personal financial information with nonaffiliated third parties except under narrow circumstances, such as the processing of transactions requested by the consumer or when the financial institution is
jointly sponsoring a product or service with a nonaffiliated third party. Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or
other marketing to consumers.



Consumer Credit Reporting



On December 4, 2003, the President signed the Fair and Accurate
Credit Transactions Act (the FAIR Act), amending the federal Fair Credit Reporting Act (the FCRA). These amendments to the FCRA (the FCRA Amendments) will become effective as early as February 2004, but more likely in the third or fourth quarter of
2004, depending on implementing regulations to be issued by the Federal Trade Commission and the federal bank regulatory agencies. The FCRA Amendments that deal with employee investigation will become effective on March 31, 2004.



The FCRA Amendments include, among other things:



| |  | new requirements for financial institutions to develop policies and procedures to identify potential identity theft and, upon the request of a consumer, place a fraud alert in the
consumers credit file stating that the consumer may be the victim of identity theft or other fraud;
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| |  | new consumer notice requirements for lenders that use consumer report information in connection with risk-based credit pricing programs;
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| |  | for entities that furnish information to consumer reporting agencies (which would include The Bank), new requirements to implement procedures and policies regarding the accuracy and
integrity of the furnished information and regarding the correction of previously furnished information that is later determined to be inaccurate; and
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| |  | a new requirement for mortgage lenders to disclose credit scores to consumers.
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The FCRA Amendments also will prohibit a business that receives consumer information from an affiliate from using that information for marketing
purposes unless the consumer is first provided a notice and an opportunity to direct the business not to use the information for such marketing purposes (the opt-out), subject to certain exceptions.



Prior to the effective date of the FCRA Amendments, the Company and its
subsidiaries will implement policies and procedures to comply with the new rules.



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Anti-Terrorism Legislation



The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
PATRIOT) Act of 2001, signed by the President on October 26, 2001, imposed new requirements and limitations on specified financial transactions and account relationships, intended to guard against money laundering and terrorism. Most of these
requirements and limitations took effect in 2002. Additional know your customer rules became effective in June 2003, requiring the Bank to establish a customer identification program under Section 326 of the USA PATRIOT Act. The Bank
implemented procedures and policies to comply with those rules prior to the effective date of each of the rules.



Proposed Legislation and Regulatory Action



New regulations and statutes are regularly proposed that contain wide-ranging proposals for altering the structures, regulations and competitive
relationships of financial institutions operating or doing business in the United States. We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new
regulation or statute.



Effect of Governmental Monetary Polices



Our earnings are affected by domestic economic conditions
and the monetary and fiscal policies of the United States government and its agencies. The Federal Reserve Banks monetary policies have had, and are likely to continue to have, an important impact on the operating results of commercial banks
through its power to implement national monetary policy in order, among other things, to curb inflation or combat a recession. The monetary policies of the Federal Reserve affect the levels of bank loans, investments and deposits through its control
over the issuance of United States government securities, its regulation of the discount rate applicable to member banks and its influence over reserve requirements to which member banks are subject. We cannot predict the nature or impact of future
changes in monetary and fiscal policies.



ITEM 2. PROPERTIES



The Company owns a two-story main office building on a 2.5 acre tract of
land located at 150 Covington Street, Jackson, Georgia. The building has approximately 9,085 square feet of finished space. The main office has five inside teller stations and four outside drive-up teller stations. The first floor also has six
customer service stations, ten enclosed office spaces (all of which are presently occupied), a safe deposit vault, a coupon/check printing room, a childrens play room, and three customer waiting areas. The second floor of the building is
unoccupied and is used for storage space and future expansion. In managements opinion, the office building and personal property of the Company and the Bank are adequately covered by insurance and are adequate for the operation of the
Banks business.



ITEM 3. LEGAL PROCEEDINGS



There are no material pending legal proceedings to which the Company or the
Bank is a party or to which any of their properties are subject; nor are there material proceedings known to the



12



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Company or the Bank to be contemplated by any governmental authority; nor are there material proceedings known to the
Company or the Bank, pending or contemplated, in which any director, officer or affiliate or any principal security holder of the Company or the Bank, or any associate of any of the foregoing, is a party or has an interest adverse to the Company.



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



None.



PART II



ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDER MATTERS



As of December 31, 2003, there were approximately 985 shareholders of record of the Companys common stock. There is no
established trading market for the Companys common stock, although management is aware of sporadic trades at prices ranging from $18.00 to $20.00 per share during the past 12 months, and the last sale of such stock of which management is aware
was at a price of $18.50. The Company had 930,208 shares of its common stock outstanding as of December 31, 2003.



The Company has not paid and does not anticipate paying dividends on its common stock in the immediate future. At present, the only source of funds from
which the Company could pay dividends would be dividends paid to the Company by the Bank. Certain regulatory requirements restrict the amount of dividends that can be paid to the Company by the Bank without obtaining the prior approval of the DBF.
Further, the Company, which is subject to a memorandum of understanding with the Federal Reserve Bank of Atlanta, may not pay dividends without prior Federal Reserve approval. No assurance can be given that dividends will be declared by the Company,
or if declared, what the amount of the dividends will be or whether such dividends, once declared, would continue.



ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



First Georgia Community Corp., is a bank holding company headquartered in Jackson, Georgia organized to own all of the common stock of its bank
subsidiary, First Georgia Community Bank. The principal activity of the bank is to provide banking services to domestic markets, principally in Butts County, Georgia and the surrounding counties. The bank is primarily regulated by the Georgia
Department of Banking and Finance and the Federal Reserve and undergoes periodic examinations by these regulatory agencies. Our bank holding company is regulated by the Federal Reserve Bank and also is subject to periodic examinations.



13



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The following discussion describes our results of operations for 2003 as compared to 2002 and also analyzes our financial
condition as of December 31, 2003 as compared to December 31, 2002. Like most community banks, we derive most of our income from interest we receive on our loans and investments. Our primary source of funds for making these loans and investments is
our deposits, on which we pay interest. Consequently, one of the key measures of our success is our amount of net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the expense on
our interest-bearing liabilities, such as deposits. Another key measure is the spread between the yield we earn on these interest-earning assets and the rate we pay on our interest-bearing liabilities.



We have included a number of tables to assist in our description of these measures. For
example, the Average Balances table shows the average balance during 2003 and 2002 of each category of our assets and liabilities, as well as the yield we earned or the rate we paid with respect to each category. A review of this table
shows that our loans typically provide higher interest yields than do other types of interest earning assets, which is why we intend to channel a substantial percentage of our earning assets into our loan portfolio. Similarly, the Rate/Volume
Analysis table helps demonstrate the impact of changing interest rates and changing volume of assets and liabilities during the years shown. We also track the sensitivity of our various categories of assets and liabilities to changes in
interest rates, and we have included a Sensitivity Analysis Table to help explain this. Finally, we have included a number of tables that provide detail about our investment securities, our loans, and our deposits.



Of course, there are risks inherent in all loans, so we maintain an allowance for loan losses
to absorb possible losses on existing loans that may become uncollectible. We establish and maintain this allowance by charging a provision for loan losses against our operating earnings. In the following section we have included a detailed
discussion of this process, as well as several tables describing our allowance for loan losses.



In addition to earning interest on our loans and investments, we earn income through fees and other expenses we charge to our customers. We describe the various components of this noninterest income, as well as our
noninterest expense, in the following discussion.



The following discussion and
analysis also identifies significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements. We encourage you to read this discussion and analysis in conjunction
with the financial statements and the related notes and the other statistical information also included in this report.





14



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Forward-Looking Statements



We may from time to time make written or oral forward-looking statements, including statements contained in our filings with the Securities
and Exchange Commission and our reports to stockholders. Statements made in this report, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Forward-looking
statements are made based upon managements belief as well as assumptions made by, and information currently available to, management pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our
actual results may differ materially from the results anticipated in forward-looking statements due to a variety of factors, including governmental monetary and fiscal policies, deposit levels, loan demand, loan collateral values, securities
portfolio values, interest rate risk management, the effects of competition in the banking business from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance
companies, money market funds and other financial institutions operating in our market area and elsewhere, including institutions operating through the Internet, changes in governmental regulation relating to the banking industry, including
regulations relating to branching and acquisitions, failure of assumptions underlying the establishment of reserves for loan losses, including the value of collateral underlying delinquent loans and other factors. We caution that these factors are
not exclusive. We do not undertake to update any forward-looking statement that may be made from time to time by us, or on our behalf.



Overview



Net earnings were $566,000 in 2003, an increase from the $155,000 earned in 2002. Earnings were reduced in 2002 due to substantial additions to the allowance for loan loss based on an increase in lower quality assets,
which was substantially reduced in 2003. Basic and diluted earnings per share were $.61 in 2003 compared to $0.17 per share in 2002.



In connection with our application of accounting principles generally accepted in the United States, we make judgments and estimates that, in the case of the
determination of our allowance for loan losses, have been critical to the determination of our financial position, results of operations and cash flows. Our evaluation considers significant factors relative to the credit risk and loss exposure in
the loan portfolio, including past due and classified loans, historical experience, underlying collateral values, and current economic conditions that may affect the borrowers ability to repay. The allowance for loan losses is evaluated by
segmenting the loan portfolio into unclassified and classified loans. An allowance percentage is applied to the unclassified loans to establish a general allowance for loan losses. The allowance percentage is determined based upon our experience
specifically and the historical experience of the banking industry generally. The classified loans, including impaired loans, are analyzed individually in order to establish a specific allowance for loan losses. The allowance for loan losses as a
percentage of total loans was 1.97% at December 31, 2003 as compared to 2.63% at December 31, 2002. See Results of Operations for the Years ended December 31, 2003 and 2002 for more information about the effect of the allowance and provision
for loan losses.



The estimate of the carrying value of other real estate owned
is also a critical accounting policy. The estimate is susceptible to numerous uncertainties that affect it, including appraisal values that may not be realized upon disposition, economic conditions during the sales process, and length of time the
property is held.



15



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Financial Condition at December 31, 2003 and 2002



The following is a summary of our balance sheets for the years indicated:



|                                   |  |                        |         |      |   |        
|---------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                   |  | December 31,          
|                                   |  | 2003                   |         | 2002
|                                   |  | (Dollars in Thousands)
|Cash and due from banks            |  | $                      | 4,170   |      | $ | 2,844  
|Interest-bearing deposits in banks |  |                        | 922     |      |   | 1,368  
|Federal funds sold                 |  |                        | 10,779  |      |   | 12,835 
|Securities                         |  |                        | 20,504  |      |   | 18,743 
|Loans, net                         |  |                        | 101,741 |      |   | 103,740
|Loans held for sale                |  |                        |        |      |   | 579    
|Premises and equipment             |  |                        | 2,469   |      |   | 2,336  
|Other assets                       |  |                        | 6,585   |      |   | 5,477  
|                                   |  |                        |         |      |   |        
|                                   |  |                       
|                                   |  | $                      | 147,170 |      | $ | 147,922
|                                   |  |                        |         |      |   |        
|                                   |  |                       
|Total deposits                     |  | $                      | 106,451 |      | $ | 106,648
|Other borrowings                   |  |                        | 27,298  |      |   | 28,510 
|Other liabilities                  |  |                        | 1,380   |      |   | 1,171  
|Stockholders equity               |  |                        | 12,041  |      |   | 11,593 
|                                   |  |                        |         |      |   |        
|                                   |  |                       
|                                   |  | $                      | 147,170 |      | $ | 147,922
|                                   |  |                        |         |      |   |        



Financial Condition at December 31,
2003 and 2002



As of December 31, 2003, we had total assets of $147.2
million, a decrease of .51% over total assets as of December 31, 2002. Total interest-earning assets were $133.9 million at December 31, 2003 or 92% of total assets as compared to 95% of total assets December 31, 2002. Our primary interest-earning
assets at December 31, 2003 were loans, which made up 76% of total interest-earning assets as compared to 76% at December 31, 2002. Our loans to available funds ratio was 78% at December 31, 2003 as compared to 79% at December 31, 2002.



Our securities portfolio, consisting of U.S. Agency, mortgage-backed, municipal, and
restricted equity securities, amounted to $20.5 million at December 31, 2003. Net unrealized gains on securities amounted to $253,000 at December 31, 2003 as compared to $531,000 at December 31, 2002. Management has not specifically identified any
securities for sale in future periods that, if so designated, would require a charge to operations if the market value would not be reasonably expected to recover prior to the time of sale.



We have 87.10% of our loan portfolio collateralized by real estate primarily located in our
market area of Butts County, Georgia and surrounding counties. Our real estate mortgage portfolio consists of loans collateralized by one to four-family residential properties (12.85%), construction loans to build one to four-family residential
properties (15.35%), and nonresidential properties consisting primarily of small business commercial properties (71.8%). We generally require that loans collateralized by real estate not exceed the collateral values by the following percentages for
each type of real estate loan as follows.





16



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|                                                                |  |    |  
|--------------------------------------------------------------- |  | -- | -
|One to four-family residential properties                       |  | 90 | %
|Construction loans on one to four-family residential properties |  | 90 | %
|Nonresidential property                                         |  | 85 | %



The remaining 12.9% of our loan
portfolio consists of commercial, consumer, and other loans. We require collateral commensurate with the repayment ability and creditworthiness of the borrower.



The specific economic and credit risks associated with our loan portfolio, especially the real estate portfolio, include, but are not limited to, a general downturn in
the economy which could affect unemployment rates in our market area, general real estate market deterioration, interest rate fluctuations, deteriorated or non-existing collateral, title defects, inaccurate appraisals, financial deterioration of
borrowers, fraud, and any violation of banking protection laws. Construction lending can also present other specific risks to the lender such as whether developers can find builders to buy lots for home construction, whether the builders can obtain
financing for the construction, whether the builders can sell the home to a buyer, and whether the buyer can obtain permanent financing. Currently, real estate values and employment trends in our market area are showing some signs of downward
pressure as a result of a slowdown in the general economy.



We attempt to
reduce these economic and credit risks not only by adhering to loan to value guidelines, but also by investigating the creditworthiness of the borrower and monitoring the borrowers financial position. Also, we establish and periodically review
our lending policies and procedures as well as having independent loan review. State banking regulations limit exposure by prohibiting secured loan relationships that exceed 25% of the Banks statutory capital and unsecured loan relationships
that exceed 15% of the Banks statutory capital.



Liquidity and Capital
Resources



The purpose of liquidity management is to ensure that there are
sufficient cash flows to satisfy demands for credit, deposit withdrawals, and our other needs. Traditional sources of liquidity include asset maturities and growth in core deposits. A company may achieve its desired liquidity objectives from the
management of assets and liabilities and through funds provided by operations. Funds invested in short-term marketable instruments and the continuous maturing of other earning assets are sources of liquidity from the asset perspective. The liability
base provides sources of liquidity through deposit growth, the maturity structure of liabilities, and accessibility to market sources of funds.



We have continued with the use of brokered deposits as a funding source. Brokered deposits totaled $15.9 million as of December 31, 2003 compared to $18.0 million as of
December 31, 2002. These deposits are readily obtainable at rates not significantly different from rates we pay on deposits in our local market.



Scheduled loan payments are a relatively stable source of funds, but loan payoffs and deposit flows fluctuate significantly, being influenced by interest rates and
general economic conditions and competition. We attempt to price deposits to meet asset/liability objectives consistent with local market conditions.





17



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Our liquidity and capital resources are monitored on a periodic basis by management, State and Federal regulatory
authorities. As determined under guidelines established by regulatory authorities and internal policy, our liquidity ratio of 21.31% at December 31, 2003 was considered satisfactory.



At December 31, 2003, we had loan commitments outstanding of $10.6 million. Because these commitments generally have fixed expiration dates
and many will expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. If needed, we have the ability on a short-term basis to borrow and purchase federal funds from other financial
institutions. At December 31, 2003, we had arrangements with five commercial banks for short-term advances of $10.8 million.



At December 31, 2003, our capital ratios were considered adequate based on regulatory minimum capital requirements. Our stockholders equity increased due to net
income in 2003 of $566,000. Our stockholders equity also decreased due to a decrease in the fair value of securities available-for-sale, net of tax, in the amount of $173,000 and increased due to the exercise of stock options in the amount of
$55,700. For regulatory purposes, the net unrealized losses on securities available-for-sale are excluded in the computation of the capital ratios.



In the future, the primary source of funds available to First Georgia Community Corp. will be the payment of dividends by the Bank. Banking regulations limit the amount
of the dividends that may be paid without prior approval of the Banks regulatory agency. Currently, the Bank could pay $383,000 in dividends without regulatory approval.



The minimum capital requirements to be considered well capitalized under prompt corrective action provisions and the actual capital ratios
for First Georgia Community Corp. and the Bank as of December 31, 2003 are as follows:



|                           |  |              |   |  |       |   |  |                         |  
|-------------------------- |  | ------------ | - |  | ----- | - |  | ----------------------- | -
|                           |  | Actual       |  
|                           |  | Consolidated |   |  | Bank  |   |  | Regulatory Requirements |  
|Leverage capital ratio     |  | 10.95        | % |  | 8.42  | % |  | 5                       | %
|Risk-based capital ratios: |  |              |   |  |       |   |  |                         |  
|Core capital               |  | 12.81        | % |  | 9.85  | % |  | 6                       | %
|Total capital              |  | 14.90        | % |  | 11.10 | % |  | 10                      | %



At December 31, 2003, we had no
material commitments for capital expenditures.



These ratios may decline as
asset growth continues, but are expected to exceed the regulatory minimum requirements. Anticipated future earnings as well as our recent issuance of Trust Preferred Securities should assist us in keeping these ratios at satisfactory levels.



We believe that our liquidity and capital resources are adequate and will meet
our foreseeable short and long-term needs. We anticipate that we will have sufficient funds available to meet current loan commitments and to fund or refinance, on a timely basis, our other material commitments and liabilities.





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Effects of Inflation



The impact of inflation on banks differs from its impact on non-financial institutions.
Banks, as financial intermediaries, have assets that are primarily monetary in nature and that tend to fluctuate in concert with inflation. A bank can reduce the impact of inflation if it can manage its rate sensitivity gap. This gap represents the
difference between rate sensitive assets and rate sensitive liabilities. We, through our asset/liability committee, attempt to structure the assets and liabilities and manage the rate sensitivity gap, thereby seeking to minimize the potential
effects of inflation. For information on the management of our interest rate sensitive assets and liabilities, see Asset/Liability Management.



Results of Operations For The Years Ended December 31, 2003 and 2002



The following is a summary of our operations for the years indicated.



|                          |  |                          |       |      |   |       |  
|------------------------- |  | ------------------------ | ----- | ---- | - | ----- | -
|                          |  | Years Ended December 31, |      
|                          |  | 2003                     |       | 2002 |  
|                          |  | (Dollars in Thousands)   |      
|Interest income           |  | $                        | 8,403 |      | $ | 8,572 |  
|                          |  |                         
|Interest expense          |  |                          | 3,747 |      |   | 3,925 |  
|                          |  |                          |       |      |   |       |  
|                          |  |                         
|Net interest income       |  |                          | 4,656 |      |   | 4,647 |  
|                          |  |                         
|Provision for loan losses |  |                          | 270   |      |   | 1,894 |  
|                          |  |                         
|Other income              |  |                          | 1,005 |      |   | 628   |  
|                          |  |                         
|Other expenses            |  |                          | 4,642 |      |   | 3,289 |  
|                          |  |                          |       |      |   |       |  
|                          |  |                         
|Pretax income             |  |                          | 749   |      |   | 92    |  
|                          |  |                         
|Income taxes (benefit)    |  |                          | 183   |      |   | (63   | )
|                          |  |                          |       |      |   |       |  
|                          |  |                         
|Net income                |  | $                        | 566   |      | $ | 155   |  
|                          |  |                          |       |      |   |       |  



19



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Net Interest Income



Our results of operations are determined by our ability to manage interest income and
expense effectively, to minimize loan and investment losses, to generate non-interest income, and to control operating expenses. Because interest rates are determined by market forces and economic conditions beyond our control, our ability to
generate net interest income depends on our ability to obtain an adequate net interest spread between the rate we pay on interest-bearing liabilities and the rate we earn on interest-earning assets.



Our net yield on average interest-earning assets was 3.33% in 2003 as compared to 3.69% in
2002. Average loans and federal funds sold increased by $2.6 million and 7.7 million, respectively, which accounted for the majority of a $13.8 million increase in total average interest-earning assets. Average interest-bearing liabilities increased
by $16.8 million with average interest-bearing demand and time deposits accounting for 3.5 million of the increase and other borrowings accounting for 13 million of the remaining increase. The rate earned on average interest-earning assets decreased
to 6.02% in 2003 from 6.81% in 2002. The rate paid on average interest-bearing liabilities decreased to 2.90% in 2003 from 3.50% in 2002. The decrease in net yield is due primarily to decreases in the rates earned on our interest-earning assets, as
a significant percentage of our loan portfolio re-priced at lower rates as the Prime rate was lowered. As our interest-bearing liabilities mature and re-price at lower rates, we expect to see our net yield to stabilize.



Provision for Loan Losses



The provision for loan losses was $270,000 in 2003 as compared to $1,894,000 in 2002. The
provision reduction in 2003 was the result of increased nonperforming loans in 2002 and recognizing the losses on those loans accordingly. Net charge offs for 2003 were $1,026,000 as compared to $444,000 in 2002. As of December 31, 2003, we had
nonperforming loans and assets of $2.3 million as compared to $3.8 million at December 31, 2002. The decrease is attributed to the charge off of previously classified nonacrual loans and the sale and write down of other real estate owned. Management
continues to review internally and with external assistance, our loan processing system and makes appropriate changes to further strengthen and preserve the integrity of that system. Based upon our evaluation of the loan portfolio, we believe the
allowance for loan losses to be adequate to absorb losses on existing loans that may become uncollectible. See Critical Accounting Policies for a description of our evaluation process for the portfolio and allowance for loan losses.



Other Income



Other income consists of service charges on deposit accounts and other miscellaneous
revenues and fees. Other operating income was $1,005,000 in 2003 as compared to $628,000 in 2002, an increase of $377,000. The increase is due primarily to a $218,000 increase in service charges on deposit accounts related to our deposit growth, and
due to gain on sales of other real estate owned of $149,000 as well as other miscellaneous income increases associated with the growth of the Bank.



20



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Other Expenses



Other expenses were $4,642,000 in 2003 as compared to $3,289,000 in 2002, an increase of $1,353,000. Salaries and employee benefits
increased by $413,000 due to an increase in additional staffing and increased commissions related to increased mortgage originations. Equipment and occupancy expenses increased by $77,000 due primarily to increased equipment depreciation, rent
expense, and maintenance costs. Other operating expenses increased by $864,000 due primarily to increased provision for losses on other real estate owned of $588,000, increased other real estate owned expense of $183,000, increased data/ATM
processing expense of $56,000, and other miscellaneous expenses associated with the growth of the Bank.



Income Tax



Income tax (benefit) expense in 2003 was $183,000 or 24% of pretax income as compared to $63,000 or (68)% in 2002. The increase in tax rate was due primarily to increased
pretax income.



Management is not aware of any known trends, events or
uncertainties, other than those discussed above, that will have or that are reasonably likely to have a material effect on our liquidity, capital resources or operations. Management is also not aware of any current recommendations by the regulatory
authorities that, if they were implemented, would have such an effect.



Asset/Liability Management



Our
objective is to manage assets and liabilities to provide a satisfactory, consistent level of profitability within the framework of established cash, loan, investment, borrowing, and capital policies. Specific officers are charged with the
responsibility for monitoring policies and procedures that are designed to ensure acceptable composition of the asset/liability mix. Managements overall philosophy is to support asset growth primarily through growth of core deposits of all
categories made by local individuals, partnerships, and corporations.



Our
asset/liability mix is monitored on a regular basis with a report reflecting the interest rate-sensitive assets and interest rate-sensitive liabilities being prepared and presented to the Banks Board of Directors on a monthly basis. The
objective of this policy is to monitor interest rate-sensitive assets and liabilities so as to minimize the impact of substantial movements in interest rates on earnings. An asset or liability is considered to be interest rate-sensitive if it will
reprice or mature within the time period analyzed, usually one year or less. The interest rate-sensitivity gap is the difference between the interest-earning assets and interest-bearing liabilities scheduled to mature or reprice within such time
period. A gap is considered positive when the amount of interest rate-sensitive assets exceeds the amount of interest rate-sensitive liabilities. A gap is considered negative when the amount of interest rate-sensitive liabilities exceeds the
interest rate-sensitive assets. During a period of rising interest rates, a negative gap would tend to affect net interest income adversely, while a positive gap would tend to result in an increase in net interest income. Conversely, during a period
of falling interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to affect net interest income adversely. If our assets and liabilities were equally flexible and moved
concurrently, the impact of any increase or decrease in interest rates on net interest income would be minimal.



21



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A simple interest rate gap analysis by itself may not be an accurate indicator of how net interest income
will be affected by changes in interest rates. Accordingly, we also evaluate how the repayment of particular assets and liabilities is impacted by changes in interest rates. Income associated with interest-earning assets and costs associated with
interest-bearing liabilities may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income. For example, although certain assets
and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market
rates, while interest rates on other types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as interest rate caps and floors) that
limit changes in interest rates. Prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the interest rate gap. The ability of many borrowers to service their debts also may decrease during periods
of rising interest rates.



Changes in interest rates also affect our liquidity
position. We currently price deposits in response to market rates and it is managements intention to continue this policy. If deposits are not priced in response to market rates, a loss of deposits could occur that would negatively affect our
liquidity position.



At December 31, 2003, our cumulative one-year interest
rate-sensitivity gap ratio was 130%. Our targeted ratio is 80% to 120% in this time horizon. This indicates that our interest-earning assets will reprice during this period at a rate faster than our interest-bearing liabilities. In a rising interest
rate environment, this should result in an increase in net interest income as a higher percentage of interest-earning assets reprice than interest-bearing liabilities. Because gap analysis shows only the dollar volume of assets and liabilities that
will mature or reprice, we also use simulation modeling to measure the actual effects of the repricing will have on our net interest margin, net income and economic value of equity. Our typical simulation modeling will involve a 12-month projection
with a level, 200 basis point rising and 200 basis point falling rate scenario.



The following table sets forth the distribution of the repricing of our interest-earning assets and interest-bearing liabilities as of December 31, 2003, the interest rate-sensitivity gap, the cumulative interest rate-sensitivity gap, the
interest rate-sensitivity gap ratio and the cumulative interest rate-sensitivity gap ratio. The table also sets forth the time periods in which interest-earning assets and interest-bearing liabilities will mature or may reprice in accordance with
their contractual terms. However, the table does not necessarily indicate the impact of general interest rate movements on the net interest margin as the repricing of various categories of assets and liabilities is subject to competitive pressures
and the needs of our customers. In addition, various assets and liabilities indicated as repricing within the same period may in fact, reprice at different times within such period and at different rates.





22



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|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|---------------------------------------------- |  | ---------------------- | ------ | -------------------------------------- | - | ------- | ------------------------------------ |  | - | ---------------- | - | ----- | - | ------ |  | - | -------
|                                               |  | Within Three Months    |        | After Three Months but Within One Year |   |         | After One Year but Within Five Years |  |   | After Five Years |   | Total
|                                               |  | (Dollars in Thousands)
|Interest-earning assets:                       |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|Interest-bearing deposits in banks             |  | $                      | 922    |                                        | $ |        |                                      |  | $ |                 |   |       | $ |       |  | $ | 922    
|Federal funds sold                             |  |                        | 10,779 |                                        |   |        |                                      |  |   |                 |   |       |   |       |  |   | 10,779 
|Securities                                     |  |                        | 1,278  |                                        |   |        |                                      |  |   | 6,680            |   |       |   | 12,546 |  |   | 20,504 
|Loans                                          |  |                        | 77,325 |                                        |   | 7,881   |                                      |  |   | 18,323           |   |       |   | 258    |  |   | 103,787
|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|                                               |  |                        | 90,304 |                                        |   | 7,881   |                                      |  |   | 25,003           |   |       |   | 12,804 |  |   | 135,992
|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|                                               |  |                        |        |                                        |  
|Interest-bearing liabilities:                  |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|Interest-bearing demand deposits               |  |                        | 30,996 |                                        |   |        |                                      |  |   |                 |   |       |   |       |  |   | 30,996 
|Savings                                        |  |                        | 1,615  |                                        |   |        |                                      |  |   |                 |   |       |   |       |  |   | 1,615  
|Certificates of deposit                        |  |                        | 6,732  |                                        |   | 25,082  |                                      |  |   | 32,043           |   |       |   |       |  |   | 63,857 
|Other borrowings                               |  |                        | 9,498  |                                        |   | 1,750   |                                      |  |   | 10,500           |   |       |   | 5,550  |  |   | 27,298 
|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|                                               |  |                        |        |                                        |  
|                                               |  |                        | 48,841 |                                        |   | 26,832  |                                      |  |   | 42,543           |   |       |   | 5,550  |  |   | 123,766
|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|                                               |  |                        |        |                                        |  
|Interest rate sensitivity gap                  |  | $                      | 41,463 |                                        | $ | (18,951 | )                                    |  | $ | (17,540          | ) |       | $ | 7,254  |  |   |        
|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|Cumulative interest rate sensitivity gap       |  | $                      | 41,463 |                                        | $ | 22,512  |                                      |  | $ | 4,972            |   |       | $ | 12,226 |  |   |        
|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|Interest rate sensitivity gap ratio            |  |                        | 1.85   |                                        |   | .29     |                                      |  |   | .59              |   |       |   | 2.31   |  |   |        
|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        
|Cumulative interest rate sensitivity gap ratio |  |                        | 1.85   |                                        |   | 1.30    |                                      |  |   | 1.04             |   |       |   | 1.10   |  |   |        
|                                               |  |                        |        |                                        |   |         |                                      |  |   |                  |   |       |   |        |  |   |        



23



---

SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA



The tables and schedules on the following pages set forth certain significant financial
information and statistical data with respect to:



| |  | Distribution of our assets, liabilities and stockholders equity, and the interest rates we experience;
| | - | -------------------------------------------------------------------------------------------------------



| |  | Our investment portfolio;
| | - | -------------------------



| |  | Our loan portfolio, including types of loans, maturities, and sensitivities of loans to changes in interest rates and information on nonperforming loans;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Summary of our loan loss experience and allowance for loan losses;
| | - | ------------------------------------------------------------------



| |  | Types of deposits; and
| | - | ----------------------



| |  | Return on equity and assets.
| | - | ----------------------------



24



---

DISTRIBUTION OF ASSETS, LIABILITIES, AND

STOCKHOLDERS EQUITY:

INTEREST RATES AND INTEREST DIFFERENTIALS



Average Balances



The condensed average balance sheet for the years indicated is presented below. (1)



|                                     |  |                          |         |   |      |   |         |  
|------------------------------------ |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                     |  | Years Ended December 31, |        
|                                     |  | 2003                     |         |   | 2002 |  
|                                     |  | (Dollars in Thousands)   |        
|ASSETS                               |  |                          |         |   |      |   |         |  
|                                     |  |                         
|Cash and due from banks              |  | $                        | 2,921   |   |      | $ | 2,530   |  
|Interest-bearing deposits in banks   |  |                          | 1,256   |   |      |   | 794     |  
|Taxable securities                   |  |                          | 16,319  |   |      |   | 15,619  |  
|Tax exempt securities                |  |                          | 4,083   |   |      |   | 1,762   |  
|Securities valuation account         |  |                          | 348     |   |      |   | 257     |  
|Federal funds sold                   |  |                          | 12,266  |   |      |   | 4,583   |  
|Loans (2)                            |  |                          | 105,752 |   |      |   | 103,100 |  
|Allowance for loan losses            |  |                          | (2,206  | ) |      |   | (1,603  | )
|Other assets                         |  |                          | 10,451  |   |      |   | 6,095   |  
|                                     |  |                          |         |   |      |   |         |  
|                                     |  | $                        | 151,190 |   |      | $ | 133,137 |  
|                                     |  |                          |         |   |      |   |         |  
|                                     |  |                         
|Total interest-earning assets        |  | $                        | 139,676 |   |      | $ | 125,858 |  
|                                     |  |                          |         |   |      |   |         |  
|                                     |  |                         
|LIABILITIES AND STOCKHOLDERS EQUITY |  |                          |         |   |      |   |         |  
|                                     |  |                         
|Deposits:                            |  |                          |         |   |      |   |         |  
|Noninterest-bearing demand           |  | $                        | 9,105   |   |      | $ | 8,822   |  
|Interest-bearing demand              |  |                          | 30,488  |   |      |   | 28,945  |  
|Savings                              |  |                          | 1,587   |   |      |   | 1,356   |  
|Time                                 |  |                          | 68,144  |   |      |   | 66,180  |  
|                                     |  |                          |         |   |      |   |         |  
|Total deposits                       |  |                          | 109,324 |   |      |   | 105,303 |  
|                                     |  |                         
|Other borrowings                     |  |                          | 28,811  |   |      |   | 15,771  |  
|Other liabilities                    |  |                          | 1,229   |   |      |   | 828     |  
|                                     |  |                          |         |   |      |   |         |  
|Total liabilities                    |  |                          | 139,364 |   |      |   | 121,902 |  
|Stockholders equity                 |  |                          | 11,826  |   |      |   | 11,235  |  
|                                     |  |                          |         |   |      |   |         |  
|                                     |  | $                        | 151,190 |   |      | $ | 133,137 |  
|                                     |  |                          |         |   |      |   |         |  
|                                     |  |                         
|Total interest-bearing liabilities   |  | $                        | 129,030 |   |      | $ | 112,252 |  
|                                     |  |                          |         |   |      |   |         |  



|(1) | For each category, average balances were determined using the daily average balances during the year.
|--- | -----------------------------------------------------------------------------------------------------

|(2) | Nonaccrual loans included in average loans for 2003 and 2002 were $303,000 and $1,430,000, respectively.
|--- | --------------------------------------------------------------------------------------------------------



25



---

Interest Income and Interest Expense



The following tables set forth the amount of our interest income and interest expense for each category of interest-earning assets and
interest-bearing liabilities and the average interest rate for total interest-earning assets and total interest-bearing liabilities, net interest spread and net yield on average interest-earning assets.



|                                             |  |                          |       |              |      |          |   |              |  |      |  
|-------------------------------------------- |  | ------------------------ | ----- | ------------ | ---- | -------- | - | ------------ |  | ---- | -
|                                             |  | Years Ended December 31, |      
|                                             |  | 2003                     |       | 2002         |     
|                                             |  | Interest                 |       | Average Rate |      | Interest |   | Average Rate | 
|                                             |  | (Dollars in Thousands)   |      
|INTEREST INCOME:                             |  |                          |       |              |      |          |   |              |  |      |  
|Interest and fees on loans (1)               |  | $                        | 7,443 |              | 7.04 |          | $ | 7,578        |  | 7.35 | %
|Interest on deposits in banks                |  |                          | 12    |              | .96  |          |   | 21           |  | 2.64 |  
|Interest on taxable securities               |  |                          | 658   |              | 4.03 |          |   | 819          |  | 5.24 |  
|Interest on tax exempt securities            |  |                          | 156   |              | 3.82 |          |   | 82           |  | 4.64 |  
|Interest on federal funds sold               |  |                          | 134   |              | 1.09 |          |   | 72           |  | 1.59 |  
|                                             |  |                          |       |              |      |          |   |              |  |      |  
|Total interest income                        |  |                          | 8,403 |              | 6.02 |          |   | 8,572        |  | 6.81 |  
|                                             |  |                          |       |              |      |          |   |              |  |      |  
|                                             |  |                          |       |             
|INTEREST EXPENSE:                            |  |                          |       |              |      |          |   |              |  |      |  
|Interest on interest-bearing                 |  |                          |       |              |      |          |   |              |  |      |  
|demand deposits                              |  |                          | 445   |              | 1.46 |          |   | 592          |  | 2.04 |  
|Interest on savings deposits                 |  |                          | 11    |              | 69   |          |   | 19           |  | 1.42 |  
|Interest on time deposits                    |  |                          | 2,100 |              | 3.08 |          |   | 2,466        |  | 3.73 |  
|Interest on other borrowings                 |  |                          | 1,191 |              | 4.13 |          |   | 848          |  | 5.38 |  
|                                             |  |                          |       |              |      |          |   |              |  |      |  
|Total interest expense                       |  |                          | 3,747 |              | 2.90 |          |   | 3,925        |  | 3.50 |  
|                                             |  |                          |       |              |      |          |   |              |  |      |  
|                                             |  |                          |       |             
|NET INTEREST INCOME                          |  | $                        | 4,656 |              |      |          | $ | 4,647        |  |      |  
|                                             |  |                          |       |              |      |          |   |              |  |      |  
|                                             |  |                          |       |             
|Net interest spread                          |  |                          |       |              | 3.12 |          |   |              |  | 3.31 | %
|                                             |  |                          |       |              |      |          |   |              |  |      |  
|Net yield on average interest-earning assets |  |                          |       |              | 3.33 |          |   |              |  | 3.69 | %
|                                             |  |                          |       |              |      |          |   |              |  |      |  



|(1) | Interest and fees on loans includes $996,000 and $853,000 of loan fee income for the years ended December 31, 2003 and 2002, respectively. Interest income recognized on nonaccrual
loans during 2003 and 2002 was $57,000 and $16,000, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|



26



---

Rate and Volume Analysis



The following table describes the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities have
affected our interest income and expense during the year indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) change in volume (change in volume multiplied
by old rate); (2) change in rate (change in rate multiplied by old volume); and (3) a combination of change in rate and change in volume. The changes in interest income and interest expense attributable to both volume and rate have been allocated
proportionately on a consistent basis to the change due to volume and the change due to rate.



|                                             |  |                                                        |      |   |        |   |      |     |  |   |      |  
|-------------------------------------------- |  | ------------------------------------------------------ | ---- | - | ------ | - | ---- | --- |  | - | ---- | -
|                                             |  | Years Ended December 31, 2003 vs. 2002 Changes Due To: |     
|                                             |  | Rate                                                   |      |   | Volume |   |      | Net | 
|                                             |  | (Dollars in Thousands)                                 |     
|Increase (decrease) in:                      |  |                                                        |      |   |        |   |      |     |  |   |      |  
|Income from interest-earning assets:         |  |                                                        |      |   |        |   |      |     |  |   |      |  
|Interest and fees on loans                   |  | $                                                      | (327 | ) |        | $ | 192  |     |  | $ | (135 | )
|Interest on deposits in banks                |  |                                                        | (17  | ) |        |   | 8    |     |  |   | (9   | )
|Interest on taxable securities               |  |                                                        | (196 | ) |        |   | 35   |     |  |   | (161 | )
|Interest on tax exempt securities            |  |                                                        | (17  | ) |        |   | 91   |     |  |   | 74   |  
|Interest on federal funds sold               |  |                                                        | (28  | ) |        |   | 90   |     |  |   | 62   |  
|                                             |  |                                                        |      |   |        |   |      |     |  |   |      |  
|Total interest income                        |  |                                                        | (585 | ) |        |   | 416  |     |  |   | (169 | )
|                                             |  |                                                        |      |   |        |   |      |     |  |   |      |  
|                                             |  |                                                        |     
|Expense from interest-bearing liabilities:   |  |                                                        |      |   |        |   |      |     |  |   |      |  
|Interest on interest-bearing demand deposits |  |                                                        | (177 | ) |        |   | 30   |     |  |   | (147 | )
|Interest on savings deposits                 |  |                                                        | (11  | ) |        |   | 3    |     |  |   | (8   | )
|Interest on time deposits                    |  |                                                        | (437 | ) |        |   | 71   |     |  |   | (366 | )
|Interest on other borrowings                 |  |                                                        | (231 | ) |        |   | 574  |     |  |   | 343  |  
|                                             |  |                                                        |      |   |        |   |      |     |  |   |      |  
|Total interest expense                       |  |                                                        | (856 | ) |        |   | 678  |     |  |   | 178  |  
|                                             |  |                                                        |      |   |        |   |      |     |  |   |      |  
|                                             |  |                                                        |     
|Net interest income                          |  | $                                                      | (271 | ) |        | $ | (262 | )   |  | $ | 9    |  
|                                             |  |                                                        |      |   |        |   |      |     |  |   |      |  



27



---

INVESTMENT PORTFOLIO



Types of Investments



The carrying amounts of securities at the dates indicated, which are all classified as available-for-sale, are summarized as follows:



|                             |  |                        |        |      |   |       
|---------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                             |  | December 31,          
|                             |  | 2003                   |        | 2002
|                             |  | (Dollars in Thousands)
|U.S. Government agencies     |  | $                      | 8,047  |      | $ | 4,121 
|Mortgage-backed securities   |  |                        | 5,489  |      |   | 10,931
|Municipal securities         |  |                        | 5,690  |      |   | 2,509 
|Restricted equity securities |  |                        | 1,278  |      |   | 1,182 
|                             |  |                        |        |      |   |       
|                             |  | $                      | 20,504 |      | $ | 18,743
|                             |  |                        |        |      |   |       



Maturities



The amounts of debt securities, including the weighted average yield in each category as of
December 31, 2003 are shown in the following table according to contractual maturity classifications (1) one year or less, (2) after one through five years, (3) after five through ten years and (4) after ten years. Equity securities are not included
in the table because they have no contractual maturity.



|                           |  |                  |       |           |                              |   |        |                              |           |  |      |        |  |           |       |  |      |  
|-------------------------- |  | ---------------- | ----- | --------- | ---------------------------- | - | ------ | ---------------------------- | --------- |  | ---- | ------ |  | --------- | ----- |  | ---- | -
|                           |  | One year or less |       |           | After one through five years |   |        | After five through ten years |          
|                           |  | Amount           |       | Yield (1) |                              |   | Amount |                              | Yield (1) |  |      | Amount |  | Yield (1) |      
|U.S. Government agencies   |  |                  |      |           |                             |   |        |                              | 5,072     |  | 3.87 | %      |  |           | 2,975 |  | 4.4  | %
|Mortgage-backed securities |  |                  |      |           |                             |   |        |                              | 1,608     |  | 5.13 | %      |  |           | 1,771 |  | 4.65 | %
|Municipals                 |  |                  |      |           |                             |   |        |                              |          |  |     |        |  |           | 3,631 |  | 3.95 | %
|                           |  |                  |       |           |                              |   |        |                              |           |  |      |        |  |           |       |  |      |  
|                           |  |                  |       |           |                              |  
|                           |  | $                |      |           |                             |   |        | $                            | 6,680     |  | 3.18 | %      |  | $         | 8,377 |  | 4.26 | %
|                           |  |                  |       |           |                              |   |        |                              |           |  |      |        |  |           |       |  |      |  
|                           |  |                  |       |           |                             
|                           |  | After ten years  |       |           |                              |   | Total  |                              |           |  |      |        | 
|                           |  | Amount           |       | Yield (1) |                              |   | Amount |                              | Yield (1) |  |      |        |  |           |      
|U.S. Government agencies   |  |                  |      |           |                             | % |        |                              | 8,047     |  | 4.07 | %      |  |           |       |  |      |  
|Mortgage-backed securities |  |                  | 2,110 |           | 6.05                         |   |        |                              | 5,489     |  | 5.33 |        |  |           |       |  |      |  
|Municipals                 |  |                  | 2,059 |           | 4.53                         |   |        |                              | 5,690     |  | 4.16 |        |  |           |       |  |      |  
|                           |  |                  |       |           |                              |   |        |                              |           |  |      |        |  |           |       |  |      |  
|                           |  |                  |       |           |                              |  
|                           |  | $                | 4,169 |           | 5.30                         | % |        | $                            | 19,226    |  | 4.46 | %      |  |           |       |  |      |  
|                           |  |                  |       |           |                              |   |        |                              |           |  |      |        |  |           |       |  |      |  



|(1) | The weighted average yields were computed using coupon interest, adding discount accretion or subtracting premium amortization, as appropriate, on a ratable basis over the life of
each security.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



28



---

LOAN PORTFOLIO



Types of Loans



The amounts of loans outstanding at the indicated dates are shown in the following table according to the type of loan.



|                                     |  |                        |         |   |      |   |         |  
|------------------------------------ |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                     |  | December 31,           |        
|                                     |  | 2003                   |         |   | 2002 |  
|                                     |  | (Dollars in Thousands) |        
|Commercial                           |  | $                      | 11,141  |   |      | $ | 11,344  |  
|Real estate-construction             |  |                        | 13,873  |   |      |   | 20,296  |  
|Real estate-mortgage                 |  |                        | 76,247  |   |      |   | 71,570  |  
|Consumer installment loans and other |  |                        | 2,526   |   |      |   | 3,332   |  
|                                     |  |                        |         |   |      |   |         |  
|                                     |  |                        | 103,787 |   |      |   | 106,542 |  
|Less allowance for loan losses       |  |                        | (2,046  | ) |      |   | (2,802  | )
|                                     |  |                        |         |   |      |   |         |  
|Net loans                            |  | $                      | 101,741 |   |      | $ | 103,740 |  
|                                     |  |                        |         |   |      |   |         |  



Maturities and Sensitivities of
Loans to Changes in Interest Rates



Total loans as of December 31, 2003
are shown in the following table according to contractual maturity classifications (1) one year or less, (2) after one through five years, and (3) after five years.



|                             |  |                        |        
|---------------------------- |  | ---------------------- | -------
|                             |  | (Dollars in Thousands)
|Commercial                   |  |                        |        
|One year or less             |  | $                      | 5,579  
|After one through five years |  |                        | 5,190  
|After five years             |  |                        | 372    
|                             |  |                        |        
|                             |  |                        | 11,141 
|                             |  |                        |        
|                             | 
|Construction                 |  |                        |        
|One year or less             |  | $                      | 13,518 
|After one through five years |  |                        | 355    
|After five years             |  |                        |       
|                             |  |                        |        
|                             |  |                        | 13,873 
|                             |  |                        |        
|                             | 
|Other                        |  |                        |        
|One year or less             |  | $                      | 20,326 
|After one through five years |  |                        | 56,992 
|After five years             |  |                        | 1,455  
|                             |  |                        |        
|                             |  |                        | 78,773 
|                             |  |                        |        
|                             | 
|                             |  | $                      | 103,787
|                             |  |                        |        



29



---

The following table summarizes loans at December 31, 2003 with the due dates after one year that have predetermined and
floating or adjustable interest rates.



|                                      |  |                        |       
|------------------------------------- |  | ---------------------- | ------
|                                      |  | (Dollars in Thousands)
|Predetermined interest rates          |  | $                      | 18,582
|Floating or adjustable interest rates |  |                        | 45,782
|                                      |  |                        |       
|                                      |  | $                      | 64,364
|                                      |  |                        |       



Risk Elements



Information with respect to nonaccrual, past due, restructured and other problem loans at
December 31, 2003 and 2002 is as follows:



|                                                                                                         |  |                        |  |       
|-------------------------------------------------------------------------------------------------------- |  | ---------------------- |  | ------
|                                                                                                         |  | December 31,          
|                                                                                                         |  | 2003                   |  | 2002  
|                                                                                                         |  | (Dollars in Thousands)
|Nonaccrual loans                                                                                         |  | $      0               |  | $2,714
|Loans contractually past due ninety days or more as to interest or principal payments and still accruing |  | 0                      |  | 0     
|Restructured loans                                                                                       |  | 0                      |  | 0     
|Potential problem loans                                                                                  |  | 0                      |  | 3,198 
|Interest income that would have been recorded on nonaccrual and restructured loans under original terms  |  | 0                      |  | 113   
|Interest income that was recorded on nonaccrual and restructured loans                                   |  | 57                     |  | 16    



Potential problem loans are defined as
loans about which we have serious doubts as to the ability of the borrower to comply with the present loan repayment terms and which may cause the loan to be placed on nonaccrual status, to become past due more than ninety days, or to be
restructured. For a description of the changes in potential problem loans from 2002 to 2003, see Results of Operations for the years ended December 31, 2003 and 2002- Provision for Loan Losses.



It is our policy to discontinue the accrual of interest income when, in the opinion of
management, collection of interest becomes doubtful. This status is accorded interest when (1) there is a significant deterioration in the financial condition of the borrower and full repayment of principal and interest is not expected and (2) the
principal or interest is more than ninety days past due, unless the loan is both well-secured and in the process of collection.



Loans classified for regulatory purposes as loss, doubtful, substandard, or special mention that have not been included in the table above do not represent or result from
trends or uncertainties that management reasonably expects will materially impact future operating results, liquidity, or capital resources. These classified loans do not represent material credits about which management is aware of any information
that causes management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms.



30



---

SUMMARY OF LOAN LOSS EXPERIENCE



The following table summarizes average loan balances for the year determined using the daily average balances during the period of banking
operations; changes in the allowance for loan losses arising from loans charged off; recoveries on loans previously charged off; additions to the allowance which have been charged to operating expense; and the ratio of net charge-offs during the
year to average loans.



|                                                                            |  |                          |         |   |      |   |         |  
|--------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                                                            |  | Years Ended December 31, |        
|                                                                            |  | 2003                     |         |   | 2002 |  
|                                                                            |  | (Dollars in Thousands)   |        
|Average amount of loans outstanding                                         |  | $                        | 105,752 |   |      | $ | 103,100 |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                         
|Balance of allowance for loan losses at beginning of year                   |  | $                        | 2,802   |   |      | $ | 1,352   |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                         
|Loans charged off                                                           |  |                          |         |   |      |   |         |  
|Commercial                                                                  |  |                          | (196    | ) |      |   |         |  
|Real estate mortgage                                                        |  |                          | (827    | ) |      |   | 424     |  
|Installment                                                                 |  |                          | (16     | ) |      |   | 34      |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                          | (1,039  | ) |      |   | 458     |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                         
|Loans recovered                                                             |  |                          |         |   |      |   |         |  
|Commercial                                                                  |  |                          |         |   |      |   |         |  
|Real estate mortgage                                                        |  |                          |         |   |      |   |         |  
|Installment                                                                 |  |                          | 13      |   |      |   | 14      |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                          | 13      |   |      |   | 14      |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                         
|Net charge-offs                                                             |  |                          | (1,026  | ) |      |   | 444     |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                         
|Additions to allowance charged to operating expense during year             |  |                          | 270     |   |      |   | 1,894   |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                         
|Balance of allowance for loan losses at end of year                         |  | $                        | 2,046   |   |      | $ | 2,802   |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                         
|Ratio of net loans charged off during the year to average loans outstanding |  |                          | .97     | % |      |   | .43     | %
|                                                                            |  |                          |         |   |      |   |         |  



Allowance for Loan Losses



The allowance for loan losses is maintained at a level that is deemed
appropriate by management to adequately cover all known and inherent risks in the loan portfolio. Our evaluation of the loan portfolio includes a periodic review of loan loss experience, current economic conditions that may affect the
borrowers ability to pay and the underlying collateral value of the loans.



31



---

As of December 31, 2003 and 2002, we had made no allocations of our allowance for loan losses to specific categories of
loans. Based on managements best estimate, the allocation of the allowance for loan losses to types of loans, as of the indicated dates, is as follows:



|                                     |  |                        |  |                                                  |                   |  |        |       |                                                  |     |  
|------------------------------------ |  | ---------------------- |  | ------------------------------------------------ | ----------------- |  | ------ | ----- | ------------------------------------------------ | --- | -
|                                     |  | December 31, 2003      |  |                                                  | December 31, 2002 | 
|                                     |  | Amount                 |  | Percent of loans in each category to total loans |                   |  | Amount |       | Percent of loans in each category to total loans |    
|                                     |  | (Dollars in Thousands) | 
|Commercial                           |  | 389                    |  | 11                                               | %                 |  | $      | 250   |                                                  | 11  | %
|Real estateconstruction             |  | 716                    |  | 13                                               |                   |  |        | 602   |                                                  | 19  |  
|Real estatemortgage                 |  | 839                    |  | 73                                               |                   |  |        | 1,850 |                                                  | 67  |  
|Consumer installment loans and other |  | 102                    |  | 3                                                |                   |  |        | 100   |                                                  | 3   |  
|                                     |  |                        |  |                                                  |                   |  |        |       |                                                  |     |  
|                                     |  | 2,046                  |  | 100                                              | %                 |  | $      | 2,802 |                                                  | 100 | %
|                                     |  |                        |  |                                                  |                   |  |        |       |                                                  |     |  



32



---

DEPOSITS



Average amount of deposits and average rates paid thereon, classified as to noninterest-bearing demand deposits, interest-bearing demand deposits, savings deposits,
and time deposits are presented below. (1)



|                                    |  |                          |         |         |      |   |        |   |         |  |      |  
|----------------------------------- |  | ------------------------ | ------- | ------- | ---- | - | ------ | - | ------- |  | ---- | -
|                                    |  | Years Ended December 31, |        
|                                    |  | 2003                     |         |         | 2002 |  
|                                    |  | Amount                   |         | Percent |      |   | Amount |   | Percent | 
|                                    |  | (Dollars in Thousands)   |        
|Noninterest-bearing demand deposits |  | $                        | 9,105   |         |     | % |        | $ | 8,822   |  |     | %
|Interest-bearing demand deposits    |  |                          | 30,488  |         | 1.46 |   |        |   | 28,945  |  | 2.04 |  
|Savings deposits                    |  |                          | 1,587   |         | .69  |   |        |   | 1,356   |  | 1.42 |  
|Time deposits                       |  |                          | 68,144  |         | 3.08 |   |        |   | 66,180  |  | 3.73 |  
|                                    |  |                          |         |         |      |   |        |   |         |  |      |  
|                                    |  | $                        | 109,324 |         |      |   |        | $ | 105,303 |  |      |  
|                                    |  |                          |         |         |      |   |        |   |         |  |      |  



|(1) | Average balances were determined using the daily average balances.
|--- | ------------------------------------------------------------------



The amounts of time certificates of deposit issued in amounts of $100,000 or more as of December 31, 2003 are shown below by category, which is based on time remaining
until maturity of (1) three months or less, (2) over three through six months, (3) over six through twelve months, and (4) over twelve months.



(Dollars in Thousands)



|                                     |  |   |       
|------------------------------------ |  | - | ------
|                                     |  |  
|Three months or less                 |  | $ | 2,701 
|Over three months through six months |  |   | 2,189 
|Over six through twelve months       |  |   | 7,751 
|Over twelve months                   |  |   | 16,764
|                                     |  |   |       
|Total                                |  | $ | 29,405
|                                     |  |   |       



RETURN ON ASSETS AND
STOCKHOLDERS EQUITY



The following rate of return information for the
year indicated is presented below.



|                           |  |                          |   |  |      |  
|-------------------------- |  | ------------------------ | - |  | ---- | -
|                           |  | Years Ended December 31, |  
|                           |  | 2003                     |   |  | 2002 |  
|Return on assets (1)       |  | 37                       | % |  | 0.12 | %
|Return on equity (2)       |  | 4.79                     |   |  | 1.38 |  
|Dividend payout ratio (3)  |  |                         |   |  |     |  
|Equity to assets ratio (4) |  | 7.82                     |   |  | 8.44 |  



|(1) | Net income divided by average total assets.
|--- | -------------------------------------------

|(2) | Net income divided by average equity.
|--- | -------------------------------------

|(3) | Dividends declared per share of common stock divided by net income per share.
|--- | -----------------------------------------------------------------------------

|(4) | Average equity divided by average total assets.
|--- | -----------------------------------------------



33



---

ITEM 7. FINANCIAL STATEMENTS



|                                                                                              
|----------------------------------------------------------------------------------------------
|FIRST GEORGIA COMMUNITY CORP. AND SUBSIDIARY  CONSOLIDATED FINANCIAL REPORT  DECEMBER 31, 2003





34



---

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 2003



TABLE OF CONTENTS



|                                                |  |      
|----------------------------------------------- |  | -----
|                                                |  | Page 
|INDEPENDENT AUDITORS REPORT                    |  | 36   
|                                                | 
|FINANCIAL STATEMENTS                            |  |      
|                                                | 
|Consolidated balance sheets                     |  | 37   
|Consolidated statements of income               |  | 38   
|Consolidated statements of comprehensive income |  | 39   
|Consolidated statements of stockholders equity |  | 40   
|Consolidated statements of cash flows           |  | 41   
|Notes to consolidated financial statements      |  | 42-61



35



---

INDEPENDENT AUDITORS REPORT



To the Board
of Directors

First Georgia Community Corp.

Jackson, Georgia



We have audited the
accompanying consolidated balance sheets of First Georgia Community Corp. and subsidiaryas of December 31, 2003 and 2002, and the related consolidated statements of income, comprehensive income, stockholders equity and cash flows for
the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



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



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Georgia Community Corp. and subsidiary as of December 31, 2003 and
2002, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.



As described in Note 17 to the financial statements, the 2002 financial statements have been restated for an error in the
method of recognizing expense related to deferred compensation liabilities.



/s/    MAULDIN & JENKINS, LLC



Atlanta, Georgia

January 16, 2004



36



---

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002



|                                                                                                                   |  |      |             |      |   |            
|------------------------------------------------------------------------------------------------------------------ |  | ---- | ----------- | ---- | - | -----------
|                                                                                                                   |  | 2003 |             | 2002
|Assets                                                                                                             |  |      |             |      |   |            
|Cash and due from banks                                                                                            |  | $    | 4,170,144   |      | $ | 2,844,136  
|Interest-bearing deposits in banks                                                                                 |  |      | 921,805     |      |   | 1,367,696  
|Federal funds sold                                                                                                 |  |      | 10,779,000  |      |   | 12,835,000 
|Securities available for sale                                                                                      |  |      | 19,226,165  |      |   | 17,561,149 
|Restricted equity securities, at cost                                                                              |  |      | 1,278,250   |      |   | 1,181,600  
|Loans held for sale                                                                                                |  |      |            |      |   | 578,872    
|                                                                                                                   |  |     
|Loans                                                                                                              |  |      | 103,787,139 |      |   | 106,542,487
|Less allowance for loan losses                                                                                     |  |      | 2,045,879   |      |   | 2,802,091  
|                                                                                                                   |  |      |             |      |   |            
|Loans, net                                                                                                         |  |      | 101,741,260 |      |   | 103,740,396
|                                                                                                                   |  |     
|Premises and equipment                                                                                             |  |      | 2,468,927   |      |   | 2,335,641  
|Other assets                                                                                                       |  |      | 6,584,742   |      |   | 5,477,394  
|                                                                                                                   |  |      |             |      |   |            
|                                                                                                                   |  |     
|Total assets                                                                                                       |  | $    | 147,170,293 |      | $ | 147,921,884
|                                                                                                                   |  |      |             |      |   |            
|Liabilities and Stockholders Equity                                                                               |  |      |             |      |   |            
|Liabilities:                                                                                                       |  |      |             |      |   |            
|Deposits:                                                                                                          |  |      |             |      |   |            
|Noninterest-bearing                                                                                                |  | $    | 9,982,542   |      | $ | 8,468,832  
|Interest-bearing                                                                                                   |  |      | 96,468,445  |      |   | 98,179,419 
|                                                                                                                   |  |      |             |      |   |            
|Total deposits                                                                                                     |  |      | 106,450,987 |      |   | 106,648,251
|Other borrowings                                                                                                   |  |      | 27,298,090  |      |   | 28,510,009 
|Other liabilities                                                                                                  |  |      | 1,380,023   |      |   | 1,170,868  
|                                                                                                                   |  |      |             |      |   |            
|Total liabilities                                                                                                  |  |      | 135,129,100 |      |   | 136,329,128
|                                                                                                                   |  |      |             |      |   |            
|                                                                                                                   |  |     
|Commitments and contingencies                                                                                      |  |      |             |      |   |            
|                                                                                                                   |  |     
|Stockholders equity                                                                                               |  |      |             |      |   |            
|Common stock, par value $5; 10,000,000 shares authorized; 930,208 and 925,708 issued and outstanding, respectively |  |      | 4,651,040   |      |   | 4,628,540  
|Surplus                                                                                                            |  |      | 5,123,654   |      |   | 5,090,442  
|Retained earnings                                                                                                  |  |      | 2,109,900   |      |   | 1,544,268  
|Accumulated other comprehensive income                                                                             |  |      | 156,599     |      |   | 329,506    
|                                                                                                                   |  |      |             |      |   |            
|                                                                                                                   |  |     
|Total stockholders equity                                                                                         |  |      | 12,041,193  |      |   | 11,592,756 
|                                                                                                                   |  |      |             |      |   |            
|                                                                                                                   |  |     
|Total liabilities and stockholders equity                                                                         |  | $    | 147,170,293 |      | $ | 147,921,884
|                                                                                                                   |  |      |             |      |   |            



See Notes to
Consolidated Financial Statements.



37



---

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2003 AND 2002



|                                                    |  |      |           |      |   |           |  
|--------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | -
|                                                    |  | 2003 |           | 2002 |  
|Interest income:                                    |  |      |           |      |   |           |  
|Loans, including fees                               |  | $    | 7,443,200 |      | $ | 7,577,752 |  
|Taxable securities                                  |  |      | 657,956   |      |   | 818,791   |  
|Nontaxable securities                               |  |      | 155,668   |      |   | 81,767    |  
|Deposits in banks                                   |  |      | 11,675    |      |   | 20,980    |  
|Federal funds sold                                  |  |      | 134,372   |      |   | 73,081    |  
|                                                    |  |      |           |      |   |           |  
|Total interest income                               |  |      | 8,402,871 |      |   | 8,572,371 |  
|                                                    |  |      |           |      |   |           |  
|                                                    |  |     
|Interest expense:                                   |  |      |           |      |   |           |  
|Deposits                                            |  |      | 2,555,558 |      |   | 3,076,710 |  
|Other borrowings                                    |  |      | 1,191,223 |      |   | 848,316   |  
|                                                    |  |      |           |      |   |           |  
|Total interest expense                              |  |      | 3,746,781 |      |   | 3,925,026 |  
|                                                    |  |      |           |      |   |           |  
|                                                    |  |     
|Net interest income                                 |  |      | 4,656,090 |      |   | 4,647,345 |  
|Provision for loan losses                           |  |      | 270,000   |      |   | 1,894,000 |  
|                                                    |  |      |           |      |   |           |  
|Net interest income after provision for loan losses |  |      | 4,386,090 |      |   | 2,753,345 |  
|                                                    |  |      |           |      |   |           |  
|                                                    |  |     
|Other income:                                       |  |      |           |      |   |           |  
|Service charges on deposit accounts                 |  |      | 598,451   |      |   | 380,102   |  
|Other operating income                              |  |      | 406,824   |      |   | 248,001   |  
|                                                    |  |      |           |      |   |           |  
|Total other income                                  |  |      | 1,005,275 |      |   | 628,103   |  
|                                                    |  |      |           |      |   |           |  
|                                                    |  |     
|Other expenses:                                     |  |      |           |      |   |           |  
|Salaries and employee benefits                      |  |      | 1,854,512 |      |   | 1,442,129 |  
|Equipment and occupancy expenses                    |  |      | 424,650   |      |   | 347,788   |  
|Other operating expenses                            |  |      | 2,363,443 |      |   | 1,499,759 |  
|                                                    |  |      |           |      |   |           |  
|Total other expenses                                |  |      | 4,642,605 |      |   | 3,289,676 |  
|                                                    |  |      |           |      |   |           |  
|                                                    |  |     
|Income before income taxes (benefits)               |  |      | 748,760   |      |   | 91,772    |  
|                                                    |  |     
|Income tax expense (benefits)                       |  |      | 183,128   |      |   | (62,837   | )
|                                                    |  |      |           |      |   |           |  
|                                                    |  |     
|Net income                                          |  | $    | 565,632   |      | $ | 154,609   |  
|                                                    |  |      |           |      |   |           |  
|                                                    |  |     
|Basic earnings per share                            |  | $    | 0.61      |      | $ | 0.17      |  
|                                                    |  |      |           |      |   |           |  
|                                                    |  |     
|Diluted earnings per share                          |  | $    | 0.61      |      | $ | 0.17      |  
|                                                    |  |      |           |      |   |           |  



See Notes to
Consolidated Financial Statements.



38



---

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2003 AND 2002



|                                                                                                                                              |  |      |          |   |      |   |        
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------
|                                                                                                                                              |  | 2003 |          |   | 2002
|Net income                                                                                                                                    |  | $    | 565,632  |   |      | $ | 154,609
|                                                                                                                                              |  |     
|Other comprehensive income (loss):                                                                                                            |  |      |          |   |      |   |        
|Unrealized holding gains (losses) on securities available for sale arising during period, net of tax of $(105,975) and $203,486,
respectively |  |      | (172,907 | ) |      |   | 332,003
|                                                                                                                                              |  |      |          |   |      |   |        
|                                                                                                                                              |  |     
|Comprehensive income                                                                                                                          |  | $    | 392,725  |   |      | $ | 486,612
|                                                                                                                                              |  |      |          |   |      |   |        



See Notes to
Consolidated Financial Statements.



39



---

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

YEARS ENDED DECEMBER 31, 2003 AND 2002



|                                                   |  |              |  |           |           |                  |   |           |                                               |   |           |                           |  |   |          |   |  |   |            |  
|-------------------------------------------------- |  | ------------ |  | --------- | --------- | ---------------- | - | --------- | --------------------------------------------- | - | --------- | ------------------------- |  | - | -------- | - |  | - | ---------- | -
|                                                   |  | Common Stock |  | Surplus   |           | RetainedEarnings |   |           | Accumulated Other Comprehensive Income (Loss) |   |           | Total StockholdersEquity | 
|                                                   |  | Shares       |  | Par Value |           |                  |   |          
|Balance, December 31, 2001, as previously reported |  | 760,708      |  | $         | 3,803,540 |                  | $ | 3,771,421 |                                               | $ | 1,512,466 |                           |  | $ | (2,497   | ) |  | $ | 9,084,930  |  
|Adjustment applicable to prior years (Note 17)     |  |             |  |           |          |                  |   |          |                                               |   | (122,807  | )                         |  |   |         |   |  |   | (122,807   | )
|                                                   |  |              |  |           |           |                  |   |           |                                               |   |           |                           |  |   |          |   |  |   |            |  
|Balance, December 31, 2001, as restated            |  | 760,708      |  |           | 3,803,540 |                  |   | 3,771,421 |                                               |   | 1,389,659 |                           |  |   | (2,497   | ) |  |   | 8,962,123  |  
|Net income                                         |  |             |  |           |          |                  |   |          |                                               |   | 154,609   |                           |  |   |         |   |  |   | 154,609    |  
|Exercise of stock options                          |  | 165,000      |  |           | 825,000   |                  |   | 1,217,700 |                                               |   |          |                           |  |   |         |   |  |   | 2,042,700  |  
|Tax benefit from the exercise of stock options     |  |             |  |           |          |                  |   | 101,321   |                                               |   |          |                           |  |   |         |   |  |   | 101,321    |  
|Other comprehensive income                         |  |             |  |           |          |                  |   |          |                                               |   |          |                           |  |   | 332,003  |   |  |   | 332,003    |  
|                                                   |  |              |  |           |           |                  |   |           |                                               |   |           |                           |  |   |          |   |  |   |            |  
|Balance, December 31, 2002                         |  | 925,708      |  |           | 4,628,540 |                  |   | 5,090,442 |                                               |   | 1,544,268 |                           |  |   | 329,506  |   |  |   | 11,592,756 |  
|Net income                                         |  |             |  |           |          |                  |   |          |                                               |   | 565,632   |                           |  |   |         |   |  |   | 565,632    |  
|Exercise of stock options                          |  | 4,500        |  |           | 22,500    |                  |   | 33,212    |                                               |   |          |                           |  |   |         |   |  |   | 55,712     |  
|Other comprehensive loss                           |  |             |  |           |          |                  |   |          |                                               |   |          |                           |  |   | (172,907 | ) |  |   | (172,907   | )
|                                                   |  |              |  |           |           |                  |   |           |                                               |   |           |                           |  |   |          |   |  |   |            |  
|Balance, December 31, 2003                         |  | 930,208      |  | $         | 4,651,040 |                  | $ | 5,123,654 |                                               | $ | 2,109,900 |                           |  | $ | 156,599  |   |  | $ | 12,041,193 |  
|                                                   |  |              |  |           |           |                  |   |           |                                               |   |           |                           |  |   |          |   |  |   |            |  



See Notes to
Consolidated Financial Statements.



40



---

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2003 AND 2002



|                                                                                  |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                  |  | 2003 |             |   | 2002 |  
|OPERATING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Net income                                                                        |  | $    | 565,632     |   |      | $ | 154,609     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |             |   |      |   |             |  
|Depreciation                                                                      |  |      | 236,126     |   |      |   | 186,360     |  
|Gain on sale of other real estate owned                                           |  |      | (148,929    | ) |      |   |            |  
|Provision for losses on other real estate owned                                   |  |      | 587,992     |   |      |   |            |  
|Net (increase) decrease in loans held for sale                                    |  |      | 578,872     |   |      |   | (276,329    | )
|Provision for loan losses                                                         |  |      | 270,000     |   |      |   | 1,894,000   |  
|Deferred income taxes                                                             |  |      | 229,062     |   |      |   | (634,837    | )
|Deferred compensation                                                             |  |      | 265,611     |   |      |   | 259,220     |  
|Increase in interest receivable                                                   |  |      | 116,622     |   |      |   | (85,152     | )
|Increase (decrease) in interest payable                                           |  |      | (17,935     | ) |      |   | 36,791      |  
|Net other operating activities                                                    |  |      | (231,062    | ) |      |   | (388,740    | )
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by operating activities                                         |  |      | 2,451,991   |   |      |   | 1,145,922   |  
|                                                                                  |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|INVESTING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Net (increase) decrease in interest bearing deposits in banks                     |  |      | 445,891     |   |      |   | (293,193    | )
|Net (increase) decrease in federal funds sold                                     |  |      | 2,056,000   |   |      |   | (9,753,000  | )
|Purchases of securities available for sale                                        |  |      | (11,612,000 | ) |      |   | (5,121,998  | )
|Proceeds from maturities of securities available for sale                         |  |      | 9,668,102   |   |      |   | 4,082,157   |  
|Purchases of restricted equity securities                                         |  |      | (96,650     | ) |      |   | (541,600    | )
|Net increase in loans                                                             |  |      | (304,605    | ) |      |   | (20,103,292 | )
|Purchases of premises and equipment                                               |  |      | (369,412    | ) |      |   | (149,472    | )
|Additions to other real estate owned                                              |  |      | (54,844     | ) |      |   |            |  
|Proceeds from sale of other real estate owned                                     |  |      | 495,006     |   |      |   |            |  
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by (used in) investing activities                               |  |      | 227,488     |   |      |   | (31,880,398 | )
|                                                                                  |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|FINANCING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Net increase (decrease) in deposits                                               |  |      | (197,264    | ) |      |   | 13,908,883  |  
|Repayment of other borrowings                                                     |  |      | (1,211,919  | ) |      |   | (500,000    | )
|Proceeds from other borrowings                                                    |  |      |            |   |      |   | 15,710,009  |  
|Proceeds from exercise of stock options                                           |  |      | 55,712      |   |      |   | 2,042,700   |  
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by (used in) financing activities                               |  |      | (1,353,471  | ) |      |   | 31,161,592  |  
|                                                                                  |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|Net increase in cash and due from banks                                           |  |      | 1,326,008   |   |      |   | 427,116     |  
|                                                                                  |  |     
|Cash and due from banks at beginning of year                                      |  |      | 2,844,136   |   |      |   | 2,417,020   |  
|                                                                                  |  |      |             |   |      |   |             |  
|Cash and due from banks at end of year                                            |  | $    | 4,170,144   |   |      | $ | 2,844,136   |  
|                                                                                  |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|SUPPLEMENTAL DISCLOSURES                                                          |  |      |             |   |      |   |             |  
|Cash paid for:                                                                    |  |      |             |   |      |   |             |  
|Interest                                                                          |  | $    | 3,764,716   |   |      | $ | 3,888,235   |  
|                                                                                  |  |     
|Income taxes                                                                      |  | $    | 83,556      |   |      | $ | 551,312     |  
|                                                                                  |  |     
|NONCASH TRANSACTIONS                                                              |  |      |             |   |      |   |             |  
|Principal balances of loans transferred to other real estate                      |  | $    | 4,327,581   |   |      | $ | 1,100,000   |  
|                                                                                  |  |     
|Financed sales of other real estate owned                                         |  | $    | 2,293,840   |   |      | $ |            |  



See Notes to
Consolidated Financial Statements.



41



---

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Nature
of Business



First Georgia Community Corp. (the
Company) is a bank holding company whose principal activity is the ownership and management of its wholly-owned subsidiary, First Georgia Community Bank (the Bank). The Bank is a commercial bank located in Jackson, Butts
County, Georgia with a branch located in Locust Grove, Henry County, Georgia. The Bank provides a full range of banking services in its primary market area of Butts and Henry Counties and the surrounding counties.



Basis of Presentation and Accounting Estimates



The consolidated financial statements include the accounts of the Company
and its subsidiary. Significant intercompany transactions and balances have been eliminated in consolidation.



In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, management
is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.



Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of foreclosed real estate, deferred taxes, and
contingent assets and liabilities. The determination of the adequacy of the allowance for loan losses is based on estimates that are susceptible to significant changes in the economic environment and market conditions. In connection with the
determination of the estimated losses on loans and the valuation of foreclosed real estate, management obtains independent appraisals for significant collateral.



Cash, Due From Banks and Cash Flows



For purposes of reporting cash flows, cash and due from banks includes cash on hand, cash items in process of collection and
amounts due from banks. Cash flows from loans, interest-bearing deposits in banks, federal funds sold and deposits are reported net.



The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank, based on a percentage of deposits. The total of
those reserve balances was approximately $678,000 and $608,000 at December 31, 2003 and 2002, respectively.



Securities



Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and recorded at amortized cost.
Debt securities not classified as held to maturity are classified as available for sale and recorded at fair value with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of the related deferred tax
effect. Equity securities, including restricted stock, without a readily determinable fair value are recorded at cost.



The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the life of
the securities. Realized gains and losses, determined on the basis of the cost of specific securities sold, are included in earnings on the settlement date. Declines in the fair value of held to maturity and available for sale securities below their
cost that are deemed to be other than temporary are reflected in earnings as realized losses.



42



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Loans Held for Sale



Loans held for sale consist of mortgage loans the Company has the intent to
sell in the foreseeable future, and are carried at the lower of aggregate cost or market value. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Gains and losses on sales of loans are recognized at
settlement dates and are determined by the difference between sales proceeds and the carrying value of the loans.



Loans



Loans are reported at their outstanding principal balances less deferred loan fees and the allowance for loan losses. Interest income on loans is accrued
on the outstanding principal balance.



Nonrefundable loan fees
and costs incurred for loans are deferred and recognized in income over the life of the loans using a method which approximates a level yield.



The accrual of interest on loans is discontinued when, in managements opinion, the borrower may be unable to meet payments as they become due,
unless the loan is well-secured. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income, unless management believes that the accrued interest is recoverable through the
liquidation of collateral. Interest income on nonaccrual loans is recognized on the cash-basis or cost-recovery method, until the loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts
are brought current and future payments are reasonably assured.



A loan is considered impaired when it is probable, based on current information and events, the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement.
Impaired loans are measured by either the present value of expected future cash flows discounted at the loans effective interest rate, the loans obtainable market price, or the fair value of the collateral if the loan is collateral
dependent. The amount of impairment, if any, and any subsequent changes are included in the allowance for loan losses. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status.



Allowance for Loan Losses



The allowance for loan losses is established through a provision for loan
losses charged to expense. Loan losses are charged against the allowance when management believes the collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.



The allowance is an amount that management believes will be adequate to
absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio, based on an evaluation of the collectibility of existing loans and prior loss experience. This
evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, concentrations and current economic conditions that may affect the
borrowers ability to pay. This evaluation does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions. While management uses the best
information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions. In addition, regulatory agencies, as an integral part of their examination process,
periodically review the Companys allowance for loan losses, and may require the Company to make additions to the allowance based on their judgment about information available to them at the time of their examinations.



43



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Allowance for Loan Losses (Continued)



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. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or
observable market price) of the impaired loan is lower than the carrying value of that loan. 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.



Premises and Equipment



Land is carried at
cost. Premises and equipment are carried at cost less accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets.



Other Real Estate Owned



Other real estate owned represents properties acquired through or in lieu of
loan foreclosure and is initially recorded at the lower of cost or fair value less estimated costs to sell. Any write-down to fair value at the time of transfer to other real estate owned is charged to the allowance for loan losses. Costs of
improvements are capitalized, whereas costs relating to holding other real estate owned and subsequent adjustments to the value are expensed. The carrying amount of other real estate owned at December 31, 2003 and 2002 was $2,281,500 and $1,120,073,
respectively.



Income Taxes



Deferred income tax assets and liabilities are determined using the balance
sheet method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current
recognition to changes in tax rates and laws.



Stock-Based
Compensation



At December 31, 2003, the Company has a
stock-based employee compensation plan, which is described more fully in Note 8. The Company accounts for this plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under the plan had an exercise price equal to the market value of the underlying stock on the date of grant. The following table
illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.



44



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Stock-Based Compensation (Continued)



|                                                                                                                                            |  |                          |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                                                                            |  | Years Ended December 31, |        
|                                                                                                                                            |  | 2003                     |         |   | 2002 |  
|Net income, as reported                                                                                                                     |  | $                        | 565,632 |   |      | $ | 154,609 |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                          | (10,135 | ) |      |   | (46,081 | )
|                                                                                                                                            |  |                          |         |   |      |   |         |  
|Pro forma net income                                                                                                                        |  | $                        | 555,497 |   |      | $ | 108,528 |  
|                                                                                                                                            |  |                          |         |   |      |   |         |  
|Earnings per share:                                                                                                                         |  |                          |         |   |      |   |         |  
|Basicas reported                                                                                                                           |  | $                        | .61     |   |      | $ | .17     |  
|                                                                                                                                            |  |                          |         |   |      |   |         |  
|Basicpro forma                                                                                                                             |  | $                        | .60     |   |      | $ | .12     |  
|                                                                                                                                            |  |                          |         |   |      |   |         |  
|Dilutedas reported                                                                                                                         |  | $                        | .61     |   |      | $ | .17     |  
|                                                                                                                                            |  |                          |         |   |      |   |         |  
|Dilutedpro forma                                                                                                                           |  | $                        | .60     |   |      | $ | .12     |  
|                                                                                                                                            |  |                          |         |   |      |   |         |  



Earnings Per Share



Basic earnings per share are computed by dividing net
income by the weighted average number of shares of common stock outstanding. Diluted earnings per share are computed by dividing net income by the sum of the weighted-average number of shares of common stock outstanding and potential common shares.
Potential common shares consist of stock options.



Comprehensive Income



Accounting principles
generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate
component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.



Recent Accounting Standards



In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and a rescission of FASB Interpretation No. 34. The interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. It also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing a guarantee. The initial recognition and initial measurement provisions of the interpretation are applicable to guarantees issued or modified after December 31, 2002. The disclosure requirements in the
interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of the interpretation did not have a material effect on the Companys financial condition or results of operations.



45



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Recent Accounting Standards (Continued)



In December 2002, the FASB issued Statement No. 148, Accounting for
Stock-Based CompensationTransition and Disclosure, an amendment of FASB Statement No. 123. The Statement amends Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, the statement amends the disclosure requirements of Statement No. 123 to require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based compensation and the effect on reported results of operations. The disclosure requirements of the statement are required for fiscal years ending after December 15, 2002 and interim periods
beginning after December 15, 2002. The Company has not adopted Statement No. 123 for accounting for stock-based compensation as of December 31, 2003; however all required disclosures of Statement No. 148 are included above under the heading
Stock-Based Compensation.



In January 2003, the
FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51, and on December 24, 2003, the FASB issued FASB Interpretation No. 46 (Revised December 2003), Consolidation of
Variable Interest Entities which replaced FIN 46. The interpretation addresses consolidation by business enterprises of variable interest entities. A variable interest entity is defined as an entity subject to consolidation according to the
provisions of the interpretation. The revised interpretation provided for special effective dates for entities that had fully or partially applied the original interpretation as of December 24, 2003. Otherwise, application of the interpretation is
required in financial statements of public entities that have interests in special-purpose entities, or SPEs, for periods ending after December 15, 2003. Application by public entities, other than small business issuers, for all other types of
variable interest entities (i.e., non-SPEs) is required in financial statements for periods ending after March 15, 2004. Application by small business issuers to variable interest entities other than SPEs is required at various dates in 2004 and
2005. The Company has determined that the revised provisions require deconsolidation of subsidiary trusts which issued trust preferred securities. The Company plans to adopt these revised provisions in the first quarter of 2004. The interpretations
did not have a material effect on the Companys financial condition or results of operations.



In May 2003, the FASB issued Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity. The statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. The statement requires than an issuer classify a financial instrument that
is within its scope as a liability. Many of those instruments were previously classified as equity. The statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of the statement did not have a material effect on the Companys financial condition or results of operations.



46



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 2. SECURITIES AVAILABLE FOR SALE



The amortized cost and fair value of securities available for sale are
summarized as follows:



|                                      |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|------------------------------------- |  | -------------- | ---------- | ---------------------- | - | ----------------------- |  | - | ---------- | - |  | - | ----------
|                                      |  | Amortized Cost |            | Gross Unrealized Gains |   | Gross Unrealized Losses |  |   | Fair Value
|December 31, 2003                     |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|U.S. Government and agency securities |  | $              | 7,961,029  |                        | $ | 92,490                  |  | $ | (6,606     | ) |  | $ | 8,046,913 
|State and municipal securities        |  |                | 5,625,034  |                        |   | 121,256                 |  |   | (56,167    | ) |  |   | 5,690,123 
|Mortgage-backed securities            |  |                | 5,387,522  |                        |   | 122,508                 |  |   | (20,901    | ) |  |   | 5,489,129 
|                                      |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|                                      |  | $              | 18,973,585 |                        | $ | 336,254                 |  | $ | (83,674    | ) |  | $ | 19,226,165
|                                      |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|                                      |  |                |            |                       
|December 31, 2002:                    |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|U.S. Government and agency securities |  | $              | 3,992,240  |                        | $ | 129,033                 |  | $ |           |   |  | $ | 4,121,273 
|State and municipal securities        |  |                | 2,461,246  |                        |   | 48,508                  |  |   | (667       | ) |  |   | 2,509,087 
|Mortgage-backed securities            |  |                | 10,576,201 |                        |   | 354,588                 |  |   |           |   |  |   | 10,930,789
|                                      |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|                                      |  | $              | 17,029,687 |                        | $ | 532,129                 |  | $ | (667       | ) |  | $ | 17,561,149
|                                      |  |                |            |                        |   |                         |  |   |            |   |  |   |           



In 2003, the FASB
Emerging Issues Task Force released Issue 03-01, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.The issue requires disclosure of certain information about other than temporary impairments in the
market value of securities. The market value of securities is based on quoted market values and is significantly affected by the interest rate environment. At December 31, 2003, all unrealized losses in the securities portfolio were for debt
securities. From the December 31, 2003 tables above, eight out of nineteen securities purchased from state and political subdivisions contained unrealized losses and four out of forty securities purchased from U.S. Government agencies and Government
sponsored corporations, including mortgage-backed securities, contained unrealized losses. The eight municipal securities had a fair value of $2,432,572 and unrealized losses of $56,167. The four U.S. securities had a fair value of $2,406,463 and
unrealized losses of $27,507. All securities with an unrealized loss at December 31, 2003 have been in a continuous unrealized loss position for less than twelve months. These unrealized losses are considered temporary because of acceptable
investment grades on each security and the repayment sources of principal and interest are government backed.



Securities with a carrying value of $16,309,000 and $9,014,000 at December 31, 2003 and 2002 were pledged to secure public deposits and for other purposes
required or permitted by law.



The amortized cost and fair
value of debt securities as of December 31, 2003 by contractual maturity are shown below. Maturities may differ from contractual maturities of mortgage-backed securities because the mortgages underlying the securities may be called or repaid without
penalty. Therefore, these securities are not included in the maturity categories in the following summary.



|                           |  |                |            |            |   |           
|-------------------------- |  | -------------- | ---------- | ---------- | - | ----------
|                           |  | Amortized Cost |            | Fair Value
|Due from one to five years |  | $              | 4,999,446  |            | $ | 5,071,650 
|Due from five to ten years |  |                | 6,568,089  |            |   | 6,606,559 
|Due after ten years        |  |                | 2,018,528  |            |   | 2,058,827 
|Mortgage-backed securities |  |                | 5,387,522  |            |   | 5,489,129 
|                           |  |                |            |            |   |           
|                           |  | $              | 18,973,585 |            | $ | 19,226,165
|                           |  |                |            |            |   |           



47



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3. LOANS



The composition of loans is summarized as follows:



|                                       |  |              |             |   |      |   |             |  
|-------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                       |  | December 31, |            
|                                       |  | 2003         |             |   | 2002 |  
|Commercial, financial and agricultural |  | $            | 11,141,000  |   |      | $ | 11,344,000  |  
|Real estateconstruction               |  |              | 13,873,000  |   |      |   | 20,296,000  |  
|Real estatemortgage                   |  |              | 76,524,000  |   |      |   | 71,847,000  |  
|Consumer installment and other         |  |              | 2,528,334   |   |      |   | 3,335,314   |  
|                                       |  |              |             |   |      |   |             |  
|                                       |  |              | 104,066,334 |   |      |   | 106,822,314 |  
|Deferred loan fees                     |  |              | (279,195    | ) |      |   | (279,827    | )
|Allowance for loan losses              |  |              | (2,045,879  | ) |      |   | (2,802,091  | )
|                                       |  |              |             |   |      |   |             |  
|Loans, net                             |  | $            | 101,741,260 |   |      | $ | 103,740,396 |  
|                                       |  |              |             |   |      |   |             |  



Changes in the
allowance for loan losses are as follows:



|                                           |  |                          |            |   |      |   |           |  
|------------------------------------------ |  | ------------------------ | ---------- | - | ---- | - | --------- | -
|                                           |  | Years Ended December 31, |           
|                                           |  | 2003                     |            |   | 2002 |  
|Balance, beginning of year                 |  | $                        | 2,802,091  |   |      | $ | 1,352,058 |  
|Provision for loan losses                  |  |                          | 270,000    |   |      |   | 1,894,000 |  
|Loans charged off                          |  |                          | (1,039,514 | ) |      |   | (457,741  | )
|Recoveries of loans previously charged off |  |                          | 13,302     |   |      |   | 13,774    |  
|                                           |  |                          |            |   |      |   |           |  
|Balance, end of year                       |  | $                        | 2,045,879  |   |      | $ | 2,802,091 |  
|                                           |  |                          |            |   |      |   |           |  



The total recorded
investment in impaired loans was $2,226,770 and $5,911,767 at December 31, 2003 and 2002, respectively. At December 31, 2003 and 2002, these impaired loans had related allowances determined in accordance with SFAS No. 114, Accounting by Creditors
for Impairment of a Loan, of $240,325 and $0, respectively. The average recorded investment in impaired loans for 2003 and 2002 was $3,098,507 and $3,578,949, respectively. Interest income recognized for cash payments received on impaired loans
totaled $57,490 and $15,879 for the years ended December 31, 2003 and 2002, respectively.



Loans on nonaccrual status amounted to approximately $2,714,136 at December 31, 2002. There were no nonaccrual loans at December 31, 2003. There were no loans past due ninety days or more and still accruing interest
at December 31, 2003 and 2002.



In the ordinary course of
business, the Company has granted loans to certain related parties, including directors, executive officers and their affiliates. The interest rates on these loans were substantially the same as rates prevailing at the time of the transaction and
repayment terms are customary for the type of loan. Changes in related party loans for the year ended December 31, 2003 are as follows:



|                           |  |   |            |  
|-------------------------- |  | - | ---------- | -
|Balance, beginning of year |  | $ | 7,414,103  |  
|Advances                   |  |   | 5,945,268  |  
|Repayments                 |  |   | (5,180,534 | )
|                           |  |   |            |  
|Balance, end of year       |  | $ | 8,178,837  |  
|                           |  |   |            |  



48



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 4. PREMISES AND EQUIPMENT



Premises and equipment are summarized as follows:



|                         |  |              |           |   |      |   |           |  
|------------------------ |  | ------------ | --------- | - | ---- | - | --------- | -
|                         |  | December 31, |          
|                         |  | 2003         |           |   | 2002 |  
|Land                     |  | $            | 493,265   |   |      | $ | 493,265   |  
|Buildings                |  |              | 1,695,566 |   |      |   | 1,695,566 |  
|Leasehold Improvements   |  |              | 224,669   |   |      |   | 31,225    |  
|Equipment                |  |              | 1,004,646 |   |      |   | 828,678   |  
|                         |  |              |           |   |      |   |           |  
|                         |  |              | 3,418,146 |   |      |   | 3,048,734 |  
|Accumulated depreciation |  |              | (949,219  | ) |      |   | (713,093  | )
|                         |  |              |           |   |      |   |           |  
|                         |  | $            | 2,468,927 |   |      | $ | 2,335,641 |  
|                         |  |              |           |   |      |   |           |  



The Company entered
into a noncancelable operating lease agreement to lease branch banking facilities which opened in February of 2003. The lease is for a term of five years. The Company is responsible for utilities, property taxes, insurance and routine maintenance.



Future minimum lease payments on the lease is summarized as
follows:



|     |  |   |        
|---- |  | - | -------
|2004 |  | $ | 30,000 
|2005 |  |   | 30,000 
|2006 |  |   | 30,000 
|2007 |  |   | 30,000 
|2008 |  |   | 2,500  
|     |  |   |        
|     |  | $ | 122,500
|     |  |   |        



NOTE 5. DEPOSITS



The aggregate amount of time deposits in denominations of $100,000 or more
at December 31, 2003 and 2002 was $29,404,747 and $32,777,730, respectively. The Company had brokered deposits at December 31, 2003 and 2002 of $15,936,000 and $18,006,695, respectively. The scheduled maturities of time deposits at December 31, 2003
are as follows:



|     |  |   |           
|---- |  | - | ----------
|2004 |  | $ | 31,880,928
|2005 |  |   | 20,809,270
|2006 |  |   | 5,979,523 
|2007 |  |   | 3,017,433 
|2008 |  |   | 2,236,781 
|     |  |   |           
|     |  | $ | 63,923,935
|     |  |   |           



Overdraft demand
deposits reclassified to loans totaled $161,149 and $68,828 at December 31, 2003 and 2002, respectively.



49



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6. OTHER BORROWINGS



Other borrowings consist of the following:



|                                                                                                                                                                                 |  |              |            |      |   |           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ---- | - | ----------
|                                                                                                                                                                                 |  | December 31,
|                                                                                                                                                                                 |  | 2003         |            | 2002
|Advance from Federal Home Loan Bank, interest payable quarterly at 2.795% until May 20, 2008 when the rate may converted to the three-month
LIBOR, due May 20, 2013.             |  | $            | 2,000,000  |      | $ |          
|Advance from Federal Home Loan Bank, interest payable quarterly at 6.385% until August 13, 2004 when the rate may be converted to the three
month LIBOR, due August 13, 2009.    |  |              | 1,750,000  |      |   | 1,750,000 
|Advance from Federal Home Loan Bank, interest payable quarterly at 5.92% (rate may be converted to the three month LIBOR), due March 17,
2010.                                   |  |              | 2,550,000  |      |   | 2,550,000 
|Advance from Federal Home Loan Bank, interest payable quarterly at 6.44% (rate may be converted to the three month LIBOR), due August 25,
2003.                                  |  |              |           |      |   | 2,000,000 
|Advance from Federal Home Loan Bank, interest payable quarterly at 5.02% (rate may be converted to the three month LIBOR), due January 4,
2011.                                  |  |              | 3,000,000  |      |   | 3,000,000 
|Advance from Federal Home Loan Bank, interest payable quarterly at 5.20% until August 8, 2006 when the rate may be converted to the three
month LIBOR, due August 8, 2011.       |  |              | 3,500,000  |      |   | 3,500,000 
|Advance from Federal Home Loan Bank, interest payable quarterly at 2.82% until September 4, 2005 when the rate may be converted to the three
month LIBOR, due September 4, 2007. |  |              | 5,000,000  |      |   | 5,000,000 
|Securities sold under repurchase agreements.                                                                                                                                     |  |              | 4,498,090  |      |   | 5,710,009 
|Floating rate junior subordinated debentures, interest payable quarterly at the three month LIBOR plus 3.45%, due November 7,
2032.                                              |  |              | 5,000,000  |      |   | 5,000,000 
|                                                                                                                                                                                 |  |              |            |      |   |           
|                                                                                                                                                                                 |  | $            | 27,298,090 |      | $ | 28,510,009
|                                                                                                                                                                                 |  |              |            |      |   |           



The Company has
available unused lines of credit with various financial institutions totaling $10,800,000 at December 31, 2003. There were no other advances outstanding at December 31, 2003 or 2002.



The advances from the Federal Home Loan Bank are secured by certain qualifying loans of approximately $65 million and
certain qualifying securities with a fair value of $4,148,993.



Securities sold under repurchase agreements, which are secured borrowings, generally mature within one to four days from the transaction date. Securities sold under repurchase agreements are reflected at the amount of cash received in
connection with the transactions. The Company may be required to provide additional collateral based on the fair value of the underlying securities. The Company monitors the fair value of the underlying securities on a daily basis.



50



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6. OTHER BORROWINGS (Continued)



In 2002, the Company formed a wholly-owned grantor trust to issue cumulative
trust preferred securities to the public. The grantor trust has invested the proceeds of the trust preferred securities in junior subordinated debentures of the Company. The trust preferred securities can be redeemed prior to maturity at the option
of the Company on or after November 7, 2007. The sole assets of the grantor trust are the Junior Subordinated Deferrable Interest Debentures of the Company (the Debentures) held by the grantor trust. The Debentures have the same interest
rate (three month LIBOR plus 3.45%, floating) as the trust preferred securities. The Company has the right to defer interest payments on the Debentures at any time or from time to time for a period not exceeding 20 consecutive quarters provided that
no extension period may extend beyond the stated maturity of the related Debentures. During any such extension period, distributions on the trust preferred certificates would also be deferred.



Payment of periodic cash distributions and payment upon liquidation or
redemption with respect to the trust preferred securities are guaranteed by the Company to the extent of funds held by the grantor trust (the Preferred Securities Guarantee). The Preferred Securities Guarantee, when taken together with
the Companys other obligations under the Debentures, constitute a full and unconditional guarantee, on a subordinated basis, by the Company of payments due on the trust preferred securities.



NOTE 7. DEFERRED COMPENSATION PLANS



The Company has a deferred compensation plan providing for death and
retirement benefits for its executive officers and directors. The estimated amounts to be paid under the compensation plan have been funded through the purchase of life insurance policies on the executive officers and directors. The balance of the
policy cash surrender values included in other assets at December 31, 2003 and 2002 is $2,358,127 and $2,257,576, respectively. Income recognized on the policies amounted to $100,551 and $128,430 for the years ended December 31, 2003 and 2002,
respectively. The balance of the deferred compensation included in other liabilities at December 31, 2003 and 2002 is $660,557 and $481,468, respectively. Expense recognized for executive officer and director deferred compensation amounted to
$179,089 and $165,362 for the years ended December 31, 2003 and 2002, respectively.



In 2002, the Company established a deferred compensation plan for its directors whereby each director may elect to defer receipt of his director fees. The amount of the fees deferred bore interest at a rate of 10% in
2002 through August 31, 2003 and 5% the remainder of 2003. The total amount of fees deferred in 2003 and 2002 totaled $74,900 and $89,500, respectively. The total amount of interest credited to deferred fees in 2003 and 2002 totaled $11,622 and
$4,358 respectively. The balance of the deferred fees plus interest credited at December 31, 2003 and 2003 amounted to $180,380 and $93,858, respectively, and is included in other liabilities at December 31, 2002.



NOTE 8. STOCK-BASED COMPENSATION



The Company has a stock incentive plan and has reserved 250,000 shares of
common stock for issuance pursuant to awards granted under the plan. The plan provides for the granting of stock options, stock appreciation rights, stock awards and other stock incentives to director and certain key employees.



51



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8. STOCK-BASED COMPENSATION (Continued)



Other pertinent information related to the options is as follows:



|                                                               |  |                         |        |      |                                |       |        |   |          |                                |  |   |      
|-------------------------------------------------------------- |  | ----------------------- | ------ | ---- | ------------------------------ | ----- | ------ | - | -------- | ------------------------------ |  | - | -----
|                                                               |  | Year Ended December 31,
|                                                               |  | 2003                    |        | 2002
|                                                               |  | Number                  |        |      | Weighted- AverageExercisePrice |       | Number |   |          | Weighted- AverageExercisePrice
|Under option, beginning of year                                |  |                         | 50,500 |      |                                | 13.38 |        |   | 187,200  |                                |  | $ | 12.38
|Granted                                                        |  |                         |       |      |                                |      |        |   | 28,300   |                                |  |   | 14.17
|Exercised                                                      |  |                         | (4,500 | )    |                                | 12.38 |        |   | (165,000 | )                              |  |   | 12.38
|Cancelled                                                      |  |                         | (5,300 | )    |                                | 14.17 |        |   |         |                                |  |   |     
|                                                               |  |                         |        |      |                                |       |        |   |          |                                |  |   |      
|Under option, end of year                                      |  |                         | 40,700 |      |                                | 13.39 |        |   | 50,500   |                                |  |   | 13.38
|                                                               |  |                         |        |      |                                |       |        |   |          |                                |  |   |      
|                                                               |  |                         |        |     
|Exercisable, end of year                                       |  |                         | 24,318 |      |                                | 12.87 |        |   | 20,700   |                                |  |   | 12.38
|                                                               |  |                         |        |      |                                |       |        |   |          |                                |  |   |      
|                                                               |  |                         |        |     
|Weighted average fair value of options granted during the year |  | $                       |       |      |                                |       |        | $ | 4.50     |                                |  |   |      
|                                                               |  |                         |        |      |                                |       |        |   |          |                                |  |   |      



Information pertaining
to options outstanding at December 31, 2003 is as follows:



|                         |  |                     |  |                                             |  |                                  |       |                    |        |                                  |   |      
|------------------------ |  | ------------------- |  | ------------------------------------------- |  | -------------------------------- | ----- | ------------------ | ------ | -------------------------------- | - | -----
|                         |  | Options Outstanding |  | Options Exercisable                        
|Range of Exercise Prices |  | NumberOutstanding   |  | Weighted- Average RemainingContractual Life |  | Weighted- Average Exercise Price |       | Number Exercisable |        | Weighted- Average Exercise Price
|$12.38-$14.17            |  | 40,700              |  | 9 years                                     |  | $                                | 13.39 |                    | 24,318 |                                  | $ | 12.87
|                         |  |                     |  |                                             |  |                                  |       |                    |        |                                  |   |      



The fair value of
each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:



|                        |  |                          |  |          |  
|----------------------- |  | ------------------------ |  | -------- | -
|                        |  | Years Ended December 31, | 
|                        |  | 2003                     |  | 2002     |  
|Dividend yield          |  | N/A                      |  | 0        | %
|Expected life           |  | N/A                      |  | 10 years |  
|Expected volatility     |  | N/A                      |  | 0.01     | %
|Risk-free interest rate |  | N/A                      |  | 3.86     | %



52



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 9. INCOME TAXES



Income tax expense (benefits) consists of the following:



|                              |  |                          |         |   |      |   |          |  
|----------------------------- |  | ------------------------ | ------- | - | ---- | - | -------- | -
|                              |  | Years Ended December 31, |        
|                              |  | 2003                     |         |   | 2002 |  
|Current                       |  | $                        | (45,934 | ) |      | $ | 572,000  |  
|Deferred                      |  |                          | 229,062 |   |      |   | (634,837 | )
|                              |  |                          |         |   |      |   |          |  
|Income tax expense (benefits) |  | $                        | 183,128 |   |      | $ | (62,837  | )
|                              |  |                          |         |   |      |   |          |  



The Companys
income tax expense (benefits) differs from the amounts computed by applying the federal income tax statutory rates to income before income taxes. A reconciliation of the differences is as follows:



|                                       |  |                          |         |   |      |   |         |  
|-------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                       |  | Years Ended December 31, |        
|                                       |  | 2003                     |         |   | 2002 |  
|Income taxes at statutory federal rate |  | $                        | 254,579 |   |      | $ | 31,202  |  
|Tax free interest income               |  |                          | (50,744 | ) |      |   | (29,218 | )
|Income from life insurance policies    |  |                          | (34,187 | ) |      |   | (38,061 | )
|State income taxes (benefits)          |  |                          | 7,638   |   |      |   | (27,813 | )
|Other                                  |  |                          | 5,842   |   |      |   | 1,053   |  
|                                       |  |                          |         |   |      |   |         |  
|Income tax expense (benefits)          |  | $                        | 183,128 |   |      | $ | (62,837 | )
|                                       |  |                          |         |   |      |   |         |  



The components of
deferred income taxes are as follows:



|                              |  |              |           |      |   |          
|----------------------------- |  | ------------ | --------- | ---- | - | ---------
|                              |  | December 31,
|                              |  | 2003         |           | 2002
|Deferred tax assets:          |  |              |           |      |   |          
|Loan loss reserves            |  | $            | 579,591   |      | $ | 964,794  
|Other real estate owned       |  |              | 80,666    |      |   |         
|Deferred compensation         |  |              | 317,335   |      |   | 217,217  
|Deferred loan fees            |  |              | 104,476   |      |   | 147,447  
|Other                         |  |              | 2,592     |      |   |         
|                              |  |              |           |      |   |          
|                              |  |              | 1,084,660 |      |   | 1,329,458
|                              |  |              |           |      |   |          
|                              |  |             
|Deferred tax liabilities:     |  |              |           |      |   |          
|Depreciation                  |  |              | 40,596    |      |   | 56,332   
|Securities available-for-sale |  |              | 95,981    |      |   | 201,956  
|                              |  |              |           |      |   |          
|                              |  |              | 136,577   |      |   | 258,288  
|                              |  |              |           |      |   |          
|                              |  |             
|Net deferred tax assets       |  | $            | 948,083   |      | $ | 1,071,170
|                              |  |              |           |      |   |          



53



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 10. EARNINGS PER SHARE



Presented below is a summary of the components used to calculate basic and
diluted earnings per share.



|                                                                                                                                |  |                          |         |      |   |        
|------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | ---- | - | -------
|                                                                                                                                |  | Years Ended December 31,
|                                                                                                                                |  | 2003                     |         | 2002
|Basic Earnings Per Share:                                                                                                       |  |                          |         |      |   |        
|Weighted average common shares outstanding                                                                                      |  |                          | 928,940 |      |   | 889,790
|                                                                                                                                |  |                          |         |      |   |        
|                                                                                                                                |  |                         
|Net income                                                                                                                      |  | $                        | 565,632 |      | $ | 154,609
|                                                                                                                                |  |                          |         |      |   |        
|                                                                                                                                |  |                         
|Basic earnings per share                                                                                                        |  | $                        | .61     |      | $ | .17    
|                                                                                                                                |  |                          |         |      |   |        
|                                                                                                                                |  |                         
|Diluted Earnings Per Share:                                                                                                     |  |                          |         |      |   |        
|Weighted average common shares outstanding                                                                                      |  |                          | 928,940 |      |   | 889,790
|Net effect of the assumed exercise of stock options based on the treasury stock method using average market prices for the
year |  |                          | 1,329   |      |   | 7,342  
|                                                                                                                                |  |                          |         |      |   |        
|Total weighted average common shares and common stock equivalents outstanding                                                   |  |                          | 930,269 |      |   | 897,132
|                                                                                                                                |  |                          |         |      |   |        
|                                                                                                                                |  |                         
|Net income                                                                                                                      |  | $                        | 565,632 |      | $ | 154,609
|                                                                                                                                |  |                          |         |      |   |        
|                                                                                                                                |  |                         
|Diluted earnings per share                                                                                                      |  | $                        | .61     |      | $ | .17    
|                                                                                                                                |  |                          |         |      |   |        



NOTE 11. COMMITMENTS AND
CONTINGENCIES



Loan Commitments



The Company is a party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit risk and interest
rate risk in excess of the amount recognized in the balance sheets. The majority of all commitments to extend credit and standby letters of credit are variable rate instruments.



54



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 11. COMMITMENTS AND CONTINGENCIES (Continued)



Loan Commitments (Continued)



The Companys 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. A summary of the Companys commitments is as follows:



|                                    |  |              |            |      |   |          
|----------------------------------- |  | ------------ | ---------- | ---- | - | ---------
|                                    |  | December 31,
|                                    |  | 2003         |            | 2002
|Commitments to extend credit        |  | $            | 10,227,000 |      | $ | 7,877,000
|Financial standby letters of credit |  |              | 223,000    |      |   | 225,000  
|Other standby letters of credit     |  |              | 174,000    |      |   | 185,000  
|                                    |  |              |            |      |   |          
|                                    |  | $            | 10,624,000 |      | $ | 8,287,000
|                                    |  |              |            |      |   |          



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 are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is
based on managements credit evaluation of the party. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate and income-producing commercial properties.



Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved
in extending loans to customers. Collateral held varies as specified above and is required in instances which the Company deems necessary.



At December 31, 2003 and 2002, the carrying amount of liabilities related to the Companys obligation to perform under financial standby letters of
credit was insignificant. The Company has not been required to perform on any material financial standby letters of credit, and the Company has not incurred any losses on financial standby letters of credit for the years ended December 31, 2003 and
2002.



Contingencies



In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the Companys financial statements.



55



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 12. CONCENTRATIONS OF CREDIT



The Company originates primarily commercial, commercial real estate,
residential real estate, and consumer loans to customers in Butts County and surrounding counties. The ability of the majority of the Companys customers to honor their contractual loan obligations is dependent on the economy in these areas.



Eighty-seven percent of the Companys loan portfolio is
concentrated in loans secured by real estate, of which a substantial portion is secured by real estate in the Companys primary market area. Accordingly, the ultimate collectibility of the loan portfolio is susceptible to changes in market
conditions in the Companys primary market area. The other significant concentrations of credit by type of loan are set forth in Note 3.



In addition, the Companys loan portfolio has a concentration of loans to customers in the convenience store industry. At December 31, 2003, loans to
customers in this industry amounted to approximately $50,419,000 or 49% of the loan portfolio.



The Company, as a matter of policy, does not generally extend credit to any single borrower or group of related borrowers in excess of 25% of statutory
capital, or approximately $2,402,000.



NOTE 13. REGULATORY MATTERS



The Bank is subject to certain restrictions on the amount
of dividends that may be declared without prior regulatory approval. At December 31, 2003, dividends of approximately $383,000 could be declared without regulatory approval.



The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance sheet
items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.



Quantitative measures established by regulation to ensure capital adequacy
require the Company and Bank to maintain minimum amounts and ratios of Total and Tier I capital to risk-weighted assets, as defined, and of Tier I capital to average assets, as defined. Management believes, as of December 31, 2003 and 2002, the
Company and the Bank met all capital adequacy requirements to which they are subject.



As of December 31, 2003, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes
have changed the Banks category. Prompt correction action provisions are not applicable to bank holding companies.



56



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 13. REGULATORY MATTERS (Continued)



The Company and the Banks actual capital amounts and ratios are
presented in the following tables.



|                                        |  |                        |        |       |                               |   |                                                                 |   |       |  |        |  |       |        |  |     |   |  | 
|--------------------------------------- |  | ---------------------- | ------ | ----- | ----------------------------- | - | --------------------------------------------------------------- | - | ----- |  | ------ |  | ----- | ------ |  | --- | - |  | 
|                                        |  | Actual                 |        |       | For Capital Adequacy Purposes |   | To Be Well Capitalized Under Prompt CorrectiveAction Provisions |  
|                                        |  | Amount                 |        | Ratio |                               |   | Amount                                                          |   | Ratio |  | Amount |  | Ratio |       
|                                        |  | (Dollars in Thousands) |       
|December 31, 2003:                      |  |                        |        |       |                               |   |                                                                 |   |       |  |        |  |       |        |  |     |   |  | 
|Total Capital to Risk Weighted Assets:  |  |                        |        |       |                               |   |                                                                 |   |       |  |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 18,434 |       | 14.90                         | % |                                                                 | $ | 9,899 |  | 8%     |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 13,709 |       | 11.10                         | % |                                                                 | $ | 9,879 |  | 8%     |  | $     | 12,349 |  | 10  | %
|Tier I Capital to Risk Weighted Assets: |  |                        |        |       |                               |   |                                                                 |   |       |  |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 15,846 |       | 12.81                         | % |                                                                 | $ | 4,950 |  | 4%     |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 12,159 |       | 9.85                          | % |                                                                 | $ | 4,940 |  | 4%     |  | $     | 7,410  |  | 6   | %
|Tier I Capital to Average Assets:       |  |                        |        |       |                               |   |                                                                 |   |       |  |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 15,846 |       | 10.95                         | % |                                                                 | $ | 5,789 |  | 4%     |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 12,159 |       | 8.42                          | % |                                                                 | $ | 5,779 |  | 4%     |  | $     | 7,223  |  | 5   | %
|                                        | 
|December 31, 2002:                      |  |                        |        |      
|Total Capital to Risk Weighted Assets:  |  |                        |        |       |                               |   |                                                                 |   |       |  |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 17,776 |       | 14.85                         | % |                                                                 | $ | 9,574 |  | 8%     |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 12,654 |       | 10.57                         | % |                                                                 | $ | 9,574 |  | 8%     |  | $     | 11,967 |  | 10  | %
|Tier I Capital to Risk Weighted Assets: |  |                        |        |       |                               |   |                                                                 |   |       |  |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 14,122 |       | 11.80                         | % |                                                                 | $ | 4,787 |  | 4%     |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 11,142 |       | 9.31                          | % |                                                                 | $ | 4,787 |  | 4%     |  | $     | 7,180  |  | 6   | %
|Tier I Capital to Average Assets:       |  |                        |        |       |                               |   |                                                                 |   |       |  |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 14,122 |       | 9.94                          | % |                                                                 | $ | 5,682 |  | 4%     |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 11,142 |       | 7.84                          | % |                                                                 | $ | 5,682 |  | 4%     |  | $     | 7,103  |  | 5   | %



NOTE 14. FAIR VALUE OF FINANCIAL
INSTRUMENTS



The fair value of a financial instrument is
the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the
Companys various financial instruments. In cases where quoted market prices are not available, fair value is based on discounted cash flows or other valuation techniques. Those techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. SFAS No. 107, Disclosures about Fair Values of Financial Instruments,
excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.



The following methods and assumptions were used by the Company in estimating
the fair value of its financial instruments:



Cash, Due
From Banks, Interest-Bearing Deposits in Banks and Federal Funds Sold:The carrying amounts of cash, due from banks, interest-bearing deposits in banks and federal funds sold approximate fair values.



57



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)



Securities:Fair values for securities are based on available quoted
market prices. The carrying values of equity securities with no readily determinable fair value approximate fair values.



Loans and Loans Held for Sale:The carrying amount of variable-rate loans that reprice frequently and have no significant change in credit risk
approximates fair value. The fair value of fixed-rate loans is estimated based on discounted contractual cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The fair value
of impaired loans is estimated based on discounted contractual cash flows or underlying collateral values, where applicable. The carrying amount of loans held for sale approximate their fair values.



Deposits:The carrying amount of demand deposits, savings deposits,
and variable-rate certificates of deposit approximates fair value. The fair value of fixed-rate certificates of deposit is estimated based on discounted contractual cash flows using interest rates currently being offered for certificates of similar
maturities.



Other Borrowings:The fair values of the
Companys fixed rate borrowings are estimated using discounted cash flow models based on the Companys incremental borrowing rate for similar types of borrowing arrangements. The carrying amounts of all other variable rate borrowings, and
securities sold under repurchase agreements approximates fair value.



Accrued Interest:The carrying amounts of accrued interest approximate their fair values.



Off-Balance Sheet Instruments:The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The
carrying amount of the off-balance sheet financial instruments is based on fees charged to enter into such agreements.



The carrying amount and estimated fair values of the Companys financial instruments were as follows:



|                                                                                 |  |                   |             |                   |   |                |  |            |             |  |   |            
|-------------------------------------------------------------------------------- |  | ----------------- | ----------- | ----------------- | - | -------------- |  | ---------- | ----------- |  | - | -----------
|                                                                                 |  | December 31, 2003 |             | December 31, 2002
|                                                                                 |  | Carrying Amount   |             | Fair Value        |   | CarryingAmount |  | Fair Value
|Financial assets:                                                                |  |                   |             |                   |   |                |  |            |             |  |   |            
|Cash, due from banks, interest-bearing deposits in banks, and federal funds sold |  | $                 | 15,870,949  |                   | $ | 15,870,949     |  | $          | 17,046,832  |  | $ | 17,046,832 
|Securities                                                                       |  |                   | 20,504,415  |                   |   | 20,504,415     |  |            | 18,742,749  |  |   | 18,742,749 
|Loans held for sale                                                              |  |                   |            |                   |   |               |  |            | 578,872     |  |   | 578,872    
|Loans                                                                            |  |                   | 101,741,260 |                   |   | 103,890,346    |  |            | 103,740,396 |  |   | 106,727,935
|Accrued interest receivable                                                      |  |                   | 611,886     |                   |   | 611,886        |  |            | 728,508     |  |   | 728,508    
|                                                                                 |  |                   |             |                  
|Financial liabilities:                                                           |  |                   |             |                   |   |                |  |            |             |  |   |            
|Deposits                                                                         |  |                   | 106,450,987 |                   |   | 107,093,956    |  |            | 106,648,251 |  |   | 108,316,927
|Other borrowings                                                                 |  |                   | 27,298,090  |                   |   | 28,489,800     |  |            | 28,510,009  |  |   | 28,629,761 
|Accrued interest payable                                                         |  |                   | 398,156     |                   |   | 398,156        |  |            | 416,091     |  |   | 416,091    



58



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 15. SUPPLEMENTAL FINANCIAL DATA



Components of other income and expenses in excess of 1% of total revenue are
as follows:



|                                                |  |                          |         |      |   |        
|----------------------------------------------- |  | ------------------------ | ------- | ---- | - | -------
|                                                |  | Years Ended December 31,
|                                                |  | 2003                     |         | 2002
|Other income:                                   |  |                          |         |      |   |        
|Income from life insurance policies             |  | $                        | 100,551 |      | $ | 128,430
|Gain on sale of other real estate               |  |                          | 148,929 |      |   |       
|Other expenses:                                 |  |                          |         |      |   |        
|Deferred compensation                           |  |                          | 179,089 |      |   | 165,362
|Legal                                           |  |                          | 23,467  |      |   | 105,839
|Data processing                                 |  |                          | 218,140 |      |   | 198,720
|Provision for losses on other real estate owned |  |                          | 587,992 |      |   |       
|Other real estate expense                       |  |                          | 249,070 |      |   | 66,267 



NOTE 16. PARENT COMPANY FINANCIAL
INFORMATION



The following information presents the
condensed balance sheets, statements of income and cash flows of First Georgia Community Corp. as of and for the years ended December 31, 2003 and 2002:



|                                           |  |      |            |      |   |           
|------------------------------------------ |  | ---- | ---------- | ---- | - | ----------
|CONDENSED BALANCE SHEETS                  
|                                           |  | 2003 |            | 2002
|Assets                                     |  |      |            |      |   |           
|Cash                                       |  | $    | 4,516,616  |      | $ | 4,971,726 
|Investment in subsidiary                   |  |      | 12,315,595 |      |   | 11,471,093
|Other assets                               |  |      | 249,364    |      |   | 208,222   
|                                           |  |      |            |      |   |           
|                                           |  |     
|Total assets                               |  | $    | 17,081,575 |      | $ | 16,651,041
|                                           |  |      |            |      |   |           
|Liabilities                                |  |      |            |      |   |           
|Other borrowings                           |  | $    | 5,000,000  |      | $ | 5,000,000 
|Other liabilities                          |  |      | 40,382     |      |   | 58,285    
|                                           |  |      |            |      |   |           
|                                           |  |     
|Total liabilities                          |  |      | 5,040,382  |      |   | 5,058,285 
|                                           |  |     
|Stockholders equity                       |  |      | 12,041,193 |      |   | 11,592,756
|                                           |  |      |            |      |   |           
|                                           |  |     
|Total liabilities and stockholders equity |  | $    | 17,081,575 |      | $ | 16,651,041
|                                           |  |      |            |      |   |           



59



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 16. PARENT COMPANY FINANCIAL INFORMATION (Continued)



|                                                                                 |  |      |          |   |      |   |          |  
|-------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|CONDENSED STATEMENTS OF INCOME                                                   | 
|                                                                                 |  | 2003 |          |   | 2002 |  
|Expenses                                                                         |  |      |          |   |      |   |          |  
|Interest expense                                                                 |  | $    | 243,165  |   |      | $ | 54,232   |  
|Salaries and employee benefits                                                   |  |      | 13,200   |   |      |   | 13,200   |  
|Other expenses                                                                   |  |      | 67,658   |   |      |   | 42,363   |  
|                                                                                 |  |      |          |   |      |   |          |  
|Total expenses                                                                   |  |      | 324,023  |   |      |   | 109,795  |  
|                                                                                 |  |      |          |   |      |   |          |  
|                                                                                 |  |     
|Loss before income tax benefits and equity in undistributed income of subsidiary |  |      | (324,023 | ) |      |   | (109,795 | )
|                                                                                 |  |     
|Income tax benefits                                                              |  |      | (122,246 | ) |      |   | (41,400  | )
|                                                                                 |  |      |          |   |      |   |          |  
|                                                                                 |  |     
|Loss before equity in undistributed income of subsidiary                         |  |      | (201,777 | ) |      |   | (68,395  | )
|                                                                                 |  |     
|Equity in undistributed income of subsidiary                                     |  |      | 767,409  |   |      |   | 223,004  |  
|                                                                                 |  |      |          |   |      |   |          |  
|                                                                                 |  |     
|Net income                                                                       |  | $    | 565,632  |   |      | $ | 154,609  |  
|                                                                                 |  |      |          |   |      |   |          |  

|                                                                              |  |      |           |   |      |   |            |  
|----------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | ---------- | -
|                                                                              | 
|CONDENSED STATEMENTS OF CASH FLOWS                                            | 
|                                                                              |  | 2003 |           |   | 2002 |  
|OPERATING ACTIVITIES                                                          |  |      |           |   |      |   |            |  
|Net income                                                                    |  | $    | 565,632   |   |      | $ | 154,609    |  
|Adjustments to reconcile net income to net cash used in operating activities: |  |      |           |   |      |   |            |  
|Equity in undistributed income of subsidiary                                  |  |      | (767,409  | ) |      |   | (223,004   | )
|Net other operating activities                                                |  |      | (59,045   | ) |      |   | (23,799    | )
|                                                                              |  |      |           |   |      |   |            |  
|                                                                              |  |     
|Net cash used in operating activities                                         |  |      | (260,822  | ) |      |   | (92,194    | )
|                                                                              |  |      |           |   |      |   |            |  
|                                                                              |  |     
|INVESTING ACTIVITIES                                                          |  |      |           |   |      |   |            |  
|Investment in subsidiary                                                      |  |      | (250,000  | ) |      |   | (1,500,000 | )
|                                                                              |  |      |           |   |      |   |            |  
|                                                                              |  |     
|Net cash used in investing activities                                         |  |      | (250,000  | ) |      |   | (1,500,000 | )
|                                                                              |  |      |           |   |      |   |            |  
|                                                                              |  |     
|FINANCING ACTIVITIES                                                          |  |      |           |   |      |   |            |  
|Repayment of other borrowings                                                 |  |      |          |   |      |   | (500,000   | )
|Proceeds from other borrowings                                                |  |      |          |   |      |   | 5,000,000  |  
|Proceeds from exercise of stock options                                       |  |      | 55,712    |   |      |   | 2,042,700  |  
|                                                                              |  |      |           |   |      |   |            |  
|                                                                              |  |     
|Net cash provided by financing activities                                     |  |      | 55,712    |   |      |   | 6,542,700  |  
|                                                                              |  |      |           |   |      |   |            |  
|                                                                              |  |     
|Net increase (decrease) in cash                                               |  |      | (455,110  | ) |      |   | 4,950,506  |  
|                                                                              |  |     
|Cash at beginning of year                                                     |  |      | 4,971,726 |   |      |   | 21,220     |  
|                                                                              |  |      |           |   |      |   |            |  
|                                                                              |  |     
|Cash at end of year                                                           |  | $    | 4,516,616 |   |      | $ | 4,971,726  |  
|                                                                              |  |      |           |   |      |   |            |  



60



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 17. PRIOR PERIOD ADJUSTMENT



In October 2003, management discovered that certain deferred compensation
liabilities had not been recognized in accordance with generally accepted accounting principles, which requires deferred compensation liabilities to be recognized over the service periods of the participants. The amount of the adjustment necessary
to correct the deferred compensation liabilities was determined in January 2004. These particular deferred compensation liabilities are funded through the earnings generated from life insurance policies as discussed in Note 7. The prior period
adjustments represent an acceleration of expense recognition, and will reduce expenses to be recognized in future years.



The effect on net income and earnings per share for the year ended December 31, 2002 are as shown below:



|                                                    |  |            |         |   |                        |   |       |                          |  |   |       |  
|--------------------------------------------------- |  | ---------- | ------- | - | ---------------------- | - | ----- | ------------------------ |  | - | ----- | -
|                                                    |  | Net Income |         |   | BasicEarnings PerShare |   |       | DilutedEarnings PerShare | 
|Net income and earnings per share before adjustment |  | $          | 201,194 |   |                        | $ | 0.23  |                          |  | $ | 0.22  |  
|Prior period adjustment for correction of an error  |  |            | (74,835 | ) |                        |   | (0.09 | )                        |  |   | (0.08 | )
|Income tax effect                                   |  |            | 28,250  |   |                        |   | 0.03  |                          |  |   | 0.03  |  
|                                                    |  |            |         |   |                        |   |       |                          |  |   |       |  
|Net income and earnings per share as restated       |  | $          | 154,609 |   |                        | $ | 0.17  |                          |  | $ | 0.17  |  
|                                                    |  |            |         |   |                        |   |       |                          |  |   |       |  



The prior period
adjustment as shown in the statement of stockholders equity for the years ended December 31, 2003 and 2002 represents the correction of the error for the years ended prior to January 1, 2002.





61



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



None.



ITEM 8A. CONTROLS AND PROCEDURES



At the end of the period covered by this report, our management, including our Chief Executive Officer and Chief Financial Officer, reviewed the
effectiveness and design of our disclosure controls and procedures under Exchange Act Rule 13a-14. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures are
adequate to ensure that material information relating to the Company, including its consolidated subsidiary, that is required to be included in its periodic filings with the Securities and Exchange Commission, is timely made known to them. There
were no significant changes in internal controls, or to managements knowledge, in other factors that could significantly affect those internal controls subsequent to the date on which management carried out its evaluation, and there has been
no corrective action with respect to significant deficiencies or material weaknesses.



62



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PART III



ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY



The information required by this Item is included in the Companys Proxy Statement for the Annual Meeting of Shareholders to be held on April 21,
2004 under the headings Identification of Directors and Executive Officers, Non-Director Executive Officers of the Bank and Filings Under Section 16(a) and is incorporated herein by reference.



ITEM 10. EXECUTIVE COMPENSATION



The information required by this Item is included in the Companys
Proxy Statement for the Annual Meeting of Shareholders to be held on April 21, 2004 under the heading Compensation of Directors and Executive Officers and is incorporated herein by reference.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The other information required by this item is included in the
Companys Proxy Statement for the Annual Meeting of Shareholders to be held on April 21, 2004 under the heading Stock Ownership of Directors Nominees and Director Nominees and Officers as a Group and Stock Ownership of Certain
Beneficial Owners and is incorporated herein by reference.



The following table provides information regarding compensation plans under which equity securities of the Company are authorized for issuance. All data is presented as of December 31, 2003.



|                                                           |  |                                                                                           |  |                                                                             |  |                                                                                                                                           
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|                                                           |  | Equity Compensation Plan Table                                                           
|                                                           |  | (a)                                                                                       |  | (b)                                                                         |  | (c)                                                                                                                                       
|Plan category                                              |  | Number of securities to beissued upon exercise of outstanding options,warrants and rights |  | Weighted-average exercise price of outstanding options, warrants and rights |  | Number of securitiesremaining available for future issuance under equity compensation plans (excluding securities reflected
in column (a))
|Equity compensation plans approved by security holders     |  | 40,700                                                                                    |  | $13.39                                                                      |  | 37,550                                                                                                                                    
|                                                           |  |                                                                                           | 
|Equity compensation plans not approved by security holders |  | 63,200                                                                                    |  | $12.60                                                                      |  | 286,800                                                                                                                                   
|                                                           |  |                                                                                           | 
|Total                                                      |  | 103,900                                                                                   |  | $12.91                                                                      |  | 324,350                                                                                                                                   



63



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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



The information required by this Item is included in the Companys
Proxy Statement for the Annual Meeting of Shareholders to be held on April 21, 2004 under the headings Transactions with Management and is incorporated herein by reference.



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) | Financial Statements
| | --- | --------------------



The following financial statements are included in Item 7 of the Report.



Report of Independent Certified Public Accountants

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Stockholders Equity

Consolidated Statements of Cash Flows

Notes to Financial Statements



| | (b) | Reports on Form 8-K:
| | --- | --------------------



No reports on Form 8-K were filed during the fourth quarter 2003.



| | (c) | Exhibits
| | --- | --------



|               |  |                                                                                                                                                            
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Exhibit                                                                                                                                                    
|3.1            |  | Articles of Incorporation. (1)                                                                                                                             
|               | 
|3.2            |  | Bylaws. (1)                                                                                                                                                
|               | 
|4.1            |  | See Exhibits 3.1 and 3.2 for provisions of the Companys Articles of Incorporation and Bylaws governing the rights of holders of securities of the Company.
|               | 
|10.1*          |  | Employment Contract between John L. Coleman and the Company (1)                                                                                            
|               | 
|10.2*          |  | Stock Option Agreement between the Company and John L. Coleman (1)                                                                                         
|               | 
|10.3*          |  | First Georgia Community Corp. 2001 Stock Incentive Plan (2)                                                                                                
|               | 
|10.4*          |  | Form of Director Deferred Fee Agreement dated January 7, 2002, as amended as of March 11, 2002 (3)                                                         



64



---

|               |  |                                                                                                                                                        
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Exhibit                                                                                                                                                
|               | 
|10.5*          |  | Form of Director Deferred Compensation Agreement dated as of November 5, 1999                                                                          
|               | 
|21.1           |  | Subsidiaries of the Company. The sole subsidiary of the Company is First Georgia Community Bank, Jackson, Georgia, which is wholly-owned by the Company
|               | 
|31.1           |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)                                                                                    
|               | 
|31.1           |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)                                                                                    
|               | 
|32.1           |  | Certifications by Chief Executive Officer and Chief Financial Officer pursuant to 18 .S.C. Section 906 of the Sarbanes-Oxley Act of 2002.              

---

|* | Indicates a management compensation plan or agreement.
|- | ------------------------------------------------------

|(1) | Incorporated by reference to the exhibit of the same number filed with the Companys Registration Statement on Form SB-2 (Regis. No. 333-13583).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to the exhibit of the same number filed with the Companys Annual Report on Form 10-KSB for the year ended December 31, 2001 (File No. 0-24153).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to the exhibit of the same number filed with the Companys Annual Report on Form 10-KSB for the year ended December 31, 2003 (File No. 0-24153).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The information required by this Item is included in the
Companys Proxy Statement for the Annual Meeting of Shareholders to be held on April 21, 2004 under the heading Audit and Other Fees Paid to Independent Accountants and is incorporated herein by reference.





65



---

SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized on March 26, 2004.



FIRST GEORGIA COMMUNITY CORP.By:

/s/ John L. ColemanJohn L. ColemanPresident and Chief Executive Officer




66



---

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by
the following persons on behalf of the Registrant and in the capacities indicated on March 26, 2004.



|                                             |  |                                      
|-------------------------------------------- |  | -------------------------------------
|Signature                                    |  | Title                                
|/s/ John L. ColemanJohn L. Coleman*          |  | President and Chief Executive Officer
|                                             | 
|/s/ D. Richard BallardD. Richard Ballard     |  | Director                             
|                                             | 
|/s/ Charles W. CarterCharles W. Carter       |  | Director                             
|                                             | 
|/s/ Alfred D. Fears, Jr.Alfred D. Fears, Jr. |  | Director                             
|                                             | 
|/s/ William B. JonesWilliam B. Jones         |  | Director                             
|                                             | 
|/s/ Harry LewisHarry Lewis                   |  | Director                             
|                                             | 
|/s/ Joey McClellandJoey McClelland           |  | Director                             
|                                             | 
|/s/ Alexander PollackAlexander Pollack       |  | Director                             
|                                             | 
|/s/ Robert RyanRobert Ryan                   |  | Director                             
|                                             | 
|/s/ James H. WarrenJames H. Warren           |  | Director                             
|                                             | 
|/s/ George L. WeaverGeorge L. Weaver         |  | Director                             
|                                             | 
|/s/ Elaine KendrickElaine Kendrick **        |  | Chief Financial Officer              

---

|* | Principal Executive Officer
|- | ---------------------------

|** | Principal Financial and Accounting Officer
|-- | ------------------------------------------



67