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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB



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(Mark One)

|x | ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------



For fiscal year ended December 31, 2004



| ̈ | 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)



Issuers
Telephone Number, Including Area Code) (770) 504-1090



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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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Check whether the issuer : (1) 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 ̈



Check if there is no 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



State issuers revenues for its most recent fiscal year. 11,033,409



The aggregate market value of the voting and non-voting common equity stock held by non-affiliates of the registrant at December 31, 2004 was $9,835,080 based on recent private sales known to the registrant at a price
of $24.00 per share. There is no established trading market for the registrants stock.



CORPORATE REGISTRANTS



State
the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 931,041 shares of Common Stock at March 22, 2005.



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the Registrants Annual Report to Shareholders for the fiscal year ended December 31, 2004 are incorporated by reference into Part II.



Transitional Small Business Disclosure
Format:    Yes ̈;    No  x



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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 22, 2005, the Bank had 49 full-time employees and 6 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.



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



| |  |  | merging or consolidating with any other bank holding company.
| | - |  | -------------------------------------------------------------



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



| |  |  | no other person owns a greater percentage of that class of voting securities immediately after the transaction.
| | - |  | ---------------------------------------------------------------------------------------------------------------



Our common stock is 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.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



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;
| | - |  | ------------------------------



| |  |  | Making, acquiring, brokering or servicing loans and usual related activities;
| | - |  | -----------------------------------------------------------------------------



| |  |  | Leasing personal or real property;
| | - |  | ----------------------------------



| |  |  | Operating a non-bank depository institution, such as a savings association;
| | - |  | ---------------------------------------------------------------------------



| |  |  | Trust company functions;
| | - |  | ------------------------



| |  |  | Financial and investment advisory activities;
| | - |  | ---------------------------------------------



| |  |  | Conducting discount securities brokerage activities;
| | - |  | ----------------------------------------------------



| |  |  | Underwriting and dealing in government obligations and money market instruments;
| | - |  | --------------------------------------------------------------------------------



| |  |  | Providing specified management consulting and counseling activities;
| | - |  | --------------------------------------------------------------------



| |  |  | Performing selected data processing services and support services;
| | - |  | ------------------------------------------------------------------



| |  |  | Acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Performing selected insurance underwriting activities.
| | - |  | ------------------------------------------------------



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;
| | - |  | --------------------------------------------



| |  |  | 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;
| | - |  | ------------------------------------------------------



| |  |  | Issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Underwriting, dealing in or making a market in securities;
| | - |  | ----------------------------------------------------------



| |  |  | 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;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Foreign activities permitted outside of the United States if the Federal Reserve has determined them to be usual in connection with banking operations abroad;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Merchant banking through securities or insurance affiliates; and
| | - |  | ----------------------------------------------------------------



| |  |  | 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. While the Company meets the qualification standards applicable to financial holding companies, the Company has not elected to become a financial holding company
at this time.



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 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.



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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, 2004, 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 1.44 per $100 of deposits for the first quarter of 2005.



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;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | 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
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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. 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.



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.



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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, 2004, the Banks ratio of total capital to risk-weighted assets was 10.79% and our ratio of Tier 1 Capital to risk-weighted
assets was 9.58%.



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, 2004, our leverage ratio was 9.23%. 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. 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.



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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;
| | - |  | -----------------------------------------------------



| |  |  | a banks investment in affiliates;
| | - |  | ----------------------------------



| |  |  | assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | loans or extensions of credit made by a bank to third parties collateralized by the securities or obligations of affiliates; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | a banks guarantee, acceptance or letter of credit issued on behalf of an affiliate.
| | - |  | ------------------------------------------------------------------------------------



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.



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.



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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) became effective in 2004.



The FCRA Amendments include, among other things:



| |  |  | 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;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | for entities that furnish information to consumer reporting agencies (which would include The Bank), new requirements to implement procedures and policies regarding the accuracy and
integrity of the furnished information and regarding the correction of previously furnished information that is later determined to be inaccurate; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a requirement for mortgage lenders to disclose credit scores to consumers.
| | - |  | --------------------------------------------------------------------------



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.Because the Bank is not currently
sharing consumer information with any other affiliate of the Company for marketing purposes, the new limitations on sharing of information for marketing purposes will not have a significant impact on the Bank or the Company.



Anti-Terrorism Legislation



The Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (the USA PATRIOT Act) of 2001 imposes requirements and limitations on specified financial transactions and account relationships, intended to guard against money laundering and terrorism. The
Bank has established a customer identification program pursuant to the know your customer rules contained in Section 326 of the USA PATRIOT Act.



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.



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Effect of Governmental Monetary Policies



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, and three customer waiting areas. The second floor of the building is unoccupied and is used for storage space and future expansion. The Company also
owns a building located on property immediately adjacent to the main office. This building is used for additional office space. The Company also owns a tract of land located at 170 Martin Luther Jr. Boulevard, Monroe, Georgia. This property is being
held for future expansion. The Bank also leases a branch located in the Ingles Supermarket located at 4908 Bill Gardner Parkway, Locust Grove, Georgia. The lease expires in December 2007. The Bank leases space to house its loan production office
located at 3155 Mills Street, Covington, Georgia. This lease expires in February 2006. In managements opinion, the office buildings 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 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.



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PART II



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



There is no established public trading market for the Companys common stock. The range of high and low trading prices
for the Companys stock was $ 18.50 to $ 25.00 per share during the 12 months ending December 31, 2004, and $18.00 to $20.00 per share during the 12 months ending December 31, 2003. As of December 31, 2004, the Company had 990 shareholders of
record, and 1,033,908 shares of its common stock outstanding, of which 102,867 shares were subject to outstanding options or warrants to purchase or convert into common stock.



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.



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ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



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.



The
following discussion describes our results of operations for 2004 as compared to 2003 and also analyzes our financial condition as of December 31, 2004 as compared to December 31, 2003. 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 2004 and 2003 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.



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,



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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 $1,250,000 in 2004, an increase from the $566,000 earned in 2003. Earnings increased in 2004 due to an increase in earning assets, a
reduction in the provision for loans, and a decrease in the expense related to carry other real estate owned. Basic and diluted earnings per share were $1.34 in 2004 compared to $0.61 per share in 2003.



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 1.32% at December 31, 2004 as compared to 1.97% at December 31, 2003. See Results of Operations for the Years ended
December 31, 2004 and 2003 for more information about the effect of the allowance and provision for loan losses.



Financial Condition at December 31, 2004 and 2003



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



|                                   |  |                        |         |      |   |        
|---------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                   |  | December 31,          
|                                   |  | 2004                   |         | 2003
|                                   |  | (Dollars in Thousands)
|Cash and due from banks            |  | $                      | 4,281   |      | $ | 4,170  
|Interest-bearing deposits in banks |  |                        | 864     |      |   | 922    
|Federal funds sold                 |  |                        | 17,152  |      |   | 10,779 
|Securities                         |  |                        | 21,348  |      |   | 20,504 
|Loans, net                         |  |                        | 148,503 |      |   | 101,741
|Premises and equipment             |  |                        | 3,254   |      |   | 2,469  
|Other assets                       |  |                        | 5,649   |      |   | 6,585  
|                                   |  |                        |         |      |   |        
|                                   |  | $                      | 201,051 |      | $ | 147,170
|                                   |  |                        |         |      |   |        
|Total deposits                     |  | $                      | 158,369 |      | $ | 106,451
|Other borrowings                   |  |                        | 26,962  |      |   | 27,298 
|Other liabilities                  |  |                        | 2,542   |      |   | 1,380  
|Stockholders equity               |  |                        | 13,178  |      |   | 12,041 
|                                   |  |                        |         |      |   |        
|                                   |  | $                      | 201,051 |      | $ | 147,170
|                                   |  |                        |         |      |   |        



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Financial Condition at December 31, 2004 and 2003



As of December 31, 2004, we had total assets of $201.1 million, an increase of 36.61% over total assets as of December 31,
2003. Total interest-earning assets were $189.8 million at December 31, 2004 or 94% of total assets as compared to 92% of total assets December 31, 2003. Our primary interest-earning assets at December 31, 2004 were loans, which made up 79% of total
interest-earning assets as compared to 76% at December 31, 2003. Our loans to available funds ratio was 81% at December 31, 2004 as compared to 78% at December 31, 2003.



Our securities portfolio, consisting of U.S. Agency, mortgage-backed, municipal, and restricted equity securities, amounted
to $21.3 million at December 31, 2004. Net unrealized gains on securities amounted to $52,000 at December 31, 2004 as compared to $253,000 at December 31, 2003. 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 91.10% 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 (8.67%), construction loans to build one to four-family residential properties (40.98%), and nonresidential properties consisting
primarily of small business commercial properties (50.35%). 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.



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



The remaining 8.9% 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



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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 $45.6 million as of December 31, 2004 compared to $15.9 million as of December 31, 2003. 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.



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 17.86% at December 31, 2004 was considered satisfactory.



At December 31, 2004, we had loan commitments outstanding of $51.4 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, 2004, we had arrangements with various commercial
banks for short-term advances of $12.8 million.



At December
31, 2004, our capital ratios were considered adequate based on regulatory minimum capital requirements. Our stockholders equity increased due to net income in 2004 of $1,250,000. 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 $125,000 and increased due to the exercise of stock options in the amount of $12,000. 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 declare $731,000 in dividends payable to the Company without regulatory approval.



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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, 2004 are as follows:



|                           |  |              |   |  |       |   |  |                        |  
|-------------------------- |  | ------------ | - |  | ----- | - |  | ---------------------- | -
|                           |  | Actual       |  
|                           |  | Consolidated |   |  | Bank  |   |  | RegulatoryRequirements |  
|Leverage capital ratio     |  | 9.23         | % |  | 8.75  | % |  | 5                      | %
|Risk-based capital ratios: |  |              |   |  |       |   |  |                        |  
|Core capital               |  | 10.08        | % |  | 9.58  | % |  | 6                      | %
|Total capital              |  | 11.65        | % |  | 10.79 | % |  | 10                     | %



At December 31, 2004, 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.



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.



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Results of Operations For The Years Ended December 31, 2004 and 2003



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



|                          |  |                          |       |      |   |      
|------------------------- |  | ------------------------ | ----- | ---- | - | -----
|                          |  | Years Ended December 31,
|                          |  | 2004                     |       | 2003
|                          |  | (Dollars in Thousands)  
|Interest income           |  | $                        | 9,941 |      | $ | 8,403
|Interest expense          |  |                          | 3,812 |      |   | 3,747
|                          |  |                          |       |      |   |      
|Net interest income       |  |                          | 6,129 |      |   | 4,656
|Provision for loan losses |  |                          | 58    |      |   | 270  
|Other income              |  |                          | 1,092 |      |   | 1,005
|Other expenses            |  |                          | 5,419 |      |   | 4,642
|                          |  |                          |       |      |   |      
|Pretax income             |  |                          | 1,744 |      |   | 749  
|Income taxes              |  |                          | 494   |      |   | 183  
|                          |  |                          |       |      |   |      
|Net income                |  | $                        | 1,250 |      | $ | 566  
|                          |  |                          |       |      |   |      



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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 3.92% in 2004 as compared to 3.33% in 2003. Average loans increased by $18.6 million with average
securities and Federal funds decreasing by $1.46 million, accounting for the majority of the $16.7 million increase in total average interest-earning assets. Average interest-bearing liabilities increased by $12.2 million with average
interest-bearing demand and time deposits accounting for $13.3 million. This increase was partially offset by a decrease in average other borrowings of $1.6 million. The rate earned on average interest-earning assets increased to 6.36% in 2004 from
6.02% in 2003. The rate paid on average interest-bearing liabilities decreased to 2.70% in 2004 from 2.90% in 2003. The increase in net yield is due to an increased yield in our loan portfolio and a continued re-pricing of our maturing time deposits
into lower rates. As we expect prime rate to increase in the coming year, both our rate earned on earning assets as well as our rate paid on interest-bearing liabilities should increase.



Provision for Loan Losses



The provision for loan losses was $58,000 in 2004 as compared to $270,000 in 2003. The provision reduction was the result of a substantial allowance being
in place prior to 2002, and the effective identification of lower quality credits, and appropriately funding and charging the allowance in 2002. The provision of $270,000 in 2003 was also made to recognize the normal growth in the loan portfolio
from 2002 until 2003 and the increase in the remaining identified problem assets. Net charge offs for 2004 were $117,000 as compared to $1,026,000 in 2003. As of December 31, 2004, we had nonperforming loans and assets of $341,000 as compared to
$2.3 million at December 31, 2003. 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 $1,092,000 in 2004 as
compared to $1,005,000 in 2003, an increase of $87,000. The increase is due primarily to a $86,000 increase in service charges on deposit accounts related to our deposit growth, gains on sales of securities of $33,000 and other miscellaneous income
increases associated with the growth of the Bank.



Other Expenses



Other expenses were $5,419,000 in 2004 as compared to
$4,642,000 in 2003, an increase of $777,000. Salaries and employee benefits increased by $907,000 due to an increase in staff in our Loan Production Office (LPO) in Covington, Georgia, which we opened in the First quarter of 2004. Equipment and
occupancy expenses increased by $132,000 due primarily to increased equipment depreciation, rent expense, and maintenance costs. Other operating expenses decreased by $262,000. This is due primarily to a decrease in provision for losses on other
real estate owned of $588,000 and a decrease in other real estate owned expense



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of $144,000. This decrease was partially offset by increased data/ATM processing expense of $70,000, increased
professional fees of $124,000, increased advertising expense of $40,000, a provision for other losses of $112,074 and other miscellaneous expenses associated with the growth of the Bank.



In 2004, the Company sold a parcel of other real estate owned that had federal tax liens of $336,044 attached. As a
condition of the sale, the Company purchased an indemnity bond in the amount of $504,066, the funds of which are held in escrow and included in other assets. Depending upon the resolution of these liens, the Company could incur a loss for the amount
of the bond.



Income Tax



Income tax expense in 2004 was $494,000 or 28% of pretax income as compared
to $183,000 or 24% in 2003. The increase in the effective 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.



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



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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, 2004, our cumulative one-year
interest rate-sensitivity gap ratio was 111%. 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, 2004,
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.



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|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|---------------------------------------------- |  | ---------------------- | ------- | --------------------------------- | - | ------- | --------------------------------- |  | -------------- | ------ |  | ----- | ------ | - |  | - | -------
|                                               |  | Within ThreeMonths     |         | AfterThreeMonthsbutWithinOne Year |   |         | After One Year butWithinFiveYears |  | AfterFiveYears |        |  | Total
|                                               |  | (Dollars in Thousands)
|Interest-earning assets:                       |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|Interest-bearing deposits in banks             |  | $                      | 864     |                                   | $ |        |                                   |  | $              |       |  | $     |       |   |  | $ | 864    
|Federal funds sold                             |  |                        | 17,152  |                                   |   |        |                                   |  |                |       |  |       |       |   |  |   | 17,152 
|Securities                                     |  |                        |        |                                   |   | 1,018   |                                   |  |                | 7,231  |  |       | 13,099 |   |  |   | 21,348 
|Loans                                          |  |                        | 118,795 |                                   |   | 7,459   |                                   |  |                | 23,477 |  |       | 759    |   |  |   | 150,490
|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|                                               |  |                        | 136,811 |                                   |   | 8,477   |                                   |  |                | 30,708 |  |       | 13,858 |   |  |   | 189,854
|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|Interest-bearing liabilities:                  |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|Interest-bearing demand deposits               |  |                        | 34,673  |                                   |   |        |                                   |  |                |       |  |       |       |   |  |   | 34,673 
|Savings                                        |  |                        | 2,112   |                                   |   |        |                                   |  |                |       |  |       |       |   |  |   | 2,112  
|Certificates of deposit                        |  |                        | 20,410  |                                   |   | 69,362  |                                   |  |                | 19,991 |  |       | 99     |   |  |   | 109,862
|Other borrowings                               |  |                        | 4,007   |                                   |   |        |                                   |  |                | 5,000  |  |       | 17,955 |   |  |   | 26,962 
|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|                                               |  |                        | 61,202  |                                   |   | 69,362  |                                   |  |                | 24,991 |  |       | 18,054 |   |  |   | 173,609
|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|Interest rate sensitivity gap                  |  | $                      | 75,609  |                                   | $ | (60,885 | )                                 |  | $              | 5,717  |  | $     | (4,196 | ) |  |   |        
|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|Cumulative interest rate sensitivity gap       |  | $                      | 75,609  |                                   | $ | 14,724  |                                   |  | $              | 20,441 |  | $     | 16,245 |   |  |   |        
|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|Interest rate sensitivity gap ratio            |  |                        | 2.24    |                                   |   | .12     |                                   |  |                | 1.23   |  |       | .77    |   |  |   |        
|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        
|Cumulative interest rate sensitivity gap ratio |  |                        | 2.24    |                                   |   | 1.11    |                                   |  |                | 1.13   |  |       | 1.09   |   |  |   |        
|                                               |  |                        |         |                                   |   |         |                                   |  |                |        |  |       |        |   |  |   |        



23



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##### Table of Contents

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



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##### Table of Contents

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, |        
|                                     |  | 2004                     |         |   | 2003 |  
|                                     |  | (Dollars in Thousands)   |        
|ASSETS                               |  |                          |         |   |      |   |         |  
|                                     |  |                         
|Cash and due from banks              |  | $                        | 4,118   |   |      | $ | 2,921   |  
|Interest-bearing deposits in banks   |  |                          | 893     |   |      |   | 1,256   |  
|Taxable securities                   |  |                          | 15,828  |   |      |   | 16,319  |  
|Tax exempt securities                |  |                          | 5,068   |   |      |   | 4,083   |  
|Securities valuation account         |  |                          | 140     |   |      |   | 348     |  
|Federal funds sold                   |  |                          | 10,311  |   |      |   | 12,266  |  
|Loans (2)                            |  |                          | 124,313 |   |      |   | 105,752 |  
|Allowance for loan losses            |  |                          | (2,076  | ) |      |   | (2,206  | )
|Other assets                         |  |                          | 8,752   |   |      |   | 10,451  |  
|                                     |  |                          |         |   |      |   |         |  
|                                     |  | $                        | 167,347 |   |      | $ | 151,190 |  
|                                     |  |                          |         |   |      |   |         |  
|Total interest-earning assets        |  | $                        | 156,413 |   |      | $ | 139,676 |  
|                                     |  |                          |         |   |      |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY |  |                          |         |   |      |   |         |  
|                                     |  |                         
|Deposits:                            |  |                          |         |   |      |   |         |  
|Noninterest-bearing demand           |  | $                        | 11,942  |   |      | $ | 9,105   |  
|Interest-bearing demand              |  |                          | 33,385  |   |      |   | 30,488  |  
|Savings                              |  |                          | 2,073   |   |      |   | 1,587   |  
|Time                                 |  |                          | 78,573  |   |      |   | 68,144  |  
|                                     |  |                          |         |   |      |   |         |  
|Total deposits                       |  |                          | 125,973 |   |      |   | 109,324 |  
|                                     |  |                         
|Other borrowings                     |  |                          | 27,203  |   |      |   | 28,811  |  
|Other liabilities                    |  |                          | 1,796   |   |      |   | 1,229   |  
|                                     |  |                          |         |   |      |   |         |  
|Total liabilities                    |  |                          | 154,972 |   |      |   | 139,364 |  
|Stockholders equity                 |  |                          | 12,375  |   |      |   | 11,826  |  
|                                     |  |                          |         |   |      |   |         |  
|                                     |  | $                        | 167,347 |   |      | $ | 151,190 |  
|                                     |  |                          |         |   |      |   |         |  
|Total interest-bearing liabilities   |  | $                        | 141,234 |   |      | $ | 129,030 |  
|                                     |  |                          |         |   |      |   |         |  

---

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

|(2) | Nonaccrual loans included in average loans for 2004 and 2003 were $481,000 and $303,000, respectively.
|--- | ------------------------------------------------------------------------------------------------------



25



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##### Table of Contents

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, |       
|                                             |  | 2004                     |        |             | 2003 |  
|                                             |  | Interest                 |        | AverageRate |      |   | Interest |   | AverageRate | 
|                                             |  | (Dollars in Thousands)   |       
|INTEREST INCOME:                             |  |                          |        |             |      |   |          |   |             |  |      |  
|Interest and fees on loans (1)               |  | $                        | 8,967  |             | 7.21 |   |          | $ | 7,443       |  | 7.04 | %
|Interest on deposits in banks                |  |                          | 1      |             | .11  |   |          |   | 12          |  | .96  |  
|Interest on taxable securities               |  |                          | 644    |             | 4.07 |   |          |   | 658         |  | 4.03 |  
|Interest on tax exempt securities            |  |                          | 195    |             | 3.85 |   |          |   | 156         |  | 3.82 |  
|Interest on federal funds sold               |  |                          | 134    |             | 1.30 |   |          |   | 134         |  | 1.09 |  
|                                             |  |                          |        |             |      |   |          |   |             |  |      |  
|Total interest income                        |  |                          | 9,941  |             | 6.36 |   |          |   | 8,403       |  | 6.02 |  
|                                             |  |                          |        |             |      |   |          |   |             |  |      |  
|INTEREST EXPENSE:                            |  |                          |        |             |      |   |          |   |             |  |      |  
|Interest on interest-bearing demand deposits |  |                          | 453    |             | 1.36 |   |          |   | 445         |  | 1.46 |  
|Interest on savings deposits                 |  |                          | 12     |             | .58  |   |          |   | 11          |  | 69   |  
|Interest on time deposits                    |  |                          | 2,225  |             | 2.83 |   |          |   | 2,100       |  | 3.08 |  
|Interest on other borrowings                 |  |                          | 1,1224 |             | .12  |   |          |   | 1,191       |  | 4.13 |  
|                                             |  |                          |        |             |      |   |          |   |             |  |      |  
|Total interest expense                       |  |                          | 3,8122 |             | .70  |   |          |   | 3,747       |  | 2.90 |  
|                                             |  |                          |        |             |      |   |          |   |             |  |      |  
|NET INTEREST INCOME                          |  | $                        | 6,129  |             |      |   |          | $ | 4,656       |  |      |  
|                                             |  |                          |        |             |      |   |          |   |             |  |      |  
|Net interest spread                          |  |                          |        |             | 3.66 | % |          |   |             |  | 3.12 | %
|                                             |  |                          |        |             |      |   |          |   |             |  |      |  
|Net yield on average interest-earning assets |  |                          |        |             | 3.92 | % |          |   |             |  | 3.33 | %
|                                             |  |                          |        |             |      |   |          |   |             |  |      |  

---

|(1) | Interest and fees on loans includes $944,000 and $996,000 of loan fee income for the years ended December 31, 2004 and 2003, respectively. Interest income recognized on nonaccrual
loans during 2004 and 2003 was $73,000 and $57,000, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



26



---

##### Table of Contents

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, 2004 vs. 2003 Changes Due To: |     
|                                             |  | Rate                                                   |      |   | Volume |   |       | Net | 
|                                             |  | (Dollars in Thousands)                                 |     
|Increase (decrease) in:                      |  |                                                        |      |   |        |   |       |     |  |   |       |  
|Income from interest-earning assets:         |  |                                                        |      |   |        |   |       |     |  |   |       |  
|Interest and fees on loans                   |  | $                                                      | 189  |   |        | $ | 1,335 |     |  | $ | 1,524 |  
|Interest on deposits in banks                |  |                                                        | (8   | ) |        |   | (3    | )   |  |   | (11   | )
|Interest on taxable securities               |  |                                                        | 6    |   |        |   | (20   | )   |  |   | (14   | )
|Interest on tax exempt securities            |  |                                                        | 1    |   |        |   | 38    |     |  |   | 39    |  
|Interest on federal funds sold               |  |                                                        | 23   |   |        |   | (23   | )   |  |   |      |  
|                                             |  |                                                        |      |   |        |   |       |     |  |   |       |  
|Total interest income                        |  |                                                        | 211  |   |        |   | 1,327 |     |  |   | 1,538 |  
|                                             |  |                                                        |      |   |        |   |       |     |  |   |       |  
|Expense from interest-bearing liabilities:   |  |                                                        |      |   |        |   |       |     |  |   |       |  
|Interest on interest-bearing demand deposits |  |                                                        | (33  | ) |        |   | 41    |     |  |   | 8     |  
|Interest on savings deposits                 |  |                                                        | (2   | ) |        |   | 3     |     |  |   | 1     |  
|Interest on time deposits                    |  |                                                        | (179 | ) |        |   | 304   |     |  |   | 125   |  
|Interest on other borrowings                 |  |                                                        | (3   | ) |        |   | (66   | )   |  |   | (69   | )
|                                             |  |                                                        |      |   |        |   |       |     |  |   |       |  
|Total interest expense                       |  |                                                        | (217 | ) |        |   | 282   |     |  |   | 65    |  
|                                             |  |                                                        |      |   |        |   |       |     |  |   |       |  
|Net interest income                          |  | $                                                      | 428  |   |        | $ | 1,045 |     |  | $ | 1,473 |  
|                                             |  |                                                        |      |   |        |   |       |     |  |   |       |  



27



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##### Table of Contents

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,          
|                             |  | 2004                   |        | 2003
|                             |  | (Dollars in Thousands)
|U.S. Government agencies     |  | $                      | 11,225 |      | $ | 8,047 
|Mortgage-backed securities   |  |                        | 3,028  |      |   | 5,489 
|Municipal securities         |  |                        | 5,683  |      |   | 5,690 
|Restricted equity securities |  |                        | 1,413  |      |   | 1,278 
|                             |  |                        |        |      |   |       
|                             |  | $                      | 21,349 |      | $ | 20,504
|                             |  |                        |        |      |   |       



Maturities



The amounts of debt securities, including the weighted average yield in each
category as of December 31, 2004 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   |  |                  | 1,018 |           | 4.65                         | % |        |                              | 6,720     |  | 3.52 | %      |  |           | 3,487 |  | 4.70 | %
|Mortgage-backed securities |  |                  |      |           |                             |   |        |                              | 413       |  | 2.72 | %      |  |           | 1,623 |  | 3.73 | %
|Municipals                 |  |                  |      |           |                             |   |        |                              | 98        |  | 2.35 | %      |  |           | 3,515 |  | 3.60 | %
|                           |  |                  |       |           |                              |   |        |                              |           |  |      |        |  |           |       |  |      |  
|                           |  | $                | 1,018 |           | 4.65                         | % |        | $                            | 7,231     |  | 3.46 | %      |  | $         | 8,625 |  | 4.07 | %
|                           |  |                  |       |           |                              |   |        |                              |           |  |      |        |  |           |       |  |      |  



|                           |  |                 |       |           |       |   |        |   |           |  |      |  
|-------------------------- |  | --------------- | ----- | --------- | ----- | - | ------ | - | --------- |  | ---- | -
|                           |  | After ten years |       |           | Total |  
|                           |  | Amount          |       | Yield (1) |       |   | Amount |   | Yield (1) | 
|U.S. Government agencies   |  |                 |      |           |      | % |        |   | 11,225    |  | 3.99 | %
|Mortgage-backed securities |  |                 | 992   |           | 4.52  |   |        |   | 3,028     |  | 3.85 |  
|Municipals                 |  |                 | 2,070 |           | 4.16  |   |        |   | 5,683     |  | 3.78 |  
|                           |  |                 |       |           |       |   |        |   |           |  |      |  
|                           |  | $               | 3,062 |           | 4.28  | % |        | $ | 19,936    |  | 3.91 | %
|                           |  |                 |       |           |       |   |        |   |           |  |      |  

---

|(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



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##### Table of Contents

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,           |        
|                                     |  | 2004                   |         |   | 2003 |  
|                                     |  | (Dollars in Thousands) |        
|Commercial                           |  | $                      | 11,092  |   |      | $ | 11,141  |  
|Real estate-construction             |  |                        | 56,353  |   |      |   | 13,873  |  
|Real estate-mortgage                 |  |                        | 81,176  |   |      |   | 76,524  |  
|Consumer installment loans and other |  |                        | 2,340   |   |      |   | 2,528   |  
|                                     |  |                        |         |   |      |   |         |  
|                                     |  |                        | 150,961 |   |      |   | 104,066 |  
|Deferred loan fees                   |  |                        | (471    | ) |      |   | (279    | )
|Less allowance for loan losses       |  |                        | (1,987  | ) |      |   | (2,046  | )
|                                     |  |                        |         |   |      |   |         |  
|Net loans                            |  | $                      | 148,503 |   |      | $ | 101,741 |  
|                                     |  |                        |         |   |      |   |         |  



Maturities and Sensitivities of
Loans to Changes in Interest Rates



Total loans as of
December 31, 2004 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             |  | $                      | 5,627  
|After one through five years |  |                        | 4,127  
|After five years             |  |                        | 1,338  
|                             |  |                        |        
|                             |  |                        | 11,092 
|                             |  |                        |        
|Construction                 |  |                        |        
|One year or less             |  | $                      | 55,290 
|After one through five years |  |                        | 1,007  
|After five years             |  |                        | 56     
|                             |  |                        |        
|                             |  |                        | 56,353 
|                             |  |                        |        
|Other                        |  |                        |        
|One year or less             |  | $                      | 33,661 
|After one through five years |  |                        | 48,650 
|After five years             |  |                        | 1,205  
|                             |  |                        |        
|                             |  |                        | 83,516 
|                             |  |                        |        
|                             |  | $                      | 150,961
|                             |  |                        |        



29



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##### Table of Contents

The following table summarizes loans at December 31, 2004 with the due dates after one year that have
predetermined and floating or adjustable interest rates.



|                                      |  |                        |       
|------------------------------------- |  | ---------------------- | ------
|                                      |  | (Dollars in Thousands)
|Predetermined interest rates          |  | $                      | 22,255
|Floating or adjustable interest rates |  |                        | 34,128
|                                      |  |                        |       
|                                      |  | $                      | 56,383
|                                      |  |                        |       



Risk Elements



Information with respect to nonaccrual, past due, restructured and other
problem loans at December 31, 2004 and 2003 is as follows:



|                                                                                                         |  |                        |       |      |   |   
|-------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----- | ---- | - | --
|                                                                                                         |  | December 31,          
|                                                                                                         |  | 2004                   |       | 2003
|                                                                                                         |  | (Dollars in Thousands)
|Nonaccrual loans                                                                                         |  | $                      | 0     |      | $ | 0 
|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                                                                                  |  |                        | 1,231 |      |   | 0 
|Interest income that would have been recorded on nonaccrual and restructured loans under original terms  |  |                        | 0     |      |   | 0 
|Interest income that was recorded on nonaccrual and restructured loans                                   |  |                        | 73    |      |   | 57



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.



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



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##### Table of Contents

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, |        
|                                                                            |  | 2004                     |         |   | 2003 |  
|                                                                            |  | (Dollars in Thousands)   |        
|Average amount of loans outstanding                                         |  | $                        | 124,313 |   |      | $ | 105,752 |  
|                                                                            |  |                          |         |   |      |   |         |  
|Balance of allowance for loan losses at beginning of year                   |  | $                        | 2,046   |   |      | $ | 2,802   |  
|                                                                            |  |                          |         |   |      |   |         |  
|Loans charged off                                                           |  |                          |         |   |      |   |         |  
|Commercial                                                                  |  |                          |        |   |      |   | (196    | )
|Real estate mortgage                                                        |  |                          | (98     | ) |      |   | (827    | )
|Installment                                                                 |  |                          | (34     | ) |      |   | (16     | )
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                          | (132    | ) |      |   | (1,039  | )
|                                                                            |  |                          |         |   |      |   |         |  
|Loans recovered                                                             |  |                          |         |   |      |   |         |  
|Commercial                                                                  |  |                          |        |   |      |   |        |  
|Real estate mortgage                                                        |  |                          |        |   |      |   |        |  
|Installment                                                                 |  |                          | 15      |   |      |   | 13      |  
|                                                                            |  |                          |         |   |      |   |         |  
|                                                                            |  |                          | 15      |   |      |   | 13      |  
|                                                                            |  |                          |         |   |      |   |         |  
|Net charge-offs                                                             |  |                          | (117    | ) |      |   | (1,026  | )
|                                                                            |  |                          |         |   |      |   |         |  
|Additions to allowance charged to operating expense during year             |  |                          | 58      |   |      |   | 270     |  
|                                                                            |  |                          |         |   |      |   |         |  
|Balance of allowance for loan losses at end of year                         |  | $                        | 1,987   |   |      | $ | 2,046   |  
|                                                                            |  |                          |         |   |      |   |         |  
|Ratio of net loans charged off during the year to average loans outstanding |  |                          | .09     | % |      |   | .97     | %
|                                                                            |  |                          |         |   |      |   |         |  



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.



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As of December 31, 2004 and 2003, 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, 2004      |       |                                                 | December 31, 2003 |  
|                                     |  | Amount                 |       | Percent of loans ineach category to total loans |                   |   | Amount |   | Percent of loans ineach category to total loans | 
|                                     |  | (Dollars in Thousands) |      
|Commercial                           |  | $                      | 500   |                                                 | 7                 | % |        | $ | 389                                             |  | 11  | %
|Real estate - construction           |  |                        | 268   |                                                 | 37                |   |        |   | 716                                             |  | 13  |  
|Real estate - mortgage               |  |                        | 1,019 |                                                 | 54                |   |        |   | 839                                             |  | 73  |  
|Consumer installment loans and other |  |                        | 200   |                                                 | 2                 |   |        |   | 102                                             |  | 3   |  
|                                     |  |                        |       |                                                 |                   |   |        |   |                                                 |  |     |  
|                                     |  | $                      | 1,987 |                                                 | 100               | % |        | $ | 2,046                                           |  | 100 | %
|                                     |  |                        |       |                                                 |                   |   |        |   |                                                 |  |     |  



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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, |        
|                                    |  | 2004                     |         |         | 2003 |  
|                                    |  | Amount                   |         | Percent |      |   | Amount |   | Percent | 
|                                    |  | (Dollars in Thousands)   |        
|Noninterest-bearing demand deposits |  | $                        | 11,942  |         |     | % |        | $ | 9,105   |  |     | %
|Interest-bearing demand deposits    |  |                          | 33,385  |         | 1.36 |   |        |   | 30,488  |  | 1.46 |  
|Savings deposits                    |  |                          | 2,073   |         | .58  |   |        |   | 1,587   |  | .69  |  
|Time deposits                       |  |                          | 78,573  |         | 2.83 |   |        |   | 68,144  |  | 3.08 |  
|                                    |  |                          |         |         |      |   |        |   |         |  |      |  
|                                    |  | $                        | 125,973 |         |      |   |        | $ | 109,324 |  |      |  
|                                    |  |                          |         |         |      |   |        |   |         |  |      |  

---

|(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, 2004 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                 |  | $                      | 13,075
|Over three months through six months |  |                        | 16,705
|Over six through twelve months       |  |                        | 25,360
|Over twelve months                   |  |                        | 9,837 
|                                     |  |                        |       
|Total                                |  | $                      | 64,977
|                                     |  |                        |       



RETURN ON ASSETS AND
STOCKHOLDERS EQUITY



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



|                           |  |                          |   |  |      |  
|-------------------------- |  | ------------------------ | - |  | ---- | -
|                           |  | Years Ended December 31, |  
|                           |  | 2004                     |   |  | 2003 |  
|Return on assets (1)       |  | .75                      | % |  | 0.37 | %
|Return on equity (2)       |  | 10.10                    |   |  | 4.79 |  
|Dividend payout ratio (3)  |  |                         |   |  |     |  
|Equity to assets ratio (4) |  | 7.39                     |   |  | 7.82 |  

---

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



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##### Table of Contents

ITEM 7. FINANCIAL STATEMENTS



The consolidated financial statements, notes thereto and report of registered public accounting firm thereon for year ended
December 31, 2004 are attached hereto beginning at page 51.



The following financial statements are attached beginning at page 51 of this Report:



|                                                          
|----------------------------------------------------------
|Report of Independent Registered Public Accounting Firm   
|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 Consolidated Financial Statements                



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



None.



ITEM 8A. CONTROLS AND PROCEDURES



Pursuant to Section 302 of the Sarbanes-Oxley act of
2002, and as of the date of 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. During the quarter ended December 31, 2004, there were no significant changes in internal controls, or to managements
knowledge, in other factors that could significantly affect those internal controls, and there has been no corrective action with respect to significant deficiencies or material weaknesses.



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##### Table of Contents

PART III



ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY



IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS



The Boards of Directors of the Company and the Bank consist of eleven (11) persons. Each of those persons has been a director of the Company since its
organization in 1996. In addition, each of these persons has been a director of the Bank since its organization in 1996. The directors of the Company and the Bank are as follows:



John L. Coleman (59)



Mr. Coleman is the President, Chief Executive Officer and a director of the Company and the Chief Executive Officer of the Bank. He has held these
positions with the Company since August 1996 and was formerly the President and Chief Executive Officer of the Bank until January 2005.



D. Richard Ballard (58)



Mr. Ballard has been affiliated with Haisten Funeral Home, Inc. in Jackson, Georgia since 1967, and is currently its owner.



Charles W. Carter (69)



Mr. Carter has been affiliated with Carter Builders Supply in Jackson since 1968 and is currently its President. Mr. Carter
was an advisory director of Citizens & Southern National Bank and its successor organization, NationsBank, in Jackson from 1978 until 1994.



Alfred D. Fears, Jr. (48)



Mr. Fears primary occupation is as an attorney, and he has been practicing law in Jackson, Georgia since 1981. He also manages an apartment rental
business in Jackson.



William B. Jones (60)



From 1966 to 1976, Mr. Jones was a teacher, coach and school superintendent
in Jackson, Georgia. Since 1977, Mr. Jones has practiced law in Jackson, Georgia, and has been active in the food and petroleum distribution business. Mr. Jones is currently President of Jones Petroleum Co., Meriwether Properties, Inc. and Vice
President of Jones & Owenby, Inc., which operates two supermarkets. He also previously served on the Advisory Board of NationsBank in Jackson, Georgia.



Harry Lewis (52)



Mr. Lewis is the Secretary-Treasurer of the Company. He has served in this position since August 1997. Mr. Lewis also owns and operates an automobile
dealership in Jackson, Georgia, which he has operated since 1983. He is also President of Playtime Learning Center, Inc.



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##### Table of Contents

Joey McClelland (58)



Mr. McClelland is presently the Owner and President of The McClelland Company, LLC providing design and implementation consulting services to
international business operations. From 2000 to 2003 he served as a Vice President with International Supply Chain - Home Depot. From 1997 to 1999, Mr. McClelland served as its director of International Consulting. Prior to 1997, Mr. McClelland
acted as Executive Director of Marketing and Logistics Consulting, providing design and implementation consulting services. Prior to 1989, Mr. McClelland held numerous management level positions in related marketing fields.



Dr. Alexander Pollack (51)



Dr. Pollack is a retired general surgeon and former medical director at the
Georgia Diagnostic and Classification Prison in Jackson, Georgia.



Robert
Ryan (67)



Since 1983, Mr. Ryan has been President of
Atlanta South 75 Inc., an automobile and truck service center. From 1960 to 1983, Mr. Ryan held various management positions with Unocal Corporation, Los Angeles, California. Mr. Ryan served on the Board of Directors of International Speedway
Corporation, the Association of Christian Truckers, Rotary Club (Community Relations) and Butts Co. Development Authority. He currently serves on the Board of Directors of the National Association of Truckstop Operators (NATSO).



James H. Warren (66)



Mr. Warren is President of Sure Power, Inc., Secretary-Treasurer of Brushy Mountain Hydro-Electric Power,
Inc. and Alternator & Starter House of Anderson SC, Inc.



George L.
Weaver (57)



Mr. Weaver has been President
of Central Georgia EMC since 1984. From 1971 to 1984, Mr. Weaver held various management positions with Central Georgia EMC. Mr. Weaver served on the Advisory Board of NationsBank of Georgia, N.A. in Jackson, Georgia, and as Vice Chairman of the
Board of Directors of Federated Rural Electric Insurance Corp and a member of its Audit Committee. He presently serves as a director of Southeastern Data Corporation (past Chairman of the Board) and Georgia Rural Electric Service Corporation (past
Chairman of the Board). Mr. Weaver is a past President of the Georgia Rural Electric Managers Association.



George L. Weaver serves as Chairman of the Companys Board of Directors. John L. Coleman serves as President and Chief Executive Officer of the
Company and Chief Executive Officer of the Bank. Harry Lewis serves as Corporate Secretary of the Company. Each officer serves at the pleasure of the Board of Directors of the Company.



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There are not, and have not been during the last five years, any involvements by the above-listed persons
in legal proceedings relating to the federal bankruptcy act, federal commodities law violations or securities law violations. In addition, none of the above-listed persons is currently charged with or within the last five years has been convicted of
any criminal violations of law (other than minor traffic violations). In addition, there are not, and have not been within the last five years, any orders, judgments or decrees enjoining or limiting any director from engaging in any type of business
practice or activity.



Charles W. Carter and Harry
Lewis are first cousins. There are no other family relationships among the director nominees or among any of them and any members of management of the Company or the Bank.



There are no arrangements or understandings between the Company and any person pursuant to which any of the above persons
have been or will be elected a director. No director is a director of another bank or bank holding company. The Company paid Mr. Fears law firm $346,653 for legal services rendered to the Company during 2004, and it is anticipated Mr. Fears
will provide legal services to the Company during 2005.



NON-DIRECTOR EXECUTIVE OFFICERS OF THE BANK



The Bank currently has two executive officers who are not directors of the Company or the Bank. Information regarding their background follows:



Joe Strickland (60)



Mr. Strickland, who became employed by the Bank in January 2004, is the President, Chief Operating Officer and Senior Credit Officer of the Bank. Mr.
Strickland is the former President and Chief Operating Officer of Main Street Bank and retired from that position at year end 2001. Previously, he was employed as Northern Division Commercial Banking Executive for NationsBank-South Carolina as
successor to C&S Bank.



Elaine S. Kendrick (57)



Ms. Kendrick is the Senior Vice President and Chief Financial Officer of the
Bank and the Company and has served in that position since October 2003. She has been employed with the Bank since inception in September 1997 as the Senior Vice President and Senior Operations Officer. From 1996-1997, she served as Senior Vice
President and Controller of Griffin Federal Savings Bank, Griffin, Georgia. From 1990-1996, she served as Vice President and Controller of Griffin Federal Savings Bank. From 1987-1990, she served as a banking officer for First Union National Bank of
Georgia in Griffin and Newnan, Georgia. From 1965-1987, she served in various capacities for Commercial Bank & Trust Company.



FILINGS UNDER SECTION 16(a)



Section 16(a) of the Securities and Exchange Act of 1934 required the Companys executive officers and directors, and persons who own more than 10%
of the common stock of the Company, to file reports of ownership and changes in ownership of such securities with the Securities and Exchange Commission.



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Executive officers, directors and greater than 10% beneficial owners are required by applicable
regulations to furnish the company with copies of all Section 16(a) forms they file. The Company is not aware of any beneficial owner of more than 10% of its common stock who is not also a director.



Based solely upon a review of the copies of the forms furnished to the
Company, the Company believes that during the 2004 fiscal year all filings applicable to its officers and directors were complied with in a timely manner.



ITEM 10. EXECUTIVE COMPENSATION



The Company does not separately compensate any of its directors or executive officers. Any compensation paid them is paid by the Bank. The following sets
forth certain information concerning the compensation of the Companys chief executive officer during fiscal years 2004, 2003 and 2002. No other executive officer earned over $100,000 in combined salary and bonus for 2004.



Summary Compensation Table



|                                                    |  |                     |  |            |                             |           |                            |                               |  |     |                                  |  |     |  |                 |          
|--------------------------------------------------- |  | ------------------- |  | ---------- | --------------------------- | --------- | -------------------------- | ----------------------------- |  | --- | -------------------------------- |  | --- |  | --------------- | ---------
|                                                    |  | Annual Compensation |  |            | Long TermCompensationAwards |           | All Other Compensation ($) |                              
|Name and Principal
Position                         |  | Fiscal Year         |  | Salary ($) |                             | Bonus ($) |                            | Other Annual Compensation ($) |  |     | SecuritiesUnderlying Options (#) | 
|John L. ColemanPresident and ChiefExecutive Officer |  | 200420032002        |  | $$$        | 155,000155,000155,000       |           | $                          | 0050,000                      |  |  | (1)(1)(1)                        |  | 000 |  | 1,8681,8031,734 | (2)(2)(2)

---

|(1) | Other annual compensation does not include any perks and other personal benefits
which may be derived from business-related expenditures that in the aggregate do not exceed the lesser of $50,000 or 10% of the total annual salary and bonus reported for such person.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The Company has provided Mr. Coleman with a $250,000 term life insurance policy. The premium paid by the Company in 2004 was $960, in 2003 was $960 and in 2002 was $960. Also, Mr.
Coleman and the Bank entered into four split dollar life insurance agreements in 1999 in connection with four life insurance policies insuring Mr. Colemans life purchased by the Bank. Compensation income is imputed to Mr. Coleman based on the
current term rate for Mr. Colemans age multiplied by the aggregate death benefit payable under the policies to Mr. Colemans beneficiary. The Bank retains a portion of the death benefits payable under each policy. The maximum death
benefit payable to Mr. Colemans beneficiary under three of the policies is $150,000 and $50,000 under the fourth policy, or an aggregate of $500,000 death benefit for the four policies. The compensation imputed to Mr. Coleman under these
arrangements in 2004 was $908, in 2003 was $843 and in 2002 was $774. See Employment Agreement below.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

The Companys Chief Executive Officer did not receive any stock options during 2004. The following
table contains information, with respect to the Companys Chief Executive Officer, concerning the exercise of options during 2004 and unexercised options held as of the end of 2004.



(a) Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values



|                |  |                                |             |                    |               |                                             |             |                                                    |               |   |       |  |  
|--------------- |  | ------------------------------ | ----------- | ------------------ | ------------- | ------------------------------------------- | ----------- | -------------------------------------------------- | ------------- | - | ----- |  | -
|Name            |  | SharesAcquired on Exercise (#) |             | Value Realized ($) |               | Number of Unexercised Options at FY-End (#) |             | Dollar Value of In-the-Money Options at FY-End ($)
|                |  |                                | Exercisable |                    | Unexercisable |                                             | Exercisable |                                                    | Unexercisable
|John L. Coleman |  | 0                              |             | 0                  |               | 200                                         |             | 0                                                  |               | $ | 2,324 |  | 0

---

|(1) | Calculated by subtracting the exercise price from the market price per share of the common stock at fiscal year-end ($24.00) and multiplying the resulting figure by the number of
shares subject to options for which the exercise price was less than the market price of the common stock at fiscal year-end.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Employment Agreement



John L. Coleman has an employment agreement dated August 8, 1996 with the Company and the Bank under which he serves as President and Chief Executive
Officer of the Company and of the Bank. The employment agreement provides for a five-year term and is annually renewable thereafter. He is paid an annual salary as set forth in the Summary Compensation Table above and is also entitled to performance
bonuses. To qualify for the annual bonus, the Bank must have a CAMEL 2 rating for the applicable year. The CAMEL rating is a rating assigned to the Bank each year by the Department of Banking based on its examination of different performance
factors, with 1 being the best CAMEL rating and 5 being the worst. If that condition is met, Mr. Coleman will be paid a cash bonus for the year at the discretion of the Compensation Committee and with full approval of the
Board of Directors. Mr. Colemans minimum cash bonus is a certain percentage of his salary for the year depending on the pre-tax return on average assets (ROA) performance of the Bank for the year. Mr. Coleman did not receive
a cash bonus in 2004.The bonus formula is as follows:



|                                  |  |                      |  
|--------------------------------- |  | -------------------- | -
|ROA                               |  | Percentage of Salary |  
|Less than .9%                     |  | No bonus             |  
|.9% or greater; less than 1.0%    |  | 5                    | %
|1.0% or greater; less than 1.10%  |  | 10                   | %
|1.10% or greater; less than 1.20% |  | 15                   | %
|1.20% or greater; less than 1.30% |  | 20                   | %
|1.30% or greater; less than 1.40% |  | 25                   | %
|1.40% or greater; less than 1.60% |  | 30                   | %
|1.60% or greater; less than 1.75% |  | 35                   | %
|1.75% or greater; less than 2.00% |  | 40                   | %
|Over 2.00%                        |  | 50                   | %



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##### Table of Contents

Mr. Coleman receives health, life and disability insurance under the same plan and terms as other
employees of the Bank. He receives a mid-size automobile to be used primarily for business purposes, and the Bank pays operating, maintenance and insurance expenses for the automobile. At Mr. Colemans request, the Bank may pay monthly
membership dues for Mr. Coleman of up to $75.00 per month at a local country club and up to $3,000 of the clubs initiation fee. Mr. Coleman has not requested such payments to date.



Mr. Colemans employment agreement provides for severance pay for Mr. Coleman in the event of Mr. Colemans
termination (except for cause) after a change of control of the Bank. Under the employment agreement, the term control means the acquisition of 25 percent or more of the voting securities of the Company by any person, or persons acting
as a group within the meaning of Section 13(d) of the Securities Exchange Act of 1934 or the acquisition of between 10 percent and 25 percent of the voting securities of the Bank if the Board of Directors of the Bank or the Comptroller of the
Currency, the Federal Deposit Insurance Corporation or the Federal Reserve Bank has made a determination that such acquisition constitutes or will constitute control of the Bank.



The employment agreement provides that if Mr. Coleman is terminated after 365 days as a result of a change of control, Mr.
Coleman shall be entitled to receive his salary through the last day of the calendar month of the termination, or payment in lieu of the notice period. In addition, Mr. Coleman would receive an amount equal to three times his then existing annual
base salary. The agreement further provides that the payment shall also be made in connection with, or within 120 days after, a change of control of the Bank if such change of control was opposed by Mr. Coleman or the Banks Board of Directors.
This payment would be in addition to any amount otherwise owed to Mr. Coleman pursuant to his employment agreement.



Executive Officers Deferred Compensation Plan



In 1999, the Bank and Mr. Coleman entered into a deferred compensation agreement. Under this agreement, Mr. Coleman will be entitled to receive retirement
benefits upon termination of his employment for any reason other than for cause, including a termination of employment following a change of control of the Bank. If Mr. Coleman dies prior to receiving any or all of the payments due him under the
agreement, his beneficiary will receive a death benefit. The deferred compensation is payable from the general assets of the Bank and Mr. Coleman is an unsecured creditor of the Bank with respect to these benefits. If Mr. Coleman is terminated for
cause, he forfeits all benefits under the agreement.



The
benefits payable to Mr. Coleman are based on the value of a deferral account established under Mr. Colemans agreement. The value of the deferral account is determined based upon the growth of life insurance cash values in life
insurance policies on Mr. Colemans life which were purchased by the Bank in 1999, which growth is reduced by the Banks after-tax opportunity cost of the policies, determined based upon a pre-tax yield equal to the Fed Funds rate.



40



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##### Table of Contents

The benefits payable to Mr. Coleman at normal retirement age (age 65) are equal to the sum of the value
of the deferral account on the anniversary of the agreement preceding normal retirement age paid out in equal annual installments over 15 years without interest plus an annual payment equal to the growth in the deferral account each year (determined
without reducing the deferral account for payments made to Mr. Coleman) from Mr. Colemans retirement until his death. The projected value of the deferral account at Mr. Colemans normal retirement age is $314,710, which would provide
payments of $20,981 per year, plus the payments of the growth in the deferral account which are projected to vary from year to year. The first year aggregate payment to Mr. Coleman (including the projected growth in the deferral account) is
projected to be $59,733, the average annual benefit during the first fifteen years is projected to be $68,956 and the average annual benefit over Mr. Colemans life is projected to be $67,845, all based on achieving the assumptions used in the
projection.



The benefits payable to Mr. Coleman at termination
of employment prior to his normal retirement age (other than after a change of control) are the sum of his deferral account at the anniversary of the agreement preceding his date of termination times Mr. Colemans vested percentage at
termination, payable in 15 equal annual installments without interest, plus an annual payment equal to the growth in the deferral account each year from Mr. Colemans termination of employment until his death (determined without reducing the
deferral account for payments made to Mr. Coleman), times Mr. Colemans vested percentage at termination. The benefits payable to Mr. Coleman at his termination of employment after a change of control are the same as a termination prior to
normal retirement age except that the vesting schedule does not apply if Mr. Colemans termination of employment after a change of control occurs during the first five years of the deferred compensation agreement.



If Mr. Coleman dies prior to termination of employment, the Bank will pay his
beneficiary a lump sum benefit equal to his deferral account as of the anniversary of the agreement preceding Mr. Colemans death.



Director Compensation



Board Fees. As of April, 2004 the Directors of the Company are paid $750 per month for their services as well as $100 per meeting attended for
Board Committees to which they are appointed.



Deferred Fee
Agreements. Effective as of January 1, 2001, the Bank entered into deferred fee agreements with each of its directors (other than Mr. Ryan). Under these agreements, each director will be entitled to receive retirement benefits upon termination
of service as a director for any reason other than for cause. If a directors services are terminated for cause, he forfeits all benefits under the agreement applicable to him.



Benefits will be paid upon a directors normal or early retirement or disability or in the event of a change in control
(defined as a transfer of 25% or more of the Banks outstanding stock). If a director dies prior to termination of his service as a director, the Bank will pay his beneficiary a lump sum benefit equal to his deferral account balance as of the
date of his death.



Benefits are payable to each director based
upon the value in his deferral account. Each directors deferral account includes his accumulated deferred fees plus accrued interest at a rate established annually by the Board of Directors. Benefits are payable in 120 equal
monthly installments, including interest at a rate set by the Board of Directors for the year in which the termination of service occurs. This interest rate is currently set at Prime + 1% per annum.



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##### Table of Contents

Deferred Compensation Agreements. In 1999, each of the directors of the Bank (other than Mr.
Coleman) entered into a deferred compensation agreement with the Bank. The agreements are essentially identical to Mr. Colemans deferred compensation agreement described above, but with a 10-year payout of the primary benefit.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



STOCK OWNERSHIP OF DIRECTOR NOMINEES, AND

DIRECTOR NOMINEES AND OFFICERS AS A GROUP



The following table sets forth the beneficial ownership of the Companys common stock by the current directors, nominees for director, executive
officers named in the Summary Compensation table, persons who to the Companys knowledge own more than five percent of the outstanding common stock, and directors and executive officers as a group, as of January 1, 2005. Each indicated person
has sole voting and investment power over the indicated shares except as otherwise noted below.



|                                                                     |  |                                          |      |  |                     |  
|-------------------------------------------------------------------- |  | ---------------------------------------- | ---- |  | ------------------- | -
|Name and Address of Beneficial
Owner                                 |  | Amount and Nature ofBeneficial Ownership |      |  | PercentageOwnership |  
|D. Richard Ballard                                                   |  | 21,145                                   | (1)  |  | 2.27                | %
|Charles W. Carter                                                    |  | 50,675                                   | (2)  |  | 5.44                |  
|John L. Coleman                                                      |  | 42,961                                   | (3)  |  | 4.61                |  
|Alfred D. Fears                                                      |  | 40,070                                   | (4)  |  | 4.30                |  
|William B. Jones                                                     |  | 109,585                                  | (5)  |  | 11.77               |  
|Harry Lewis                                                          |  | 36,145                                   |      |  | 3.88                |  
|Joey McClelland                                                      |  | 35,645                                   | (6)  |  | 3.83                |  
|Dr. Alexander Pollack                                                |  | 60,583                                   | (7)  |  | 6.51                |  
|Robert Ryan                                                          |  | 27,853                                   | (8)  |  | 2.99                |  
|James H. Warren                                                      |  | 24,185                                   | (9)  |  | 2.60                |  
|George L. Weaver                                                     |  | 46,899                                   | (10) |  | 5.04                |  
|All current directors and executive officers as a group (13 persons) |  | 521,246                                  |      |  | 55.99               |  

---

|(1) | Does not include 300 shares owned by his adult son, over which shares he asserts no voting or
investment power.
|--- | ---------------------------------------------------------------------------------------------------------------

|(2) | Includes 6,700 shares owned by C. Carter, Inc., 1,500 shares owned by Jones Hometown
Hardware, 4,400 shares owned by Mr. Carters wife, and 600 shares held by his wife as custodian for their grandchildren. Mr. Carter disclaims voting and investment power with respect to the shares held by his wife individually and as custodian.
Does not include 1900 shares owned by his adult son and 600 shares owned by his adult daughter over which he asserts no voting or investment power.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|(3) | Includes 170 shares owned by Mr. Coleman jointly with his wife, 25,000 shares held in Mr.
Colemans IRA, 200 shares subject to vested options and 2,591 shares owned by his wife (as to which voting and investment power is disclaimed). Does not include 55 shares owned by each of his adult daughters, over which shares he asserts no
voting or investment power.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes 5,941 shares owned by Mr. Fears IRA, 650 shares owned by The Fears Firm, PC,
830 shares owned by Fears, Lawrence & Turner, 5,610 shares owned by his wife and 14,059 shares held by his wife as trustee. Mr. Fears disclaims voting and investment power with respect to the shares held by his wife individually and as trustee.
Does not include 55 shares owned by his adult daughter, over which shares he asserts no voting or investment power.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 45,632 shares owned by wholly-owned corporations and 1,000 shares held by Mr.
Joness wife. Mr. Jones disclaims voting and investment power with respect to the shares held by his wife. Does not include 500 shares owned by his adult son, over which shares he asserts no voting or investment power.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Does not include 100 shares owned by Mr. McClellands adult son, 100 shares owned by Mr.
McClellands adult daughter, or 1,800 shares owned by Mr. McClellands mother, over all of which shares he asserts no voting or investment power.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Includes 14,628 shares held by Pollack Art Foundation.
|--- | ------------------------------------------------------

|(8) | Includes 12,853 shares owned by Mr. Ryan and his wife jointly. Does not include 550 shares owned by Mr. Ryans adult son or 1,150 shares owned by Mr.
Ryans stepson, over all of which shares Mr. Ryan asserts no voting or investment power.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Includes 2,926 shares owned by Mr. Warrens IRA, 9,300 shares owned jointly with his wife, and 2,926 shares owned by Mr. Warrens wifes IRA, over all
of which shares he shares voting and investment power; does not include 476 shares owned by his adult daughters, 200 shares owned by his brother over all of which shares Mr. Warren asserts no voting or investment power.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Includes 5,177 shares owned by Mr. Weavers IRA.
|---- | ------------------------------------------------



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##### Table of Contents

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, 2004.



Equity Compensation Plan Table



|                                                           |  |                                                                                          |  |                                                                          |       |                                                                                                                                       |        
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ----- | ------------------------------------------------------------------------------------------------------------------------------------- | -------
|                                                           |  | (a)                                                                                      |  | (b)                                                                      |       | (c)                                                                                                                                  
|Plan category                                              |  | Number of securities tobe issued upon exerciseof outstanding options,warrants and rights |  | Weighted-averageexercise price ofoutstanding options,warrants and rights |       | Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn
(a))
|Equity compensation plans approved by security holders     |  | 102,867                                                                                  |  | $                                                                        | 12.90 |                                                                                                                                       | 324,550
|Equity compensation plans not approved by security holders |  | 0                                                                                        |  |                                                                          | 0     |                                                                                                                                       | 0      
|Total                                                      |  | 102,867                                                                                  |  | $                                                                        | 12.90 |                                                                                                                                       | 324,550



ITEM 12. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS



TRANSACTIONS WITH MANAGEMENT



In the ordinary course of its banking business, the Bank
has had and anticipates that it will continue to have transactions with various directors, officers, principal shareholders, and their associates.



In the opinion of management, all loans and commitments to extend loans included in such transactions were made in the ordinary course of business
substantially on the same terms, including interest rates and collateral, as those prevailing from time to time on comparable transactions with unaffiliated persons and do not involve more than a normal risk of collectibility or present any other
unfavorable features. In managements opinion, the amount of extensions of credit outstanding at any time from the beginning of the last fiscal year to date to a director, director nominee, executive officer or principal security holder and
their associates, individually or in the aggregate, did not exceed the maximum permitted under applicable banking regulations.



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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) | 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)                                                         
|               | 
|10.5*          |  | Form of Director Deferred Compensation Agreement dated as of November 5, 1999 (3)                                                                          
|               | 
|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)                                                                                        
|               | 
|31.2           |  | 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).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

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



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



No reports on Form 8-K were filed during the fourth quarter 2004.



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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit and Other Fees Paid to Independent Accountants



The following table sets forth the fees paid to the Companys independent accountants, Mauldin & Jenkins, LLC, for
the services indicated.



|                   |  |       |        |       |   |       
|------------------ |  | ----- | ------ | ----- | - | ------
|                   |  | 2004* |        | 2003*
|Audit Fees         |  | $     | 49,150 |       | $ | 48,481
|Audit-Related Fees |  |       | 0      |       | $ | 2,216 
|Tax Fees**         |  | $     | 6,950  |       | $ | 7,650 
|All Other Fees     |  |       | n/a    |       | $ | 5,656 

---

|* | Based on an estimate provided by Mauldin & Jenkins, LLC. Includes fees for services billed to the Company in the following year in connection with the indicated years
audit and review of interim financial statements.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Consists of tax return preparation services.
|-- | --------------------------------------------



Audit Fees



Audit fees represent fees billed by Mauldin & Jenkins for professional services rendered in connection with the (1) audit of the Companys annual
financial statements for 2003 and 2004, and (2) review of the financial statements included in the Companys quarterly filings on Form 10-QSB, and (3) services provided in connection with statutory and regulatory filings.



Audit Related Fees



Audit related fees represent fees for professional services rendered for assurance and related services reasonably related
to the performance of the audit or review of the Companys financial statements and not included in Audit Fees above. Audit related fees consist of accounting consultations regarding deferred compensation and other real estate
owned. No audit related fees were incurred in 2004.



Tax Fees



Tax fees represent the aggregate fees billed in each of
the last two fiscal years for professional services rendered by Mauldin & Jenkins for tax compliance, tax advice, and tax planning.



47



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##### Table of Contents

All Other Fees



In 2003 all other fees consisted of Federal Home Loan Bank mortgage collateral verification agreed-upon procedures. These fees are no longer applicable to
Mauldin & Jenkins, LLC.



The fees billed by Mauldin &
Jenkins are pre-approved by the Audit Committee of the Company in accordance with the policies and procedures for the Audit Committee. The Audit Committee pre-approves all audit and non-audit services provided by the Companys independent
auditors and may not engage the independent auditors to perform any prohibited non-audit services. For 2004, 100% of the fees incurred were pre-approved.



The Audit Committee has considered the provision of non-audit services by Mauldin & Jenkins, LLC and has determined that the provision of such
services was consistent with maintaining the independence of Mauldin & Jenkins, LLC.



48



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FIRST GEORGIA COMMUNITY CORP. AND SUBSIDIARY



CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 2004



49



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##### Table of Contents

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 2004



TABLE OF CONTENTS



|                                                        |  |      
|------------------------------------------------------- |  | -----
|                                                        |  | Page 
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |  | 51   
|                                                        | 
|FINANCIAL STATEMENTS                                    |  |      
|                                                        | 
|Consolidated balance sheets                             |  | 52   
|Consolidated statements of income                       |  | 53   
|Consolidated statements of comprehensive income         |  | 54   
|Consolidated statements of stockholders equity         |  | 55   
|Consolidated statements of cash flows                   |  | 56   
|Notes to consolidated financial statements              |  | 57-77



50



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors

First Georgia Community Corp. and Subsidiary

Jackson, Georgia



We
have audited the accompanying consolidated balance sheets of First Georgia Community Corp. and subsidiaryas of December 31, 2004 and 2003, 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 the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004 and
2003, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.



/s/ MAULDIN & JENKINS, LLC



Atlanta, Georgia

February 18, 2005



51



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##### Table of Contents

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2004 AND 2003



|                                                                                                                   |  |      |             |      |   |            
|------------------------------------------------------------------------------------------------------------------ |  | ---- | ----------- | ---- | - | -----------
|                                                                                                                   |  | 2004 |             | 2003
|Assets                                                                                                             |  |      |             |      |   |            
|Cash and due from banks                                                                                            |  | $    | 4,281,050   |      | $ | 4,170,144  
|Interest-bearing deposits in banks                                                                                 |  |      | 863,735     |      |   | 921,805    
|Federal funds sold                                                                                                 |  |      | 17,152,000  |      |   | 10,779,000 
|Securities available for sale                                                                                      |  |      | 19,935,407  |      |   | 19,226,165 
|Restricted equity securities, at cost                                                                              |  |      | 1,413,250   |      |   | 1,278,250  
|                                                                                                                   |  |     
|Loans                                                                                                              |  |      | 150,489,676 |      |   | 103,787,139
|Less allowance for loan losses                                                                                     |  |      | 1,986,917   |      |   | 2,045,879  
|                                                                                                                   |  |      |             |      |   |            
|Loans, net                                                                                                         |  |      | 148,502,759 |      |   | 101,741,260
|                                                                                                                   |  |     
|Premises and equipment                                                                                             |  |      | 3,254,452   |      |   | 2,468,927  
|Other assets                                                                                                       |  |      | 5,648,822   |      |   | 6,584,742  
|                                                                                                                   |  |      |             |      |   |            
|Total assets                                                                                                       |  | $    | 201,051,475 |      | $ | 147,170,293
|                                                                                                                   |  |      |             |      |   |            
|Liabilities and Stockholders Equity                                                                               |  |      |             |      |   |            
|Liabilities:                                                                                                       |  |      |             |      |   |            
|Deposits:                                                                                                          |  |      |             |      |   |            
|Noninterest-bearing                                                                                                |  | $    | 11,721,867  |      | $ | 9,982,542  
|Interest-bearing                                                                                                   |  |      | 146,647,512 |      |   | 96,468,445 
|                                                                                                                   |  |      |             |      |   |            
|Total deposits                                                                                                     |  |      | 158,369,379 |      |   | 106,450,987
|Other borrowings                                                                                                   |  |      | 26,961,594  |      |   | 27,298,090 
|Other liabilities                                                                                                  |  |      | 2,542,434   |      |   | 1,380,023  
|                                                                                                                   |  |      |             |      |   |            
|Total liabilities                                                                                                  |  |      | 187,873,407 |      |   | 135,129,100
|                                                                                                                   |  |      |             |      |   |            
|Commitments and contingencies                                                                                      |  |      |             |      |   |            
|                                                                                                                   |  |     
|Stockholders equity                                                                                               |  |      |             |      |   |            
|Common stock, par value $5; 10,000,000 shares authorized; 931,041 and 930,208 issued and outstanding, respectively |  |      | 4,655,205   |      |   | 4,651,040  
|Surplus                                                                                                            |  |      | 5,131,291   |      |   | 5,123,654  
|Retained earnings                                                                                                  |  |      | 3,359,533   |      |   | 2,109,900  
|Accumulated other comprehensive income                                                                             |  |      | 32,039      |      |   | 156,599    
|                                                                                                                   |  |      |             |      |   |            
|Total stockholders equity                                                                                         |  |      | 13,178,068  |      |   | 12,041,193 
|                                                                                                                   |  |      |             |      |   |            
|Total liabilities and stockholders equity                                                                         |  | $    | 201,051,475 |      | $ | 147,170,293
|                                                                                                                   |  |      |             |      |   |            



See Notes to Consolidated Financial
Statements.



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FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2004 AND 2003



|                                                    |  |      |           |      |   |          
|--------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                    |  | 2004 |           | 2003
|Interest income:                                    |  |      |           |      |   |          
|Loans, including fees                               |  | $    | 8,967,455 |      | $ | 7,443,200
|Taxable securities                                  |  |      | 643,937   |      |   | 657,956  
|Nontaxable securities                               |  |      | 195,113   |      |   | 155,668  
|Deposits in banks                                   |  |      | 383       |      |   | 11,675   
|Federal funds sold                                  |  |      | 134,063   |      |   | 134,372  
|                                                    |  |      |           |      |   |          
|Total interest income                               |  |      | 9,940,951 |      |   | 8,402,871
|                                                    |  |      |           |      |   |          
|Interest expense:                                   |  |      |           |      |   |          
|Deposits                                            |  |      | 2,690,423 |      |   | 2,555,558
|Other borrowings                                    |  |      | 1,121,995 |      |   | 1,191,223
|                                                    |  |      |           |      |   |          
|Total interest expense                              |  |      | 3,812,418 |      |   | 3,746,781
|                                                    |  |      |           |      |   |          
|Net interest income                                 |  |      | 6,128,533 |      |   | 4,656,090
|Provision for loan losses                           |  |      | 57,926    |      |   | 270,000  
|                                                    |  |      |           |      |   |          
|Net interest income after provision for loan losses |  |      | 6,070,607 |      |   | 4,386,090
|                                                    |  |      |           |      |   |          
|Other income:                                       |  |      |           |      |   |          
|Service charges on deposit accounts                 |  |      | 684,350   |      |   | 598,451  
|Gain on sale of securities available for sale       |  |      | 33,032    |      |   |         
|Other operating income                              |  |      | 375,076   |      |   | 406,824  
|                                                    |  |      |           |      |   |          
|Total other income                                  |  |      | 1,092,458 |      |   | 1,005,275
|                                                    |  |      |           |      |   |          
|Other expenses:                                     |  |      |           |      |   |          
|Salaries and employee benefits                      |  |      | 2,761,694 |      |   | 1,854,512
|Equipment and occupancy expenses                    |  |      | 556,674   |      |   | 424,650  
|Other operating expenses                            |  |      | 2,101,042 |      |   | 2,363,443
|                                                    |  |      |           |      |   |          
|Total other expenses                                |  |      | 5,419,410 |      |   | 4,642,605
|                                                    |  |      |           |      |   |          
|Income before income taxes                          |  |      | 1,743,655 |      |   | 748,760  
|                                                    |  |     
|Income tax expense                                  |  |      | 494,022   |      |   | 183,128  
|                                                    |  |      |           |      |   |          
|Net income                                          |  | $    | 1,249,633 |      | $ | 565,632  
|                                                    |  |      |           |      |   |          
|Basic earnings per share                            |  | $    | 1.34      |      | $ | 0.61     
|                                                    |  |      |           |      |   |          
|Diluted earnings per share                          |  | $    | 1.34      |      | $ | 0.61     
|                                                    |  |      |           |      |   |          



See Notes to Consolidated Financial
Statements.



53



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FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2004 AND 2003



|                                                                                                                                       |  |      |           |   |      |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | -------- | -
|                                                                                                                                       |  | 2004 |           |   | 2003 |  
|Net income                                                                                                                             |  | $    | 1,249,633 |   |      | $ | 565,632  |  
|                                                                                                                                       |  |      |           |   |      |   |          |  
|Other comprehensive loss:                                                                                                              |  |      |           |   |      |   |          |  
|Unrealized holding losses on securities available for sale arising during period, net of benefit of $63,791 and $105,975,
respectively |  |      | (104,080  | ) |      |   | (172,907 | )
|                                                                                                                                       |  |     
|Reclassification adjustment for gains realized in net income, net of tax of $12,552 and $0, respectively                               |  |      | (20,480   | ) |      |   |         |  
|                                                                                                                                       |  |      |           |   |      |   |          |  
|Other comprehensive loss                                                                                                               |  |      | (124,560  | ) |      |   | (172,907 | )
|                                                                                                                                       |  |      |           |   |      |   |          |  
|Comprehensive income                                                                                                                   |  | $    | 1,125,073 |   |      | $ | 392,725  |  
|                                                                                                                                       |  |      |           |   |      |   |          |  



See Notes to Consolidated Financial
Statements.



54



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##### Table of Contents

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

YEARS ENDED DECEMBER 31, 2004 AND 2003



|                           |  |              |  |           |           |                  |   |                                       |  |   |                          |  |   |          |   |  |   |            |  
|-------------------------- |  | ------------ |  | --------- | --------- | ---------------- | - | ------------------------------------- |  | - | ------------------------ |  | - | -------- | - |  | - | ---------- | -
|                           |  | Common Stock |  | Surplus   |           | RetainedEarnings |   | Accumulated Other ComprehensiveIncome |  |   | TotalStockholdersEquity | 
|                           |  | Shares       |  | Par Value |           |                  |   |                                      
|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 |  
|Net income                 |  |             |  |           |          |                  |   |                                      |  |   | 1,249,633                |  |   |         |   |  |   | 1,249,633  |  
|Exercise of stock options  |  | 833          |  |           | 4,165     |                  |   | 7,637                                 |  |   |                         |  |   |         |   |  |   | 11,802     |  
|Other comprehensive loss   |  |             |  |           |          |                  |   |                                      |  |   |                         |  |   | (124,560 | ) |  |   | (124,560   | )
|                           |  |              |  |           |           |                  |   |                                       |  |   |                          |  |   |          |   |  |   |            |  
|Balance, December 31, 2004 |  | 931,041      |  | $         | 4,655,205 |                  | $ | 5,131,291                             |  | $ | 3,359,533                |  | $ | 32,039   |   |  | $ | 13,178,068 |  
|                           |  |              |  |           |           |                  |   |                                       |  |   |                          |  |   |          |   |  |   |            |  



See Notes to Consolidated Financial
Statements.



55



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##### Table of Contents

FIRST GEORGIA COMMUNITY CORP.

AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2004 AND 2003



|                                                                                  |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                  |  | 2004 |             |   | 2003 |  
|OPERATING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Net income                                                                        |  | $    | 1,249,633   |   |      | $ | 565,632     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |             |   |      |   |             |  
|Depreciation and amortization                                                     |  |      | 301,587     |   |      |   | 236,126     |  
|Gain on sale of other real estate owned                                           |  |      | (64,990     | ) |      |   | (148,929    | )
|Gain on sale of securities available for sale                                     |  |      | (33,032     | ) |      |   |            |  
|Provision for losses on other real estate owned                                   |  |      |            |   |      |   | 587,992     |  
|Provision for other losses                                                        |  |      | 112,074     |   |      |   |            |  
|Net decrease in loans held for sale                                               |  |      |            |   |      |   | 578,872     |  
|Provision for loan losses                                                         |  |      | 57,926      |   |      |   | 270,000     |  
|Deferred income taxes                                                             |  |      | (70,217     | ) |      |   | 229,062     |  
|Deferred compensation                                                             |  |      | 234,946     |   |      |   | 265,611     |  
|Increase (decrease) in interest receivable                                        |  |      | (156,946    | ) |      |   | 116,622     |  
|Increase (decrease) in interest payable                                           |  |      | 214,612     |   |      |   | (17,935     | )
|Net other operating activities                                                    |  |      | 54,911      |   |      |   | (231,062    | )
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by operating activities                                         |  |      | 1,900,504   |   |      |   | 2,451,991   |  
|                                                                                  |  |      |             |   |      |   |             |  
|INVESTING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Net decrease in interest bearing deposits in banks                                |  |      | 58,070      |   |      |   | 445,891     |  
|Net (increase) decrease in federal funds sold                                     |  |      | (6,373,000  | ) |      |   | 2,056,000   |  
|Purchases of securities available for sale                                        |  |      | (8,969,724  | ) |      |   | (11,612,000 | )
|Proceeds from maturities of securities available for sale                         |  |      | 6,277,117   |   |      |   | 9,668,102   |  
|Proceeds from sales of securities available for sale                              |  |      | 1,757,058   |   |      |   |            |  
|Purchases of restricted equity securities                                         |  |      | (135,000    | ) |      |   | (96,650     | )
|Net increase in loans                                                             |  |      | (46,393,186 | ) |      |   | (304,605    | )
|Purchases of premises and equipment                                               |  |      | (1,028,677  | ) |      |   | (369,412    | )
|Additions to other real estate owned                                              |  |      |            |   |      |   | (54,844     | )
|Proceeds from sale of other real estate owned                                     |  |      | 1,579,046   |   |      |   | 495,006     |  
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by (used in) investing activities                               |  |      | (53,228,296 | ) |      |   | 227,488     |  
|                                                                                  |  |      |             |   |      |   |             |  
|FINANCING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Net increase (decrease) in deposits                                               |  |      | 51,918,392  |   |      |   | (197,264    | )
|Net repayment of other borrowings                                                 |  |      | (491,496    | ) |      |   | (1,211,919  | )
|Proceeds from exercise of stock options                                           |  |      | 11,802      |   |      |   | 55,712      |  
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by (used in) financing activities                               |  |      | 51,438,698  |   |      |   | (1,353,471  | )
|                                                                                  |  |      |             |   |      |   |             |  
|Net increase in cash and due from banks                                           |  |      | 110,906     |   |      |   | 1,326,008   |  
|                                                                                  |  |     
|Cash and due from banks at beginning of year                                      |  |      | 4,170,144   |   |      |   | 2,844,136   |  
|                                                                                  |  |      |             |   |      |   |             |  
|Cash and due from banks at end of year                                            |  | $    | 4,281,050   |   |      | $ | 4,170,144   |  
|                                                                                  |  |      |             |   |      |   |             |  
|SUPPLEMENTAL DISCLOSURES                                                          |  |      |             |   |      |   |             |  
|Cash paid for:                                                                    |  |      |             |   |      |   |             |  
|Interest                                                                          |  | $    | 3,597,806   |   |      | $ | 3,764,716   |  
|                                                                                  |  |     
|Income taxes                                                                      |  | $    | 213,706     |   |      | $ | 83,556      |  
|NONCASH TRANSACTIONS                                                              |  |      |             |   |      |   |             |  
|Principal balances of loans transferred to other real estate owned                |  | $    | 1,988,701   |   |      | $ | 4,327,581   |  
|                                                                                  |  |     
|Financed sales of other real estate owned                                         |  | $    | 2,414,940   |   |      | $ | 2,293,840   |  



See Notes to Consolidated Financial
Statements.



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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 and a loan production office located in Covington, Newton 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 $739,000 and $678,000 at December 31, 2004 and 2003, 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.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Securities (Continued)



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. In estimating other than temporary impairment losses, management considers
(1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in fair value.



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.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Allowance for Loan Losses (Continued)



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.



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 following estimated useful lives of the assets:



|                       |  |            
|---------------------- |  | -----------
|Buildings              |  | 10-40 years
|Leasehold improvements |  | 5-15 years 
|Equipment              |  | 2-10 years 



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, 2004 and 2003 was
$341,206 and $2,281,500, 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.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Stock-Based Compensation



At December 31, 2004, 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.



|                                                                                                                                            |  |                          |           |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | --------- | - | ---- | - | ------- | -
|                                                                                                                                            |  | Years Ended December 31, |          
|                                                                                                                                            |  | 2004                     |           |   | 2003 |  
|Net income, as reported                                                                                                                     |  | $                        | 1,249,633 |   |      | $ | 565,632 |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                          | (13,356   | ) |      |   | (10,135 | )
|                                                                                                                                            |  |                          |           |   |      |   |         |  
|Pro forma net income                                                                                                                        |  | $                        | 1,236,277 |   |      | $ | 555,497 |  
|                                                                                                                                            |  |                          |           |   |      |   |         |  
|Earnings per share:                                                                                                                         |  |                          |           |   |      |   |         |  
|Basic  as reported                                                                                                                         |  | $                        | 1.34      |   |      | $ | .61     |  
|                                                                                                                                            |  |                          |           |   |      |   |         |  
|Basic - pro forma                                                                                                                           |  | $                        | 1.33      |   |      | $ | .60     |  
|                                                                                                                                            |  |                          |           |   |      |   |         |  
|Diluted - as reported                                                                                                                       |  | $                        | 1.34      |   |      | $ | .61     |  
|                                                                                                                                            |  |                          |           |   |      |   |         |  
|Diluted - pro forma                                                                                                                         |  | $                        | 1.33      |   |      | $ | .60     |  
|                                                                                                                                            |  |                          |           |   |      |   |         |  



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.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Recent Accounting Standards



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 adopted 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 December 2004, the
FASB published Statement No. 123 (revised 2004), Share-Based Payment (FAS 123(R) or the Statement). FAS 123(R) requires that the compensation cost relating to share-based payment transactions, including grants of
employee stock options, be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. FAS 123(R) covers a wide range of share-based compensation arrangements including stock
options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. FAS 123(R) is a replacement of FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No.
25, Accounting for Stock Issued to Employees, and its related interpretive guidance (APB 25).



The effect of the Statement will be to require entities to measure the cost of employee services received in exchange for stock options based on the grant-date fair value of the award, and to recognize the cost over
the period the employee is required to provide services for the award. FAS 123(R) permits entities to use any option-pricing model that meets the fair value objective in the Statement.



The Company will be required to apply FAS 123(R) as of the beginning of its first interim period that begins after December
15, 2005, which will be the year ending December 31, 2006.



FAS 123(R) allows two methods for determining the effects of the transition: the modified prospective transition method and the modified retrospective method of transition. Under the modified prospective transition method, an entity would
use the fair value based accounting method for all employee awards granted, modified, or settled after the effective date. As of the effective date, compensation cost related to the nonvested portion of awards outstanding as of that date would be
based on the grant-date fair value of those awards as calculated under the original provisions of Statement No. 123; that is, an entity would not remeasure the grant-date fair value estimate of the unvested portion of awards granted prior to the
effective date. An entity will have the further option to either apply the Statement to only the quarters in the period of adoption and subsequent periods, or apply the Statement to all quarters in the fiscal year of adoption Under the modified
retrospective method of transition, an entity would revise its previously issued financial statements to recognize employee compensation cost for prior periods presented in accordance with the original provisions of Statement No. 123.



The Company has not yet completed its study of the transition methods or
made any decisions about how it will adopt FAS 123(R).



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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, 2004                     |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|U.S. Government and agency securities |  | $              | 11,216,658 |                        | $ | 34,635                  |  | $ | (26,422    | ) |  | $ | 11,224,871
|State and municipal securities        |  |                | 5,612,513  |                        |   | 127,235                 |  |   | (56,844    | ) |  |   | 5,682,904 
|Mortgage-backed securities            |  |                | 3,054,561  |                        |   | 9,143                   |  |   | (36,072    | ) |  |   | 3,027,632 
|                                      |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|                                      |  | $              | 19,883,732 |                        | $ | 171,013                 |  | $ | (119,338   | ) |  | $ | 19,935,407
|                                      |  |                |            |                        |   |                         |  |   |            |   |  |   |           
|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
|                                      |  |                |            |                        |   |                         |  |   |            |   |  |   |           



The following table
shows the gross unrealized losses and fair value of securities, aggregated by category and length of time that securities have been in a continuous unrealized loss position at December 31, 2004.



|                                      |  |                     |           |                  |                   |         |            |       |                  |           |  |            |         |                  |  |   |            |  |   |          |  
|------------------------------------- |  | ------------------- | --------- | ---------------- | ----------------- | ------- | ---------- | ----- | ---------------- | --------- |  | ---------- | ------- | ---------------- |  | - | ---------- |  | - | -------- | -
|                                      |  | Less Than 12 Months |           |                  | 12 Months or More |         |            | Total |                 
|Description of Securities:            |  | Fair Value          |           | UnrealizedLosses |                   |         | Fair Value |       | UnrealizedLosses |           |  | Fair Value |         | UnrealizedLosses | 
|U.S. Government and agency securities |  | $                   | 6,463,000 |                  | $                 | (26,422 | )          |       | $                |          |  | $          |        |                  |  | $ | 6,463,000  |  | $ | (26,422  | )
|State and municipal securities        |  |                     | 861,353   |                  |                   | (11,811 | )          |       |                  | 1,014,967 |  |            | (45,033 | )                |  |   | 1,876,320  |  |   | (56,844  | )
|Mortgage-backed securities            |  |                     | 1,864,978 |                  |                   | (11,432 | )          |       |                  | 979,318   |  |            | (24,640 | )                |  |   | 2,844,296  |  |   | (36,072  | )
|                                      |  |                     |           |                  |                   |         |            |       |                  |           |  |            |         |                  |  |   |            |  |   |          |  
|Total temporarily impaired securities |  | $                   | 9,189,331 |                  | $                 | (49,665 | )          |       | $                | 1,994,285 |  | $          | (69,673 | )                |  | $ | 11,183,616 |  | $ | (119,338 | )
|                                      |  |                     |           |                  |                   |         |            |       |                  |           |  |            |         |                  |  |   |            |  |   |          |  



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, 2004, all unrealized losses in the securities portfolio were for debt
securities. From the December 31, 2004 amortized cost/fair value tables above, seven out of nineteen securities purchased from state and political subdivisions contained unrealized losses and seventeen out of twenty-eight securities purchased from
U.S. Government agencies and Government sponsored corporations, including mortgage-backed securities, contained unrealized losses. These unrealized losses are considered temporary because of acceptable investment grades on each security and the
repayment sources of principal and interest are government backed.



At December 31, 2003, all unrealized losses in the securities portfolio were for debt securities. From the December 31, 2003 amortized cost/fair value 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. All securities with an
unrealized loss at December 31, 2003 have been in a continuous unrealized loss position for less than twelve months.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 2. SECURITIES AVAILABLE FOR SALE (Continued)



Securities with a carrying value of $9,673,000 and $16,309,000 at December
31, 2004 and 2003 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, 2004 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 in less than one year  |  | $              | 1,004,209  |            | $ | 1,017,650 
|Due from one to five years |  |                | 6,826,396  |            |   | 6,818,231 
|Due from five to ten years |  |                | 6,981,722  |            |   | 7,002,421 
|Due after ten years        |  |                | 2,016,844  |            |   | 2,069,473 
|Mortgage-backed securities |  |                | 3,054,561  |            |   | 3,027,632 
|                           |  |                |            |            |   |           
|                           |  | $              | 19,883,732 |            | $ | 19,935,407
|                           |  |                |            |            |   |           



Gross gains and losses
on sales of securities available for sale consist of the following:



|                   |  |                          |        |   |      |   |  
|------------------ |  | ------------------------ | ------ | - | ---- | - | -
|                   |  | Years Ended December 31,
|                   |  | 2004                     |        |   | 2003
|Gross gains        |  | $                        | 34,609 |   |      | $ | 
|Gross losses       |  |                          | (1,577 | ) |      |   | 
|                   |  |                          |        |   |      |   |  
|Net realized gains |  | $                        | 33,032 |   |      | $ | 
|                   |  |                          |        |   |      |   |  



NOTE 3. LOANS



The composition of loans is summarized as follows:



|                                       |  |              |             |   |      |   |             |  
|-------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                       |  | December 31, |            
|                                       |  | 2004         |             |   | 2003 |  
|Commercial, financial and agricultural |  | $            | 11,092,000  |   |      | $ | 11,141,000  |  
|Real estate  construction             |  |              | 56,353,000  |   |      |   | 13,873,000  |  
|Real estate  mortgage                 |  |              | 81,176,000  |   |      |   | 76,524,000  |  
|Consumer installment and other         |  |              | 2,339,738   |   |      |   | 2,528,334   |  
|                                       |  |              |             |   |      |   |             |  
|                                       |  |              | 150,960,738 |   |      |   | 104,066,334 |  
|Deferred loan fees                     |  |              | (471,062    | ) |      |   | (279,195    | )
|Allowance for loan losses              |  |              | (1,986,917  | ) |      |   | (2,045,879  | )
|                                       |  |              |             |   |      |   |             |  
|Loans, net                             |  | $            | 148,502,759 |   |      | $ | 101,741,260 |  
|                                       |  |              |             |   |      |   |             |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3. LOANS (Continued)



Changes in the allowance for loan losses are as follows:



|                                           |  |                          |           |   |      |   |            |  
|------------------------------------------ |  | ------------------------ | --------- | - | ---- | - | ---------- | -
|                                           |  | Years Ended December 31, |          
|                                           |  | 2004                     |           |   | 2003 |  
|Balance, beginning of year                 |  | $                        | 2,045,879 |   |      | $ | 2,802,091  |  
|Provision for loan losses                  |  |                          | 57,926    |   |      |   | 270,000    |  
|Loans charged off                          |  |                          | (131,793  | ) |      |   | (1,039,514 | )
|Recoveries of loans previously charged off |  |                          | 14,905    |   |      |   | 13,302     |  
|                                           |  |                          |           |   |      |   |            |  
|Balance, end of year                       |  | $                        | 1,986,917 |   |      | $ | 2,045,879  |  
|                                           |  |                          |           |   |      |   |            |  



The total recorded
investment in impaired loans was $1,231,454 and $2,226,770 at December 31, 2004 and 2003, respectively. At December 31, 2004 and 2003, these impaired loans had related allowances determined in accordance with SFAS No. 114, Accounting by Creditors
for Impairment of a Loan, of $90,878 and $240,325, respectively. The average recorded investment in impaired loans for 2004 and 2003 was $2,141,245 and $3,098,507, respectively. Interest income recognized for cash payments received on impaired
loans totaled $154,381 and $57,490 for the years ended December 31, 2004 and 2003, respectively.



There were no nonaccrual loans at December 31, 2004 and 2003. There were no loans past due ninety days or more and still accruing interest at December 31,
2004 and 2003.



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, 2004 are as follows:



|                           |  |   |            |  
|-------------------------- |  | - | ---------- | -
|Balance, beginning of year |  | $ | 8,264,676  |  
|Advances                   |  |   | 7,216,399  |  
|Repayments                 |  |   | (7,560,172 | )
|                           |  |   |            |  
|Balance, end of year       |  | $ | 7,920,903  |  
|                           |  |   |            |  



NOTE 4. PREMISES AND EQUIPMENT



Premises and equipment are summarized as follows:



|                         |  |              |            |   |      |   |           |  
|------------------------ |  | ------------ | ---------- | - | ---- | - | --------- | -
|                         |  | December 31, |           
|                         |  | 2004         |            |   | 2003 |  
|Land                     |  | $            | 802,951    |   |      | $ | 493,265   |  
|Buildings                |  |              | 2,099,059  |   |      |   | 1,695,566 |  
|Construction in process  |  |              | 61,592     |   |      |   |          |  
|Leasehold improvements   |  |              | 235,214    |   |      |   | 224,669   |  
|Equipment                |  |              | 1,248,006  |   |      |   | 1,004,646 |  
|                         |  |              |            |   |      |   |           |  
|                         |  |              | 4,446,822  |   |      |   | 3,418,146 |  
|Accumulated depreciation |  |              | (1,192,370 | ) |      |   | (949,219  | )
|                         |  |              |            |   |      |   |           |  
|                         |  | $            | 3,254,452  |   |      | $ | 2,468,927 |  
|                         |  |              |            |   |      |   |           |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 4. PREMISES AND EQUIPMENT (Continued)



The Company has leased various properties under noncancelable operating
lease agreements which expire at various times through 2008 with renewal options through 2018. The leases related to properties also require the payment of property taxes, normal maintenance and insurance.



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



|     |  |   |        
|---- |  | - | -------
|2005 |  | $ | 82,464 
|2006 |  |   | 42,451 
|2007 |  |   | 31,950 
|2008 |  |   | 5,000  
|     |  |   |        
|     |  | $ | 161,865
|     |  |   |        



NOTE 5. DEPOSITS



The aggregate amount of time deposits in denominations of $100,000 or more
at December 31, 2004 and 2003 was $64,977,651 and $29,404,747, respectively. The Company had brokered deposits at December 31, 2004 and 2003 of $45,595,000 and $15,936,000, respectively. The scheduled maturities of time deposits at December 31, 2004
are as follows:



|            |  |   |            
|----------- |  | - | -----------
|2005        |  | $ | 89,771,950 
|2006        |  |   | 13,878,663 
|2007        |  |   | 3,160,423  
|2008        |  |   | 2,221,812  
|2009        |  |   | 730,255    
|Later years |  |   | 99,000     
|            |  |   |            
|            |  | $ | 109,862,103
|            |  |   |            



Overdraft demand
deposits reclassified to loans totaled $46,348 and $161,149 at December 31, 2004 and 2003, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6. OTHER BORROWINGS



Other borrowings consist of the following:



|                                                                                                                                                                                 |  |              |            |      |   |           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ---- | - | ----------
|                                                                                                                                                                                 |  | December 31,
|                                                                                                                                                                                 |  | 2004         |            | 2003
|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  |      | $ | 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 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.                                                                                                                                     |  |              | 4,006,594  |      |   | 4,498,090 
|Floating rate junior subordinated debentures, interest payable quarterly at the three month LIBOR plus 3.45%, due November 7,
2032.                                              |  |              | 5,155,000  |      |   | 5,000,000 
|                                                                                                                                                                                 |  |              |            |      |   |           
|                                                                                                                                                                                 |  | $            | 26,961,594 |      | $ | 27,298,090
|                                                                                                                                                                                 |  |              |            |      |   |           



The Company has
available unused lines of credit with various financial institutions totaling $12,800,000 at December 31, 2004. There were no other advances outstanding at December 31, 2004 or 2003.



The advances from the Federal Home Loan Bank are secured by certain qualifying loans of approximately $15 million and
certain qualifying securities with a fair value of $9,421,282.



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.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6. OTHER BORROWINGS (Continued)



The Company has 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. EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS



The Company has a 401(k) profit sharing plan available to all eligible
employees, subject to certain minimum age and service requirements. Contributions charged to expense were $50,211 and $46,093 for the years ended December 31, 2004 and 2003, respectively.



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, 2004 and 2003 is $2,447,759 and $2,358,127, respectively. Income recognized on the policies amounted to $89,632 and $100,551 for the years ended December 31, 2004 and 2003,
respectively. The balance of the deferred compensation included in other liabilities at December 31, 2004 and 2003 is $804,641 and $660,557, respectively. Expense recognized for executive officer and director deferred compensation amounted to
$144,084 and $179,089 for the years ended December 31, 2004 and 2003, respectively.



The Company has 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% for the remainder of 2003 and in 2004. The total amount of fees deferred in 2004 and 2003 totaled $79,800 and $74,900, respectively. The total amount of interest credited to deferred fees in 2004 and 2003 totaled $11,062 and
$11,622, respectively. The balance of the deferred fees plus interest credited at December 31, 2004 and 2003 amounted to $271,242 and $180,380, respectively, and is included in other liabilities.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8. STOCK-BASED COMPENSATION



The Company has a stock incentive plan and has reserved 750,000 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.



Other pertinent information related to the options is as follows:



|                                                               |  |                         |         |      |                                  |   |        |  |   |                                  |   |  |   |      
|-------------------------------------------------------------- |  | ----------------------- | ------- | ---- | -------------------------------- | - | ------ |  | - | -------------------------------- | - |  | - | -----
|                                                               |  | Year Ended December 31,
|                                                               |  | 2004                    |         | 2003
|                                                               |  | Number                  |         |      | Weighted- Average Exercise Price |   | Number |  |   | Weighted- Average Exercise Price
|Under option, beginning of year                                |  |                         | 40,700  |      |                                  | $ | 13.39  |  |   | 50,500                           |   |  | $ | 13.38
|Granted                                                        |  |                         | 63,000  |      |                                  |   | 12.38  |  |   |                                 |   |  |   |     
|Exercised                                                      |  |                         | (833    | )    |                                  |   | 14.17  |  |   | (4,500                           | ) |  |   | 12.38
|Cancelled                                                      |  |                         |        |      |                                  |   |       |  |   | (5,300                           | ) |  |   | 14.17
|                                                               |  |                         |         |      |                                  |   |        |  |   |                                  |   |  |   |      
|Under option, end of year                                      |  |                         | 102,867 |      |                                  |   | 12.90  |  |   | 40,700                           |   |  |   | 13.39
|                                                               |  |                         |         |      |                                  |   |        |  |   |                                  |   |  |   |      
|Exercisable, end of year                                       |  |                         | 26,253  |      |                                  |   | 12.96  |  |   | 22,318                           |   |  |   | 12.75
|                                                               |  |                         |         |      |                                  |   |        |  |   |                                  |   |  |   |      
|Weighted average fair value of options granted during the year |  | $                       | 4.75    |      |                                  |   |        |  | $ |                                 |   |  |   |      
|                                                               |  |                         |         |      |                                  |   |        |  |   |                                  |   |  |   |      



Information pertaining
to options outstanding at December 31, 2004 is as follows:



|                         |  |                     |  |                                            |  |                                 |       |                   |        |                                 |   |      
|------------------------ |  | ------------------- |  | ------------------------------------------ |  | ------------------------------- | ----- | ----------------- | ------ | ------------------------------- | - | -----
|                         |  | Options Outstanding |  | Options Exercisable                       
|Range of Exercise
Prices |  | NumberOutstanding   |  | Weighted- AverageRemainingContractual Life |  | Weighted- Average ExercisePrice |       | NumberExercisable |        | Weighted- AverageExercise Price
|$12.38  $14.17          |  | 102,867             |  | 8.73                                       |  | $                               | 12.90 |                   | 26,253 |                                 | $ | 12.96
|                         |  |                     |  |                                            |  |                                 |       |                   |        |                                 |   |      



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,
|                        |  | 2004                     |   |  | 2003
|Dividend yield          |  | 0                        | % |  | N/A 
|Expected life           |  | 10 years                 |   |  | N/A 
|Expected volatility     |  | 11.69                    | % |  | N/A 
|Risk-free interest rate |  | 4.53                     | % |  | N/A 



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 9. INCOME TAXES



Income tax expense consists of the following:



|                   |  |                          |         |   |      |   |         |  
|------------------ |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                   |  | Years Ended December 31, |        
|                   |  | 2004                     |         |   | 2003 |  
|Current            |  | $                        | 564,239 |   |      | $ | (45,934 | )
|Deferred           |  |                          | (70,217 | ) |      |   | 229,062 |  
|                   |  |                          |         |   |      |   |         |  
|Income tax expense |  | $                        | 494,022 |   |      | $ | 183,128 |  
|                   |  |                          |         |   |      |   |         |  



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, |        
|                                       |  | 2004                     |         |   | 2003 |  
|Income taxes at statutory federal rate |  | $                        | 592,843 |   |      | $ | 254,579 |  
|Tax free interest income               |  |                          | (63,906 | ) |      |   | (50,744 | )
|Income from life insurance policies    |  |                          | (30,475 | ) |      |   | (34,187 | )
|State income taxes                     |  |                          | (884    | ) |      |   | 7,638   |  
|Other                                  |  |                          | (3,556  | ) |      |   | 5,842   |  
|                                       |  |                          |         |   |      |   |         |  
|Income tax expense                     |  | $                        | 494,022 |   |      | $ | 183,128 |  
|                                       |  |                          |         |   |      |   |         |  



The components of
deferred income taxes are as follows:



|                              |  |              |           |      |   |          
|----------------------------- |  | ------------ | --------- | ---- | - | ---------
|                              |  | December 31,
|                              |  | 2004         |           | 2003
|Deferred tax assets:          |  |              |           |      |   |          
|Loan loss reserves            |  | $            | 564,925   |      | $ | 579,591  
|Other real estate owned       |  |              | 7,547     |      |   | 80,666   
|Deferred compensation         |  |              | 405,993   |      |   | 317,335  
|Deferred loan fees            |  |              | 177,128   |      |   | 104,476  
|Other                         |  |              |          |      |   | 2,592    
|                              |  |              |           |      |   |          
|                              |  |              | 1,155,593 |      |   | 1,084,660
|                              |  |              |           |      |   |          
|                              |  |              |           |      |   |          
|Deferred tax liabilities:     |  |              |           |      |   |          
|Depreciation                  |  |              | 41,312    |      |   | 40,596   
|Securities available for sale |  |              | 19,637    |      |   | 95,981   
|                              |  |              |           |      |   |          
|                              |  |              | 60,949    |      |   | 136,577  
|                              |  |              |           |      |   |          
|Net deferred tax assets       |  | $            | 1,094,644 |      | $ | 948,083  
|                              |  |              |           |      |   |          



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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,
|                                                                                                                                |  | 2004                     |           | 2003
|Basic Earnings Per Share:                                                                                                       |  |                          |           |      |   |        
|Weighted average common shares outstanding                                                                                      |  |                          | 930,799   |      |   | 928,940
|                                                                                                                                |  |                          |           |      |   |        
|                                                                                                                                |  |                          |           |      |   |        
|Net income                                                                                                                      |  | $                        | 1,249,633 |      | $ | 565,632
|                                                                                                                                |  |                          |           |      |   |        
|                                                                                                                                |  |                          |           |      |   |        
|Basic earnings per share                                                                                                        |  | $                        | 1.34      |      | $ | .61    
|                                                                                                                                |  |                          |           |      |   |        
|                                                                                                                                |  |                          |           |      |   |        
|Diluted Earnings Per Share:                                                                                                     |  |                          |           |      |   |        
|Weighted average common shares outstanding                                                                                      |  |                          | 930,799   |      |   | 928,940
|Net effect of the assumed exercise of stock options based on the treasury stock method using average market prices for the
year |  |                          | 1,538     |      |   | 1,329  
|                                                                                                                                |  |                          |           |      |   |        
|Total weighted average common shares and common stock equivalents outstanding                                                   |  |                          | 932,337   |      |   | 930,269
|                                                                                                                                |  |                          |           |      |   |        
|                                                                                                                                |  |                          |           |      |   |        
|Net income                                                                                                                      |  | $                        | 1,249,633 |      | $ | 565,632
|                                                                                                                                |  |                          |           |      |   |        
|                                                                                                                                |  |                          |           |      |   |        
|Diluted earnings per share                                                                                                      |  | $                        | 1.34      |      | $ | .61    
|                                                                                                                                |  |                          |           |      |   |        



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.



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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,
|                                    |  | 2004         |            | 2003
|Commitments to extend credit        |  | $            | 50,887,000 |      | $ | 10,227,000
|Financial standby letters of credit |  |              | 290,000    |      |   | 223,000   
|Other standby letters of credit     |  |              | 244,000    |      |   | 174,000   
|                                    |  |              |            |      |   |           
|                                    |  | $            | 51,421,000 |      | $ | 10,624,000
|                                    |  |              |            |      |   |           



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. As of December 31, 2004,
the Company had recorded reserves of $112,074 for potential losses related to unfunded commitments, the balance of which is included in other liabilities in the consolidated balance sheet.



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, 2004 and 2003, 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, 2004 and
2003.



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.



In 2004, the Company sold a parcel of other real estate owned that had federal tax liens of $336,044 attached. As a
condition of the sale, the Company purchased an indemnity bond in the amount of $504,066, the funds of which are held in escrow and included in other assets in the consolidated balance sheet. Depending upon the resolution of these liens, the Company
could incur a loss for the amount of the bond.



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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.



Ninety-one 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, 2004, loans to
customers in this industry amounted to approximately $43,000,000 or 28% 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 $3,152,000.



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, 2004, dividends of approximately $731,000 could be declared by the Bank payable to the Company without regulatory approval. As of December 31, 2004, the Company
could not declare dividends payable to the stockholders without prior 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, 2004 and 2003, the Company and the Bank met all capital adequacy requirements to which they are
subject.



As of December 31, 2004, 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.



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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 Corrective Action Provisions |       
|                                        |  | Amount                 |        | Ratio |                               |   | Amount |                                                                  | Ratio  |  |   | Amount |  | Ratio |       
|                                        |  | (Dollars in Thousands) |       
|December 31, 2004:                      |  |                        |        |       |                               |   |        |                                                                  |        |  |   |        |  |       |        |  |     |  
|Total Capital to Risk Weighted Assets:  |  |                        |        |       |                               |   |        |                                                                  |        |  |   |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 20,245 |       | 11.65                         | % |        | $                                                                | 13,905 |  | 8 | %      |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 18,720 |       | 10.79                         | % |        | $                                                                | 13,875 |  | 8 | %      |  | $     | 17,344 |  | 10  | %
|Tier I Capital to Risk Weighted Assets: |  |                        |        |       |                               |   |        |                                                                  |        |  |   |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 17,528 |       | 10.08                         | % |        | $                                                                | 6,953  |  | 4 | %      |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 16,621 |       | 9.58                          | % |        | $                                                                | 6,938  |  | 4 | %      |  | $     | 10,406 |  | 6   | %
|Tier I Capital to Average Assets:       |  |                        |        |       |                               |   |        |                                                                  |        |  |   |        |  |       |        |  |     |  
|Consolidated                            |  | $                      | 17,528 |       | 9.23                          | % |        | $                                                                | 7,600  |  | 4 | %      |  | $     | N/A    |  | N/A |  
|Bank                                    |  | $                      | 16,621 |       | 8.75                          | % |        | $                                                                | 7,599  |  | 4 | %      |  | $     | 9,500  |  | 5   | %
|                                        |  |                        |        |       |                               |  
|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   | %



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.



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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: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.



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, 2004 |             | December 31, 2003
|                                                                                  |  | Carrying Amount   |             | Fair Value        |   | Carrying Amount |  | Fair Value
|Financial assets:                                                                 |  |                   |             |                   |   |                 |  |            |             |  |   |            
|Cash, due from banks, interest- bearing deposits in banks, and federal funds sold |  | $                 | 22,296,785  |                   | $ | 22,296,785      |  | $          | 15,870,949  |  | $ | 15,870,949 
|Securities                                                                        |  |                   | 21,348,657  |                   |   | 21,348,657      |  |            | 20,504,415  |  |   | 20,504,415 
|Loans                                                                             |  |                   | 148,502,759 |                   |   | 149,902,485     |  |            | 101,741,260 |  |   | 103,890,346
|Accrued interest receivable                                                       |  |                   | 768,832     |                   |   | 768,832         |  |            | 611,886     |  |   | 611,886    
|                                                                                  |  |                   |             |                  
|Financial liabilities:                                                            |  |                   |             |                   |   |                 |  |            |             |  |   |            
|Deposits                                                                          |  |                   | 158,369,379 |                   |   | 158,432,782     |  |            | 106,450,987 |  |   | 107,093,956
|Other borrowings                                                                  |  |                   | 26,961,594  |                   |   | 27,785,242      |  |            | 27,298,090  |  |   | 28,489,800 
|Accrued interest payable                                                          |  |                   | 612,768     |                   |   | 612,768         |  |            | 398,156     |  |   | 398,156    



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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,
|                                                |  | 2004                     |         | 2003
|Other income:                                   |  |                          |         |      |   |        
|Income from life insurance policies             |  | $                        | 89,632  |      | $ | 100,551
|Gain on sale of other real estate               |  |                          | 64,990  |      |   | 148,929
|Other expenses:                                 |  |                          |         |      |   |        
|Deferred compensation                           |  |                          | 144,084 |      |   | 179,089
|Accounting and auditing                         |  |                          | 115,000 |      |   | 88,985 
|Data processing                                 |  |                          | 246,617 |      |   | 218,140
|Provision for losses on other real estate owned |  |                          |        |      |   | 587,992
|Other real estate expense                       |  |                          | 104,691 |      |   | 249,070
|Professional services                           |  |                          | 141,712 |      |   | 87,157 
|Provision for other losses                      |  |                          | 112,074 |      |   |       



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, 2004 and 2003:



CONDENSED BALANCE SHEETS



|                                           |  |      |            |      |   |           
|------------------------------------------ |  | ---- | ---------- | ---- | - | ----------
|                                           |  | 2004 |            | 2003
|Assets                                     |  |      |            |      |   |           
|Cash                                       |  | $    | 1,340,657  |      | $ | 4,516,616 
|Investment in subsidiary                   |  |      | 16,653,316 |      |   | 12,315,595
|Other assets                               |  |      | 379,004    |      |   | 249,364   
|                                           |  |      |            |      |   |           
|Total assets                               |  | $    | 18,372,977 |      | $ | 17,081,575
|                                           |  |      |            |      |   |           
|Liabilities                                |  |      |            |      |   |           
|Other borrowings                           |  | $    | 5,155,000  |      | $ | 5,000,000 
|Other liabilities                          |  |      | 39,909     |      |   | 40,382    
|                                           |  |      |            |      |   |           
|Total liabilities                          |  |      | 5,194,909  |      |   | 5,040,382 
|                                           |  |     
|Stockholders equity                       |  |      | 13,178,068 |      |   | 12,041,193
|                                           |  |      |            |      |   |           
|Total liabilities and stockholders equity |  | $    | 18,372,977 |      | $ | 17,081,575
|                                           |  |      |            |      |   |           



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 16. PARENT COMPANY FINANCIAL INFORMATION (Continued)



CONDENSED STATEMENTS OF INCOME



|                                                                                 |  |      |           |   |      |   |          |  
|-------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | -------- | -
|                                                                                 |  | 2004 |           |   | 2003 |  
|Income                                                                           |  |      |           |   |      |   |          |  
|Interest income                                                                  |  | $    | 7,635     |   |      | $ |         |  
|                                                                                 |  |      |           |   |      |   |          |  
|Total income                                                                     |  |      | 7,635     |   |      |   |         |  
|                                                                                 |  |      |           |   |      |   |          |  
|Expenses                                                                         |  |      |           |   |      |   |          |  
|Interest expense                                                                 |  |      | 248,435   |   |      |   | 243,165  |  
|Salaries and employee benefits                                                   |  |      | 13,200    |   |      |   | 13,200   |  
|Other expenses                                                                   |  |      | 87,490    |   |      |   | 67,658   |  
|                                                                                 |  |      |           |   |      |   |          |  
|Total expenses                                                                   |  |      | 349,125   |   |      |   | 324,023  |  
|                                                                                 |  |      |           |   |      |   |          |  
|Loss before income tax benefits and equity in undistributed income of subsidiary |  |      | (341,490  | ) |      |   | (324,023 | )
|                                                                                 |  |     
|Income tax benefits                                                              |  |      | (128,842  | ) |      |   | (122,246 | )
|                                                                                 |  |      |           |   |      |   |          |  
|Loss before equity in undistributed income of subsidiary                         |  |      | (212,648  | ) |      |   | (201,777 | )
|                                                                                 |  |     
|Equity in undistributed income of subsidiary                                     |  |      | 1,462,281 |   |      |   | 767,409  |  
|                                                                                 |  |      |           |   |      |   |          |  
|Net income                                                                       |  | $    | 1,249,633 |   |      | $ | 565,632  |  
|                                                                                 |  |      |           |   |      |   |          |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 16. PARENT COMPANY FINANCIAL INFORMATION (Continued)



CONDENSED STATEMENTS OF CASH FLOWS



|                                                                              |  |      |            |   |      |   |           |  
|----------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                                                              |  | 2004 |            |   | 2003 |  
|OPERATING ACTIVITIES                                                          |  |      |            |   |      |   |           |  
|Net income                                                                    |  | $    | 1,249,633  |   |      | $ | 565,632   |  
|Adjustments to reconcile net income to net cash used in operating activities: |  |      |            |   |      |   |           |  
|Equity in undistributed income of subsidiary                                  |  |      | (1,462,281 | ) |      |   | (767,409  | )
|Net other operating activities                                                |  |      | 24,887     |   |      |   | (59,045   | )
|                                                                              |  |      |            |   |      |   |           |  
|Net cash used in operating activities                                         |  |      | (187,761   | ) |      |   | (260,822  | )
|                                                                              |  |      |            |   |      |   |           |  
|INVESTING ACTIVITIES                                                          |  |      |            |   |      |   |           |  
|Investment in subsidiary                                                      |  |      | (3,000,000 | ) |      |   | (250,000  | )
|                                                                              |  |      |            |   |      |   |           |  
|Net cash used in investing activities                                         |  |      | (3,000,000 | ) |      |   | (250,000  | )
|                                                                              |  |      |            |   |      |   |           |  
|FINANCING ACTIVITIES                                                          |  |      |            |   |      |   |           |  
|Proceeds from exercise of stock options                                       |  |      | 11,802     |   |      |   | 55,712    |  
|                                                                              |  |      |            |   |      |   |           |  
|Net cash provided by financing activities                                     |  |      | 11,802     |   |      |   | 55,712    |  
|                                                                              |  |      |            |   |      |   |           |  
|Net decrease in cash                                                          |  |      | (3,175,959 | ) |      |   | (455,110  | )
|                                                                              |  |     
|Cash at beginning of year                                                     |  |      | 4,516,616  |   |      |   | 4,971,726 |  
|                                                                              |  |      |            |   |      |   |           |  
|Cash at end of year                                                           |  | $    | 1,340,657  |   |      | $ | 4,516,616 |  
|                                                                              |  |      |            |   |      |   |           |  



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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 23, 2005.



FIRST GEORGIA COMMUNITY CORP.By:

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




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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 29, 2005.



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

---

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

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



79