<PAGE>

                                                                    EXHIBIT 13.1

                  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations

The following is a discussion of our financial condition and the financial
condition of our bank subsidiary, First Georgia Community Bank at December 31,
2001 and 2000 and the results of operations for the years then ended. The
purpose of this discussion is to focus on information about our financial
condition and results of operations that are not otherwise apparent from our
audited consolidated financial statements. Reference should be made to those
statements and the selected financial data presented elsewhere in this report
for an understanding of the following discussion and analysis.

Forward-Looking Statements

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

Overview

Our 2001 results were highlighted by the reporting of net income of $936,000 for
an increase of $123,000 over 2000. Despite a downturn in the national and state
economy exacerbated by the effects of the September 11, 2001 terrorist attacks,
we had significant loan and overall asset growth. This growth should provide a
base for continued profitability.

<PAGE>

Financial Condition at December 31, 2001 and 2000

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

                                                   December 31,
                                               2001         2000
                                             (Dollars in Thousands)

Cash and due from banks                      $  2,417      $  1,433
Interest-bearing deposits in banks              1,074            45
Federal funds sold                              3,082         7,090
Securities                                     16,626         8,282
Loans, net                                     86,631        63,034
Loans held for sale                               303            --
Premises and equipment                          2,373         2,163
Other assets                                    3,405         2,929
                                             --------      --------

                                             $115,911      $ 84,976
                                             ========      ========

Total deposits                               $ 92,739      $ 69,678
Other borrowings                               13,300         6,307
Other liabilities                                 787           902
Stockholders' equity                            9,085         8,089
                                             --------      --------

                                             $115,911      $ 84,976
                                             ========      ========

Financial Condition at December 31, 2001 and 2000

As of December 31, 2001, we had total assets of $115.9 million, an increase of
36% over total assets as of December 31, 2000. Total interest-earning assets
were $109.1 million at December 31, 2001 or 94% of total assets as compared to
93% of total assets at December 31, 2000. Our primary interest-earning assets at
December 31, 2001 were loans, which made up 81% of total interest-earning assets
as compared to 81% at December 31, 2000. Our loan to deposit ratio was 95% at
December 31, 2001 as compared to 92% at December 31, 2000. Deposit growth of
$23.1 million and increased other borrowings of $7.0 million have been used
primarily to fund loan growth of $23.9 million. The remainder of funds provided
by these financing activities, coupled with a decrease in federal funds sold of
$4.0 million, was invested primarily in securities.

Our securities portfolio, consisting of U.S. Agency, mortgage-backed, municipal,
and restricted equity securities, amounted to $16.6 million at December 31,
2001. Unrealized losses on securities amounted to $4,000 at December 31, 2001 as
compared to $52,000 at December 31, 2000. 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 85% of our loan portfolio collateralized by real estate located in our
primary 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 (15%), construction loans to build one to four-family
residential properties (27%), and nonresidential properties

<PAGE>

consisting primarily of small business commercial
properties (58%). 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 15% 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 stable with no indications of a significant downturn in
the local economy.

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

Liquidity and Capital Resources

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

As our loan demand has continued to increase, we have increased the use of
brokered deposits as a funding source. Brokered deposits totaled $18.1 million
as of December 31, 2001. 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

<PAGE>

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 16% at December 31, 2001 was considered satisfactory.

At December 31, 2001, we had loan commitments outstanding of $9.5 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, 2001, we had arrangements with three commercial
banks for short-term advances of $5,000,000.

At December 31, 2001, our capital ratios were considered adequate based on
regulatory minimum capital requirements. Our stockholders' equity increased due
to net income in 2001 of $936,000. Our stockholders' equity also increased due
to an increase in the fair value of securities available-for-sale, net of tax,
in the amount of $32,000 and due to the exercise of stock options in the amount
of $28,000. 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 pay $485,000 in dividends
without regulatory approval.

The minimum capital requirements to be considered well capitalized under prompt
corrective action provisions and the actual capital ratios for First Georgia
Community Corp. and the Bank as of December 31, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                Actual
                                            --------------------------

                                                                                  Regulatory
                                            Consolidated          Bank           Requirements
                                            ------------          ----           ------------
     <S>                                    <C>                  <C>             <C>
     Leverage capital ratio                      7.97%             8.37%            5.00%
     Risk-based capital ratios:
        Core capital                             8.99              9.45             6.00
        Total capital                           10.25             10.70            10.00
</TABLE>

At December 31, 2001, 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 will 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

<PAGE>

current loan commitments and to fund or refinance, on a timely basis, our other
material commitments and liabilities.

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.

Effects of Inflation
--------------------

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

Results of Operations For The Years Ended December 31, 2001 and 2000

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

                                                  Years Ended December 31,
                                                   2001               2000
                                                     (Dollars in Thousands)

Interest income                                  $  8,398          $  6,141

Interest expense                                    4,507             3,111
                                                    -----             -----

Net interest income                                 3,891             3,030

Provision for loan losses                             393               336

Other income                                          559               448

Other expenses                                      2,658             2,091
                                                    -----             -----

Pretax income                                       1,399             1,051

Income taxes                                          463               238
                                                   ------            ------

Net income                                       $    936          $    813
                                                   ======            ======

<PAGE>

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 3.93% in 2001 as compared
to 4.78% in 2000. Average loans increased by $28.9 million, which accounted for
the majority of a $35.6 million increase in total average interest-earning
assets. Average interest-bearing liabilities increased by $32.3 million with
average interest-bearing demand and time deposits accounting for the vast
majority of this increase. The rate earned on average interest-earning assets
decreased to 8.49% in 2001 from 9.69% in 2000. The rate paid on average
interest-bearing liabilities decreased to 5.22% in 2001 from 5.76% in 2000. The
decrease in net yield is due primarily to decreases in the rates earned on our
interest-earning assets, as the prime rate was lowered eleven times in 2001 to
4.75%. As our interest-bearing liabilities mature and reprice, we expect to see
our net yield increase.

Provision for Loan Losses
-------------------------

The provision for loan losses was $393,000 in 2001 as compared to $336,000 in
2000. The amounts provided were due primarily to the growth of the portfolio and
to our assessment of the inherent risk in the portfolio. Net charge offs for
2001 were $9,000 as compared to net recoveries of $12,000 in 2000. As of
December 31, 2001, we had nonperforming loans and assets of $1.3 million as
compared to $68,000 at December 31, 2000. The increase is attributable to one
borrower. We do not believe the increase in nonperforming loans and assets to be
an indication of a negative trend in the credit quality of our loan portfolio.
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. 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 1.54% at December 31, 2001 as compared to 1.51% at
December 31, 2000.

Other Income
------------

Other income consists of service charges on deposit accounts and other
miscellaneous revenues and fees. Other operating income was $559,000 in 2001 as
compared to $448,000 in 2000, an increase of $111,000. The increase is due
primarily to an $77,000 increase in service charges on deposit accounts related
to our deposit growth, an increase in the recognition of income of $6,000
related to the increase in the cash surrender value of life insurance policies,
and an $11,000 gain on the sale of other real estate owned.

<PAGE>

Other Expenses
--------------

Other expenses were $2,658,000 in 2001 as compared to $2,091,000 in 2000, an
increase of $567,000. Salaries and employee benefits increased by $324,000 due
to an increase in the number of employees to 31 at December 31, 2001 from 21 at
December 31, 2000 and other annual salary increases. Equipment and occupancy
expenses increased by $64,000 due primarily to increased equipment depreciation
and maintenance costs of $60,000. Other operating expenses increased by $179,000
due primarily to increased data/ATM processing expenses of $30,000, increased
legal and professional expenses of $62,000 and other miscellaneous expenses of
$87,000 associated with the growth of the Bank.

Income Tax
----------

Income tax expense in 2001 was $463,000 or 33% of pretax income as compared to
$238,000 or 23% of pretax income in 2000. Income tax expense in 2000 was less
than the federal statutory rate of 34% due to the recognition of $84,000 of
deferred tax assets previously accorded a valuation allowance.

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

<PAGE>

liabilities may not be affected uniformly by changes in interest rates. In
addition, the magnitude and duration of changes in interest rates may have a
significant impact on net interest income. For example, although certain assets
and liabilities may have similar maturities or periods of repricing, they may
react in different degrees to changes in market interest rates. Interest rates
on certain types of assets and liabilities fluctuate in advance of changes in
general market rates, while interest rates on other types may lag behind changes
in general market rates. In addition, certain assets, such as adjustable rate
mortgage loans, have features (generally referred to as "interest rate caps and
floors") that limit changes in interest rates. Prepayment and early withdrawal
levels also could deviate significantly from those assumed in calculating the
interest rate gap. The ability of many borrowers to service their debts also may
decrease during periods of rising interest rates.

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

At December 31, 2001, our cumulative one-year interest rate-sensitivity gap
ratio was 84%. Our targeted ratio is 80% to 120% in this time horizon. This
indicates that our interest-bearing liabilities will reprice during this period
at a rate faster than our interest-earning assets. We have approximately $18.3
million of interest-bearing demand deposits that we consider to be core
deposits, and therefore not interest rate sensitive. Adjusting for these
deposits, our cumulative one year interest rate-sensitive gap ratio would be
112%. We believe that competitive market rates are being paid for certificates
of deposit, and as long as the rates remain competitive, liquidity should not be
adversely affected.

The following table sets forth the distribution of the repricing of our
interest-earning assets and interest-bearing liabilities as of December 31,
2001, 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.

<PAGE>

<TABLE>
<CAPTION>
                                                    After             After
                                                    Three              One
                                                    Months           Year but
                                     Within          but              Within          After
                                      Three         Within             Five           Five
                                     Months        One Year           Years           Years          Total
                                                            (Dollars in Thousands)
<S>                                <C>              <C>            <C>             <C>             <C>
Interest-earning assets:
     Interest-bearing
        deposits in banks             $   578       $     496       $        --     $    --        $   1,074
     Federal funds sold                 3,082              --                --          --            3,082
     Securities                         1,623              --             3,068      11,935           16,626
     Loans                             52,217           4,444            31,288         337           88,286
                                     --------       ---------       -----------     -------        ---------

                                       57,500           4,940            34,356      12,272          109,068
                                     --------       ---------       -----------     -------        ---------
Interest-bearing liabilities:
     Interest-bearing demand
          deposits                     28,481              --                --          --           28,481
     Savings                            1,303              --                --          --            1,303
     Certificates of deposit           18,635          25,395            11,591          --           55,621
     Other borrowings                     500              --             2,000      10,800           13,300
                                     --------       ---------       -----------     -------        ---------

                                       48,919          25,395            13,591      10,800           98,705
                                     --------       ---------       -----------     -------        ---------

Interest rate sensitivity
     gap                             $  8,581       $ (20,455)      $    20,765     $ 1,472        $  10,363
                                     ========       =========       ===========     =======        =========
Cumulative interest rate
     sensitivity gap                 $  8,581       $ (11,874)      $     8,891     $10,363
                                     ========       =========       ===========     =======
Interest rate sensitivity
     gap ratio                           1.18             .19              2.53        1.14
                                     ========       =========       ===========     =======
Cumulative interest rate
     sensitivity gap ratio               1.18             .84              1.10        1.10
                                     ========       =========       ===========     =======
</TABLE>






<PAGE>

               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.






<PAGE>

                    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)

<TABLE>
<CAPTION>
                                                             Years Ended December 31,
                                                            2001                 2000
                                                              (Dollars in Thousands)
<S>                                                  <C>                 <C>
                   ASSETS

     Cash and due from banks                         $      2,227        $      1,735
     Interest-bearing deposits in banks                       208                   -
     Taxable securities                                    11,960               8,154
     Tax exempt securities                                    563                   -
     Securities valuation account                              63                (289)
     Federal funds sold                                     5,996               3,917
     Loans (2)                                             80,217              51,280
     Allowance for loan losses                             (1,189)               (771)
     Other assets                                           5,385               4,798
                                                     ------------        ------------
                                                     $    105,430        $     68,824
                                                     ============        ============

     Total interest-earning assets                   $     98,944        $     63,351
                                                     ============        ============

          LIABILITIES AND STOCKHOLDERS' EQUITY

     Deposits:
          Noninterest-bearing demand                 $      9,781        $      6,925
          Interest-bearing demand                          24,687              15,318
          Savings                                             982                 886
          Time                                             49,894              33,287
                                                     ------------        ------------
                   Total deposits                          85,344              56,416

     Other borrowings                                      10,695               4,487
     Other liabilities                                        821                 401
                                                     ------------          ----------
                   Total liabilities                       96,860              61,304
     Stockholders' equity                                   8,570               7,520
                                                     ------------        ------------
                                                     $    105,430        $     68,824
                                                     ============        ============

          Total interest-bearing liabilities         $     86,258        $     53,978
                                                     ============        ============
</TABLE>

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

(2) Nonaccrual loans included in average loans for 2001 and 2000 were $239,000
    and $20,000, respectively.



<PAGE>

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.

<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                                 2001                        2000
                                                                      Average                    Average
                                                        Interest       Rate          Interest     Rate
                                                                       (Dollars in Thousands)
     <S>                                                <C>           <C>            <C>         <C>
     INTEREST INCOME:
          Interest and fees on loans (1)                $  7,464         9.31%       $  5,408      10.55%
          Interest on deposits in banks                        5         2.19               -          -
          Interest on taxable securities                     634         5.30             480       5.89
          Interest on tax exempt securities                   31         5.57               -          -
          Interest on federal funds sold                     264         4.41             253       6.45
                                                        --------                     --------
          Total interest income                            8,398         8.49           6,141       9.69
                                                        --------                     --------

     INTEREST EXPENSE:
          Interest on interest-bearing
            demand deposits                                1,033         4.19             720       4.70
          Interest on savings deposits                        24         2.40              24       2.74
          Interest on time deposits                        2,826         5.66           2,086       6.27
          Interest on other borrowings                       624         5.83             281       6.27
                                                        --------                     --------
          Total interest expense                           4,507         5.22           3,111       5.76
                                                        --------                     --------

     NET INTEREST INCOME                                $  3,891                     $  3,030
                                                        ========                     ========

          Net interest spread                                            3.26%                      3.93%
                                                                         ====                       ====
          Net yield on average interest-earning assets                   3.93%                      4.78%
                                                                         ====                       ====
</TABLE>

(1)       Interest and fees on loans includes $663,000 and $460,000 of loan fee
          income for the years ended December 31, 2001 and 2000, respectively.
          Interest income recognized on nonaccrual loans during 2001 was
          $34,000. There was no interest income recognized on nonaccrual loans
          during 2000.

<PAGE>

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.

<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                                   2001 vs. 2000
                                                                  Changes Due To:

                                                            Rate      Volume          Net
                                                                (Dollars in Thousands)
     <S>                                                <C>         <C>         <C>
     Increase (decrease) in:
          Income from interest-earning assets:
          Interest and fees on loans                    $   (699)   $  2,755    $   2,056
          Interest on deposits in banks                        -           5            5
          Interest on taxable securities                     (52)        206          154
          Interest on tax exempt securities                    -          31           31
          Interest on federal funds sold                     (96)        107           11
                                                        ---------   --------    ---------
                   Total interest income                    (847)      3,104        2,257
                                                        ---------   --------    ---------

          Expense from interest-bearing liabilities:
          Interest on interest-bearing
                   demand deposits                           (86)        399          313
          Interest on savings deposits                        (3)          3            -
          Interest on time deposits                         (216)        956          740
          Interest on other borrowings                       (21)        364          343
                                                        ---------   --------    ---------
                   Total interest expense                   (326)      1,722        1,396
                                                        ---------   --------    ---------

                   Net interest income                  $   (521)   $  1,382    $     861
                                                        =========   ========    =========
</TABLE>

<PAGE>


                              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,
                                           2001               2000
                                            (Dollars in Thousands)

     U.S. Government agencies           $   4,105           $  7,449
     Mortgage-backed securities            10,550                  -
     Municipal securities                   1,331                518
     Restricted equity securities             640                315
                                        ---------           --------
                                        $  16,626           $  8,282
                                        =========           ========

Maturities

The amounts of debt securities, including the weighted average yield in each
category as of December 31, 2001 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.

<TABLE>
<CAPTION>
                                                              After one                 After five
                                   One year or less       through five years         through ten years
                                  Amount     Yield(1)    Amount      Yield(1)       Amount     Yield(1)
<S>                               <C>        <C>         <C>         <C>            <C>        <C>
U.S. Government agencies          $     -            -%  $ 2,572         4.86%      $  1,533       5.58%
Mortgage-backed securities              -            -       496         4.47          1,440       5.30
Municipals                              -            -         -            -              -          -
                                  -------                -------                    --------
                                  $     -            -   $ 3,068         4.80       $  2,973       5.44
                                  =======                =======                    ========
</TABLE>

                                    After ten years            Total
                                  Amount     Yield(1)    Amount      Yield(1)

U.S. Government agencies          $     -            -%  $ 4,105         5.13%
Mortgage-backed securities          8,614         6.01    10,550         5.84
Municipals                          1,331         4.65     1,331         4.65
                                  -------                -------
                                  $ 9,945         5.82   $15,986         5.56
                                  =======                =======

(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.

<PAGE>


                                 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,
                                                        2001            2000
                                                       (Dollars in Thousands)

      Commercial                                     $    8,940      $    5,983
      Real estate-construction                           20,001          14,022
      Real estate-mortgage                               54,974          39,959
      Consumer installment loans and other                4,068           4,038
                                                     ----------      ----------
                                                         87,983          64,002
      Less allowance for loan losses                     (1,352)           (968)
                                                     ----------      ----------
                    Net loans                        $   86,631      $   63,034
                                                     ==========      ==========

Maturities and Sensitivities of Loans to Changes in Interest Rates

Total loans as of December 31, 2001 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.

<TABLE>
<CAPTION>
                                                             (Dollars in Thousands)
      <S>                                                    <C>
      Commercial
           One year or less                                          $    2,388
           After one through five years                                   5,797
           After five years                                                 755
                                                                     ----------
                                                                          8,940
                                                                     ----------

      Construction
           One year or less                                          $   19,075
           After one through five years                                     926
           After five years                                                  --
                                                                     ----------
                                                                         20,001
                                                                     ----------

      Other
           One year or less                                          $   19,647
           After one through five years                                  37,695
           After five years                                               1,700
                                                                     ----------
                                                                         59,042
                                                                     ----------

                                                                     $   87,983
                                                                     ==========
</TABLE>

<PAGE>


The following table summarizes loans at December 31, 2001 with the due dates
after one year that have predetermined and floating or adjustable interest
rates.

<TABLE>
<CAPTION>
                                                             (Dollars in Thousands)
      <S>                                                    <C>
      Predetermined interest rates                                   $   30,013
      Floating or adjustable interest rates                              16,860
                                                                     ----------
                                                                     $   46,873
                                                                     ==========
</TABLE>

Risk Elements

Information with respect to nonaccrual, past due, restructured and other problem
loans at December 31, 2001 and 2000 is as follows:

<TABLE>
<CAPTION>
                                                                      December 31,
                                                                  2001            2000
                                                                 (Dollars in Thousands)
      <S>                                                        <C>             <C>
      Nonaccrual loans                                         $    1,300      $       12
      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                                          17               0
      Interest income that would have been recorded on
           nonaccrual and restructured loans under original
           terms                                                       15               2
      Interest income that was recorded on nonaccrual and
           restructured loans                                           0               0
</TABLE>

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.

<PAGE>


                         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,
                                                        2001            2000
                                                       (Dollars in Thousands)

      Average amount of loans outstanding            $   80,217     $   51,280
                                                     ==========     ==========

      Balance of allowance for loan losses
           at beginning of year                      $      968     $      620
                                                     ----------     ----------

      Loans charged off

           Commercial                                        --             --
           Real estate mortgage                              --             --
           Installment                                       16              1
                                                     ----------     ----------
                                                             16              1
                                                     ----------     ----------

      Loans recovered

           Commercial                                        --             --
           Real estate mortgage                              --             --
           Installment                                        7             13
                                                     ----------     ----------
                                                              7             13
                                                     ----------     ----------

      Net charge-offs (recoveries)                            9            (12)
                                                     ----------     ----------

      Additions to allowance charged to operating
           expense during year                              393            336
                                                     ----------     ----------

      Balance of allowance for loan losses
           at end of year                            $    1,352     $      968
                                                     ==========     ==========

      Ratio of net loans charged off (recovered)
      during the year to average loans outstanding          .01%          (.02)%
                                                     ==========     ==========

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.

<PAGE>

As of December 31, 2001 and 2000, 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:

<TABLE>
<CAPTION>
                                                    December 31, 2001                      December 31, 2000
                                                        Percent of loans in                     Percent of loans in
                                                            each category                           each category
                                                Amount     to total loans              Amount      to total loans
                                                                     (Dollars in Thousands)
<S>                                           <C>               <C>                   <C>               <C>
Commercial                                    $   270           10%                   $194              10%
Real estate - construction                        203           23                     145              22
Real estate - mortgage                            744           62                     532              62
Consumer installment
     loans and other                              135            5                      97               6
                                                -----         ----                    ----            ----
                                               $1,352          100%                   $968             100%
                                                =====         ====                    ====            ====
</TABLE>

<PAGE>

                                    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 is presented below. (1)

<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                                        2001                                    2000
                                                Amount         Percent                 Amount          Percent
                                                                     (Dollars in Thousands)
<S>                                            <C>             <C>                     <C>             <C>
Noninterest-bearing demand deposits            $9,781              --%                 $  6,925            --%
Interest-bearing demand deposits               24,687            4.19                    15,318          4.70
Savings deposits                                  982            2.40                       886          2.74
Time deposits                                  49,894            5.66                    33,287          6.27
                                               ------                                    ------
                                              $85,344                                   $56,416
                                               ======                                    ======
</TABLE>

(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, 2001 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.

<TABLE>
<CAPTION>
                                                                                 (Dollars in Thousands)
     <S>                                                                                <C>
     Three months or less                                                               $ 11,452
     Over three months through six months                                                  5,525
     Over six through twelve months                                                        5,630
     Over twelve months                                                                    5,500
                                                                                        --------
              Total                                                                     $ 28,107
                                                                                        ========
</TABLE>

                   RETURN ON ASSETS AND STOCKHOLDERS' EQUITY

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

<TABLE>
<CAPTION>
                                                                               Years Ended December 31,
                                                                              2001                 2000
     <S>                                                                      <C>                  <C>
     Return on assets (1)                                                      0.89%                1.18%
     Return on equity (2)                                                     10.93                10.81
     Dividend payout ratio (3)                                                    -                    -
     Equity to assets ratio (4)                                                8.13                10.93
</TABLE>

(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.