##### Table of Contents

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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 000-52453



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PIEDMONT COMMUNITY BANK GROUP,
INC.

(Exact name of small business issuer as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Georgia                                                        |  | 20-8264706                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

110 Bill Conn Parkway, Gray, Georgia 31032

(Address of principal executive offices)

(478) 986-5900

(Issuers telephone number)

N/A

(Former name, former address and former fiscal year, if changed since
last report)



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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 past 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 the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x

State the number of shares outstanding of each of the issuers classes of common equity, as of November 14, 2007:1,630,734 shares, no par value per share.

Transitional Small Business Disclosure Format    Yes ̈No  x



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##### Table of Contents

PIEDMONT COMMUNITY BANK GROUP, INC.

TABLE OF CONTENTS



|         |  |                                                                                                                                |  |     
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | ----
|         |  |                                                                                                                                |  | Page
|PART I.  |  | FINANCIAL INFORMATION                                                                                                          |  |     
|         |  |                                                                                                                               
|ITEM 1.  |  | Financial Statements                                                                                                           |  | 3   
|         |  |                                                                                                                               
|         |  | Consolidated Balance Sheets as of September 30, 2007 (unaudited) and December 31, 2006                                         |  | 3   
|         |  |                                                                                                                               
|         |  | Consolidated Statements of Income and Comprehensive Income Three and Nine Months Ended September 30, 2007 and 2006 (unaudited) |  | 4   
|         |  |                                                                                                                               
|         |  | Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2007 and 2006 (unaudited)                        |  | 5   
|         |  |                                                                                                                               
|         |  | Notes to Consolidated Financial Statements (unaudited)                                                                         |  | 6   
|         |  |                                                                                                                               
|ITEM 2.  |  | Managements Discussion and Analysis or Plan of Operations                                                                     |  | 8   
|         |  |                                                                                                                               
|ITEM 3.  |  | Controls and Procedures                                                                                                        |  | 15  
|         |  |                                                                                                                               
|PART II. |  | OTHER INFORMATION                                                                                                              |  | 15  
|         |  |                                                                                                                               
|ITEM 1.  |  | Legal Proceedings                                                                                                              |  | 15  
|         |  |                                                                                                                               
|ITEM 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                    |  | 15  
|         |  |                                                                                                                               
|ITEM 3.  |  | Defaults Upon Senior Securities                                                                                                |  | 15  
|         |  |                                                                                                                               
|ITEM 4.  |  | Submission of Matters to a Vote of Security Holders                                                                            |  | 15  
|         |  |                                                                                                                               
|ITEM 5.  |  | Other Information                                                                                                              |  | 15  
|         |  |                                                                                                                               
|ITEM 6.  |  | Exhibits                                                                                                                       |  | 15  



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

PIEDMONT COMMUNITY BANK GROUP, INC.

Consolidated Balance Sheets

September 30, 2007 and December 31, 2006



|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                  |  | September 30,2007(unaudited) |             |   | December 31,2006 |  
|ASSETS                                                                                                                                                            |  |                              |             |   |                  |   |             |  
|Cash and due from banks                                                                                                                                           |  | $                            | 1,382,301   |   |                  |   | 1,659,993   |  
|Interest bearing deposits in banks                                                                                                                                |  |                              | 2,932,585   |   |                  |   | 1,584,000   |  
|Federal funds sold                                                                                                                                                |  |                              | 2,528,000   |   |                  |   | 3,762,000   |  
|Securities held to maturity, at cost (fair value of $1,992,848 and $636,543, respectively)                                                                        |  |                              | 2,019,737   |   |                  |   | 644,912     |  
|Securities available for sale, at fair value                                                                                                                      |  |                              | 10,001,479  |   |                  |   | 6,162,724   |  
|Restricted equity securities, at cost                                                                                                                             |  |                              | 1,015,345   |   |                  |   | 767,245     |  
|Loans, less allowance for loan losses of $1,687,644 and $1,235,044, Respectively                                                                                  |  |                              | 159,500,318 |   |                  |   | 117,692,476 |  
|Accrued interest receivable                                                                                                                                       |  |                              | 1,992,405   |   |                  |   | 1,376,236   |  
|Premises and equipment, net                                                                                                                                       |  |                              | 7,568,640   |   |                  |   | 6,831,779   |  
|Other assets                                                                                                                                                      |  |                              | 767,875     |   |                  |   | 562,674     |  
|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  
|Total assets                                                                                                                                                      |  | $                            | 189,708,685 |   |                  |   | 141,044,039 |  
|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                              |  |                              |             |   |                  |   |             |  
|Deposits:                                                                                                                                                         |  |                              |             |   |                  |   |             |  
|Noninterest-bearing                                                                                                                                               |  |                              | 5,858,607   |   |                  | $ | 5,187,150   |  
|Interest-bearing                                                                                                                                                  |  |                              | 152,568,147 |   |                  |   | 106,897,692 |  
|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  
|Total deposits                                                                                                                                                    |  |                              | 158,426,754 |   |                  |   | 112,084,842 |  
|Accrued interest payable                                                                                                                                          |  |                              | 1,072,471   |   |                  |   | 941,498     |  
|Federal Home Loan Bank advances                                                                                                                                   |  |                              | 13,100,000  |   |                  |   | 9,100,000   |  
|Federal funds purchased                                                                                                                                           |  |                              |            |   |                  |   | 1,977,500   |  
|Other liabilities                                                                                                                                                 |  |                              | 215,780     |   |                  |   | 789,275     |  
|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  
|Total liabilities                                                                                                                                                 |  |                              | 172,815,005 |   |                  |   | 124,893,115 |  
|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  
|Stockholders equity:                                                                                                                                             |  |                              |             |   |                  |   |             |  
|Common stock (no par value, 2007), ($5 par value, 2006) 10,000,000 shares authorized; 1,630,734 shares, and 1,358,968 shares issued and
outstanding, respectively |  |                              | 16,020,029  |   |                  |   | 6,794,840   |  
|Capital surplus                                                                                                                                                   |  |                              |            |   |                  |   | 9,017,451   |  
|Undivided profits                                                                                                                                                 |  |                              | 925,586     |   |                  |   | 405,061     |  
|Accumulated other comprehensive loss                                                                                                                              |  |                              | (51,935     | ) |                  |   | (66,428     | )
|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  
|Total stockholders equity                                                                                                                                        |  |                              | 16,893,680  |   |                  |   | 16,150,924  |  
|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  
|Total liabilities and stockholders equity                                                                                                                        |  | $                            | 189,708,685 |   |                  |   | 141,044,039 |  
|                                                                                                                                                                  |  |                              |             |   |                  |   |             |  

See accompanying notes to unaudited consolidated financial statements



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##### Table of Contents

PIEDMONT COMMUNITY BANK GROUP, INC.

Consolidated Statements of Income and Comprehensive Income

For the Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)



|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | ----------------- | - | ----------------- |  | ----------------- | --------- |  | - | --------- | -
|                                                                                                  |  | Three Months Ended |           | Nine Months Ended |  
|                                                                                                  |  | September 30,2007  |           | September 30,2006 |   | September 30,2007 |  | September 30,2006 |          
|Interest and dividend income:                                                                     |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Loans, including loan fees                                                                        |  | $                  | 3,450,139 |                   | $ | 2,065,211         |  | $                 | 9,154,281 |  | $ | 5,570,201 |  
|Securities available for sale                                                                     |  |                    | 115,748   |                   |   | 67,758            |  |                   | 306,901   |  |   | 187,153   |  
|Securities held to maturity                                                                       |  |                    | 16,549    |                   |   | 3,699             |  |                   | 43,509    |  |   | 7,977     |  
|Interest bearing deposits in banks                                                                |  |                    | 36,094    |                   |   | 17,719            |  |                   | 127,170   |  |   | 53,758    |  
|Federal funds sold                                                                                |  |                    | 49,021    |                   |   | 11,199            |  |                   | 108,863   |  |   | 30,561    |  
|Dividends                                                                                         |  |                    | 13,125    |                   |   | 8,853             |  |                   | 35,110    |  |   | 22,427    |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|                                                                                                  |  |                    | 3,680,676 |                   |   | 2,174,439         |  |                   | 9,775,834 |  |   | 5,872,077 |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Interest expense:                                                                                 |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Deposits                                                                                          |  |                    | 1,981,608 |                   |   | 1,042,140         |  |                   | 5,221,859 |  |   | 2,670,492 |  
|Other borrowings                                                                                  |  |                    | 146,236   |                   |   | 127,758           |  |                   | 391,249   |  |   | 317,691   |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|                                                                                                  |  |                    | 2,127,844 |                   |   | 1,169,898         |  |                   | 5,613,108 |  |   | 2,988,183 |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Net interest income                                                                               |  |                    | 1,552,832 |                   |   | 1,004,541         |  |                   | 4,162,726 |  |   | 2,883,894 |  
|Provision for loan losses                                                                         |  |                    | 134,600   |                   |   | 59,500            |  |                   | 452,600   |  |   | 234,772   |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Net interest income after provision for loan losses                                               |  |                    | 1,418,232 |                   |   | 945,041           |  |                   | 3,710,126 |  |   | 2,649,122 |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Noninterest income:                                                                               |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Service charges on deposit accounts                                                               |  |                    | 27,170    |                   |   | 21,438            |  |                   | 78,856    |  |   | 64,429    |  
|Mortgage origination income                                                                       |  |                    | 36,121    |                   |   | 59,645            |  |                   | 127,437   |  |   | 239,293   |  
|Other                                                                                             |  |                    | 13,964    |                   |   | 9,898             |  |                   | 39,751    |  |   | 31,408    |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|                                                                                                  |  |                    | 77,255    |                   |   | 90,981            |  |                   | 246,044   |  |   | 335,130   |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Noninterest expense:                                                                              |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Salaries and employee benefits                                                                    |  |                    | 570,261   |                   |   | 429,525           |  |                   | 1,624,299 |  |   | 1,204,372 |  
|Equipment and occupancy                                                                           |  |                    | 114,946   |                   |   | 101,100           |  |                   | 333,241   |  |   | 238,303   |  
|Other operating                                                                                   |  |                    | 427,881   |                   |   | 262,462           |  |                   | 1,089,504 |  |   | 659,390   |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|                                                                                                  |  |                    | 1,113,088 |                   |   | 793,087           |  |                   | 3,047,044 |  |   | 2,102,065 |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Income before provision for income taxes and minority interest in net (income) loss of subsidiary |  |                    | 382,399   |                   |   | 242,935           |  |                   | 909,126   |  |   | 882,187   |  
|Provision for income taxes                                                                        |  |                    | 152,646   |                   |   | 76,086            |  |                   | 388,177   |  |   | 287,955   |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Income before minority interest in net (income) loss of subsidiary                                |  |                    | 229,753   |                   |   | 166,849           |  |                   | 520,949   |  |   | 594,232   |  
|Minority interest in net (income) loss of subsidiary                                              |  |                    |          |                   |   | 4,487             |  |                   |          |  |   | (1,741    | )
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Net income                                                                                        |  |                    | 229,753   |                   |   | 171,336           |  |                   | 520,949   |  |   | 592,491   |  
|Other comprehensive income:                                                                       |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Unrealized gains on securities available for sale arising during the period, net of tax           |  |                    | 75,816    |                   |   | 78,127            |  |                   | 14,493    |  |   | 13,010    |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  
|Comprehensive income                                                                              |  | $                  | 305,569   |                   | $ | 249,463           |  | $                 | 535,442   |  | $ | 605,501   |  
|                                                                                                  |  |                    |           |                   |   |                   |  |                   |           |  |   |           |  

See accompanying notes to unaudited consolidated financial statements.



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##### Table of Contents

PIEDMONT COMMUNITY BANK GROUP, INC.

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2007 and 2006

(Unaudited)



|                                                                                  |  |                   |             |   |                   |             |  
|--------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ----------------- | ----------- | -
|                                                                                  |  | September 30,2007 |             |   | September 30,2006 |            
|Cash Flow from operating activities:                                              |  |                   |             |   |                   |             |  
|Net Income                                                                        |  | $                 | 520,949     |   |                   | 592,491     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                   |             |   |                   |             |  
|Depreciation and amortization                                                     |  |                   | 214,025     |   |                   | 128,958     |  
|Provision for loan losses                                                         |  |                   | 452,600     |   |                   | 234,772     |  
|Share based compensation cost                                                     |  |                   | 207,738     |   |                   | 209,580     |  
|Increase in accrued interest receivable                                           |  |                   | (616,169    | ) |                   | (538,620    | )
|Increase in accrued interest payable                                              |  |                   | 130,973     |   |                   | 377,995     |  
|Net other operating activities                                                    |  |                   | (786,161    | ) |                   | (23,252     | )
|                                                                                  |  |                   |             |   |                   |             |  
|Net cash flow provided by operating activities                                    |  |                   | 123,955     |   |                   | 981,924     |  
|                                                                                  |  |                   |             |   |                   |             |  
|Cash Flow from investing activities:                                              |  |                   |             |   |                   |             |  
|Net increase in loans                                                             |  |                   | (42,260,442 | ) |                   | (21,022,899 | )
|Net decrease in federal funds sold                                                |  |                   | 1,234,000   |   |                   |            |  
|Net increase in interestbearing deposits in banks                                |  |                   | (1,348,585  | ) |                   | (1,895,000  | )
|Purchase of restricted equity securities                                          |  |                   | (248,100    | ) |                   | (393,545    | )
|Purchase of securities available for sale                                         |  |                   | (4,497,327  | ) |                   | (1,001,529  | )
|Proceeds from maturities, calls & paydowns of securities available for sale       |  |                   | 675,194     |   |                   | 248,193     |  
|Purchases of securities held to maturity                                          |  |                   | (1,375,000  | ) |                   | (451,723    | )
|Purchases of premises and equipment                                               |  |                   | (945,374    | ) |                   | (2,738,953  | )
|                                                                                  |  |                   |             |   |                   |             |  
|Net cash flow used in investing activities                                        |  |                   | (48,765,634 | ) |                   | (27,255,456 | )
|                                                                                  |  |                   |             |   |                   |             |  
|Cash Flow from financing activities:                                              |  |                   |             |   |                   |             |  
|Net increase in deposits                                                          |  |                   | 46,341,912  |   |                   | 22,713,275  |  
|Redemption of common stock                                                        |  |                   |            |   |                   | (44,226     | )
|Payment of dividends on fractional shares                                         |  |                   | (425        | ) |                   |            |  
|Net decrease in federal funds purchased                                           |  |                   | (1,977,500  | ) |                   |            |  
|Proceeds from Federal Home Loan Bank advances                                     |  |                   | 4,000,000   |   |                   | 5,100,000   |  
|Repayment of Federal Home Loan Bank advances                                      |  |                   |            |   |                   | (1,000,000  | )
|                                                                                  |  |                   |             |   |                   |             |  
|Net cash flow provided by financing activities                                    |  |                   | 48,363,987  |   |                   | 26,769,049  |  
|                                                                                  |  |                   |             |   |                   |             |  
|Net increase (decrease) in cash and due from banks                                |  |                   | (277,692    | ) |                   | 495,517     |  
|Cash and due from banks at beginning of period                                    |  |                   | 1,659,993   |   |                   | 898,199     |  
|                                                                                  |  |                   |             |   |                   |             |  
|Cash and due from banks at end of period                                          |  | $                 | 1,382,301   |   |                   | 1,393,716   |  
|                                                                                  |  |                   |             |   |                   |             |  
|Supplemental disclosures for cash flow information-                               |  |                   |             |   |                   |             |  
|Cash paid for:                                                                    |  |                   |             |   |                   |             |  
|Interest                                                                          |  | $                 | 5,482,135   |   |                   | 2,610,188   |  
|                                                                                  |  |                   |             |   |                   |             |  
|Income taxes                                                                      |  | $                 | 468,000     |   |                   | 3,200       |  
|                                                                                  |  |                   |             |   |                   |             |  

See accompanying notes to unaudited consolidated financial statements



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##### Table of Contents

PIEDMONT COMMUNITY BANK GROUP, INC.

Notes to Consolidated Financial Statements

(unaudited)



|1. | Basis of Presentation
|-- | ---------------------

Piedmont Community
Bank Group, Inc. (the Company) is a one-bank holding company with respect to its wholly-owned subsidiary bank, Piedmont Community Bank (the Bank). The Company was organized on April 26, 2006 and consummated the
acquisition of all of the outstanding common stock of the Bank in exchange for 1,358,968 shares of no par value common stock on February 7, 2007. In accounting for the transaction, the $5 par value common stock of the Bank became no par value
common stock of the holding company. The formation and reorganization was approved by the stockholders during the fourth quarter of 2006.

The mortgage company was dissolved and merged into the Bank in 2006.

The Bank is a commercial bank headquartered in Gray, Jones
County, Georgia. The Bank provides a full range of banking services in its primary market areas of Jones, Bibb, Monroe, Houston, Greene and the surrounding counties.

The accompanying consolidated financial statements of the Company are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Companys annual report on Form 10-KSB for the
year ended December 31, 2006.

All significant intercompany transactions and balances have been eliminated in consolidation. The
financial information included herein reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of the Companys financial position and results of
operations for the interim periods ended September 30, 2007.

The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities and income and expense amounts. Actual results could differ from those estimates. The results of operations for the three and nine month periods ended
September 30, 2007 are not necessarily indicative of the results to be expected for the full year.



|2. | Stock Compensation Plan
|-- | -----------------------

At
September 30, 2007, the Company had a stock-based employee/director compensation plan which is more fully described in Note 10 of the consolidated financial statements in the Annual Report on Form 10-KSB for the year ended December 31,
2006. As of September 30, 2007, the Company had 380,705 options outstanding.

The Company recorded stock based compensation expense of
$208,000 and $209,000 for the nine months ended September 30, 2007 and 2006, respectively.

At September 30, 2007, there was
$399,000 of unrecognized compensation cost related to stock-based payments, which is expected to be recognized over a weighted-average period of 1.4 years. No options have been granted or exercised in 2007. For the nine months ended
September 30, 2006, 240,038 options were granted with a weighted-average exercise price of $11.67 per share and a weighted-average grant date fair value of $3.05 per option.



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##### Table of Contents

|3. | Earnings Per Common Share
|-- | -------------------------

SFAS
No. 128, Earnings Per Share, establishes standards for computing and presenting basic and diluted earnings per share. In this regard, the Company is required to report earnings per common share with and without the dilutive effects of
potential common stock issuances from instruments such as options, convertible securities and warrants on the face of the statements of income. Earnings per common share are based on the weighted average number of common shares outstanding during
the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share. Additionally, the Company must reconcile the amounts used in the computation of both basic earnings per share and
diluted earnings per share.

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



|                                                                                                                                  |  |                    |  |                   |  |                   |  |                  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ |  | ----------------- |  | ----------------- |  | -----------------
|                                                                                                                                  |  | Three Months Ended |  | Nine Months Ended
|                                                                                                                                  |  | September 30,2007  |  | September 30,2006 |  | September 30,2007 |  | September 30,2006
|Basic earnings per share:                                                                                                         |  |                    |  |                   |  |                   |  |                  
|Weighted average common shares outstanding                                                                                        |  | 1,630,734          |  | 1,630,762         |  | 1,630,747         |  | 1,630,901        
|                                                                                                                                  |  |                    |  |                   |  |                   |  |                  
|Net income                                                                                                                        |  | 229,753            |  | 171,336           |  | 520,949           |  | 592,491          
|                                                                                                                                  |  |                    |  |                   |  |                   |  |                  
|Basic earnings per share                                                                                                          |  | 0.14               |  | 0.11              |  | 0.32              |  | 0.36             
|                                                                                                                                  |  |                    |  |                   |  |                   |  |                  
|Diluted earnings per share:                                                                                                       |  |                    |  |                   |  |                   |  |                  
|Weighted average common shares outstanding                                                                                        |  | 1,630,734          |  | 1,630,762         |  | 1,630,734         |  | 1,630,901        
|Net effect of the assumed exercise of stock options based on the treasury stock method using average market prices for the
period |  | 33,934             |  | 52,547            |  | 34,946            |  | 33,329           
|                                                                                                                                  |  |                    |  |                   |  |                   |  |                  
|Total weighted average common shares and common stock equivalents outstanding                                                     |  | 1,664,668          |  | 1,683,309         |  | 1,665,693         |  | 1,664,230        
|                                                                                                                                  |  |                    |  |                   |  |                   |  |                  
|Net income                                                                                                                        |  | 229,753            |  | 171,336           |  | 520,949           |  | 592,491          
|                                                                                                                                  |  |                    |  |                   |  |                   |  |                  
|Diluted earnings per share                                                                                                        |  | 0.14               |  | 0.10              |  | 0.31              |  | 0.36             
|                                                                                                                                  |  |                    |  |                   |  |                   |  |                  



|4. | Loans
|-- | -----

The composition of loans is
summarized as follows:



|                               |  |                    |             |   |                   |   |             |  
|------------------------------ |  | ------------------ | ----------- | - | ----------------- | - | ----------- | -
|                               |  | September 30, 2007 |             |   | December 31, 2006 |  
|Commercial                     |  | $                  | 16,658,264  |   |                   | $ | 6,946,346   |  
|Real estate  construction     |  |                    | 36,906,887  |   |                   |   | 25,002,006  |  
|Real estate  mortgage         |  |                    | 16,376,159  |   |                   |   | 12,846,584  |  
|Real estate  commercial       |  |                    | 89,255,244  |   |                   |   | 72,088,049  |  
|Consumer installment and other |  |                    | 2,057,438   |   |                   |   | 2,108,892   |  
|                               |  |                    |             |   |                   |   |             |  
|                               |  |                    | 161,253,992 |   |                   |   | 118,991,877 |  
|Deferred loan fees             |  |                    | (66,030     | ) |                   |   | (64,357     | )
|Allowance for loan losses      |  |                    | (1,687,644  | ) |                   |   | (1,235,044  | )
|                               |  |                    |             |   |                   |   |             |  
|Loans, net                     |  | $                  | 159,500,318 |   |                   | $ | 117,692,476 |  
|                               |  |                    |             |   |                   |   |             |  



|5. | Recent Accounting Pronouncements
|-- | --------------------------------

In
September 2006, the FASB issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 provides detailed guidance for the financial statement recognition, measurement, and disclosure of uncertain
tax positions recognized in the financial statements. FIN 48 requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. If the tax position
meets the more-likely-than-not recognition threshold, the tax effect is recognized at the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement. Any difference between the tax position taken in the
tax return and the tax position



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recognized in the financial statements using the criteria above results in the recognition of a liability in the financial statements for the unrecognized
benefit. Similarly, if a tax position fails to meet the more-likely-than-not recognition threshold, the benefit taken in a tax return will also result in the recognition of a liability in the financial statements for the full amount of the
unrecognized benefit. The new interpretation was effective for the Company for the nine months ended September 30, 2007. The adoption of this new accounting interpretation did not have a significant impact on the Companys financial
position, results of operations, or cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
(SFAS No. 157). SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements. The changes to current practice resulting from the application of this statement relate to the
definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. SFAS No. 157 is effective for the fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. The Company does not anticipate the adoption of this new accounting principle to have a material effect on its financial position, results of operations, or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities to
choose to measure many financial instruments and certain other items at fair value. The objective of SFAS No. 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for financial statements issued for fiscal years after November 15, 2007. The adoption of this
standard is not expected to have a material impact on the financial condition or the results of operations of the Company and the Company did not early implement.



|ITEM 2. | Managements Discussion and Analysis or Plan of Operations
|------- | ----------------------------------------------------------

The following is our discussion and analysis of certain significant factors which have affected the Companys financial position and operating results during the periods included in the accompanying consolidated financial statements.

Forward Looking Statements

Certain of the statements
made herein are forward-looking statements for purposes of the Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act), and as such may involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward looking
statements include statements using the words such as may, will, anticipate, should, would, believe, contemplate, expect, estimate,
continue, or intend, or other similar words and expressions of the future. Our actual results may differ significantly from the results we discuss in these forward-looking statements.

These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, without limitation:



| |  |  | the effects of future economic conditions;
| | - |  | ------------------------------------------



| |  |  | governmental monetary and fiscal policies, as well as legislative and regulatory changes;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and other
interest-sensitive assets and liabilities;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the interest rate environment which could reduce anticipated or actual margins;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms,
insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally, and internationally, together with such competitors
offering banking products and services by mail, telephone, computer, and the Internet;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes occurring in business conditions and inflation;
| | - |  | -------------------------------------------------------



| |  |  | changes in monetary and tax policies;
| | - |  | -------------------------------------



| |  |  | changes in technology;
| | - |  | ----------------------



| |  |  | the level of allowance for loan loss;
| | - |  | -------------------------------------



| |  |  | the rate of delinquencies and amounts of charge-offs;
| | - |  | -----------------------------------------------------



| |  |  | the rates of loan growth;
| | - |  | -------------------------



| |  |  | adverse changes in asset quality and resulting credit risk-related losses and expenses;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | changes in the securities market; and
| | - |  | -------------------------------------



| |  |  | other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission.
| | - |  | --------------------------------------------------------------------------------------------------------------------



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Introduction

Through
our bank subsidiary we perform banking services customary for full service banks of similar size and character. The Bank offers personal and business checking accounts, interest-bearing checking accounts, savings accounts and various types of
certificates of deposit. The Bank also offers commercial loans, installment and other consumer loans, home equity loans, home equity lines of credit, construction loans and mortgage loans. In addition, the Bank provides such services as official
bank checks and travelers checks, direct deposit and United States Savings Bonds. The Bank provides other customary banking services including ATM services, safe deposit facilities, internet banking, money transfers, and individual retirement
accounts.

Overview

Management continuously monitors
our financial condition in order to protect depositors, increase undivided profits and protect current and future earnings. Further discussion of significant items affecting our financial condition is discussed in detail below.

Critical Accounting Policies

We have adopted various accounting
policies which govern the application of accounting principles generally accepted in the United States of America in the preparation of our consolidated financial statements. Our significant accounting policies are described in the footnotes to the
consolidated financial statements at December 31, 2006 as filed in our annual report on Form 10-KSB.

Certain accounting policies involve significant
judgments and assumptions by us which have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies to be critical accounting policies. The judgments and assumptions we use are based on
historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates which could have a
material impact on our carrying values of assets and liabilities and our results of operations.

We believe the allowance for loan losses is a critical
accounting policy that requires the most significant judgments and estimates used in preparation of our consolidated financial statements. Refer to the portion of this discussion that addresses asset quality for a description of our processes and
methodology for determining our allowance for loan losses.

Asset Quality

A major key to long-term earnings growth is the maintenance of a high-quality loan portfolio. Our directive in this regard is carried out through our policies and procedures for extending credit to our customers. The
goal and result of these policies and procedures is to provide a sound basis for new credit extensions and an early recognition of problem assets to allow the most flexibility in their timely disposition. Additions to the allowance for loan losses
will be made periodically to maintain the allowance at an appropriate level based upon managements analysis of potential risk in the loan portfolio. The amount of the allowance for loan losses is determined by an evaluation of the level of
loans outstanding, the level of non-performing loans, historical loan loss experience, delinquency trends, the amount of actual losses charged to the allowance in a given period, and assessment of present economic conditions.

The allowance for loan losses increased by $134,600 and $452,600 for the third quarter and the first nine months of 2007, respectively as compared to an increase of
$57,483 and $234,323 for the third quarter and the first nine months of 2006, respectively. The amounts provided are due primarily to loan growth and our assessment of inherent risk in the loan portfolio. The allowance for loan losses as a
percentage of total loans was 1.05% and 1.04% at September 30, 2007 and December 31, 2006, respectively. 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.

The allowance for loan losses is established and adjusted 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 are credited to the allowance.



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##### Table of Contents

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 our allowance for loan losses, and may require us 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, 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.

Information with respect to nonaccrual, past
due and restructured loans is as follows:



|                                                                                                         |  |                        |     |      |   |   
|-------------------------------------------------------------------------------------------------------- |  | ---------------------- | --- | ---- | - | --
|                                                                                                         |  | September 30,         
|                                                                                                         |  | 2007                   |     | 2006
|                                                                                                         |  | (Dollars in Thousands)
|Nonaccrual loans                                                                                         |  | $                      |    |      | $ |  
|Loans contractually past due ninety days or more as to interest or principal payments and still accruing |  |                        |    |      |   |  
|Restructured loans                                                                                       |  |                        |    |      |   |  
|Potential problem loans                                                                                  |  |                        | 417 |      |   | 18
|Interest income that would have been recorded on non-accrual and restructured loans under original terms |  |                        |    |      |   |  
|Interest income that was recorded on nonaccrual and restructured loans                                   |  |                        |    |      |   |  

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. Two relationships were added to potential problems loans in the third
quarter of 2007.

It is our policy to discontinue the accrual of interest income when, in the opinion of management, collection of interest becomes
doubtful. We will generally discontinue the accrual of 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 which 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 which causes management to have serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.



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Information regarding certain loans and allowance for loan loss data is as follows:



|                                                                                          |  |                                 |         |   |      |   |        |  
|----------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------ | -
|                                                                                          |  | Nine Months Ended September 30, |        
|                                                                                          |  | 2007                            |         |   | 2006 |  
|                                                                                          |  | (Dollars in Thousands)          |        
|Average amount of loans outstanding                                                       |  | $                               | 141,946 |   |      | $ | 92,050 |  
|                                                                                          |  |                                 |         |   |      |   |        |  
|Balance of allowance for loan losses at beginning of period                               |  |                                 | 1,235   |   |      |   | 879    |  
|                                                                                          |  |                                 |         |   |      |   |        |  
|Loans charged off:                                                                        |  |                                 |         |   |      |   |        |  
|Commercial and financial                                                                  |  |                                 |        |   |      |   |       |  
|Real estate mortgage                                                                      |  |                                 |        |   |      |   |       |  
|Installment                                                                               |  |                                 |        |   |      |   | 2      |  
|                                                                                          |  |                                 |         |   |      |   |        |  
|                                                                                          |  |                                 |        |   |      |   | 2      |  
|                                                                                          |  |                                 |         |   |      |   |        |  
|Loans recovered:                                                                          |  |                                 |         |   |      |   |        |  
|Commercial and financial                                                                  |  |                                 |        |   |      |   |       |  
|Real estate mortgage                                                                      |  |                                 |        |   |      |   |       |  
|Installment                                                                               |  |                                 |        |   |      |   | 2      |  
|                                                                                          |  |                                 |         |   |      |   |        |  
|                                                                                          |  |                                 |        |   |      |   | 2      |  
|                                                                                          |  |                                 |         |   |      |   |        |  
|Net recoveries (charge-offs)                                                              |  |                                 |        |   |      |   |       |  
|Additions to allowance charged to operating expense during period                         |  |                                 | 453     |   |      |   | 234    |  
|                                                                                          |  |                                 |         |   |      |   |        |  
|Balance of allowance for loan losses at end of period                                     |  | $                               | 1,688   |   |      | $ | 1,113  |  
|                                                                                          |  |                                 |         |   |      |   |        |  
|Ratio of net loan charge-offs (recoveries) during the period to average loans outstanding |  |                                 |        | % |      |   |       | %
|                                                                                          |  |                                 |         |   |      |   |        |  

Liquidity and Capital Resources

Liquidity management involves the matching of the cash flow requirements of customers, who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to
meet their credit needs, and our ability to meet those needs. We strive to maintain an adequate liquidity position by managing the balances and maturities of interest-earning assets and interest-bearing liabilities so that the balance we have in
short-term investments at any given time will adequately cover any reasonably anticipated immediate need for funds. Additionally, we maintain relationships with correspondent banks, which could provide funds to the Bank on short notice, if needed.

Our liquidity and capital resources are monitored daily by management and on a periodic basis by state and federal regulatory authorities. As determined
under guidelines established by these regulatory authorities, our liquidity ratio at September 30, 2007 was considered satisfactory. At that date, our short-term investments and available Federal Funding were adequate to cover any reasonably
anticipated immediate need for funds. At September 30, 2007, we had unused available Federal Fund lines of $12,500,000 and unused Federal Home Loan Bank borrowing capacity of approximately $1,530,000.

Our consolidated financial statements, as of September 30, 2007, evidenced a decrease in liquidity position as total cash and due from banks amounted to $1,382,000
representing 0.73% of total assets as compared to 1.18% as of December 31, 2006. Investment securities available for sale amounted to $10,002,000 and interest bearing deposits in banks amounted to $2,933,000, representing 5.27% and 1.55% of
total assets, respectively. These securities provide a secondary source of liquidity since they can be converted into cash in a timely manner.



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Our ability to maintain and expand our deposit base and borrowing capabilities is a source of liquidity. For the
nine-month period ended September 30, 2007, total deposits increased from $112.1 million at December 31, 2006 to $158.4 million at September 30, 2007. Of this total, however, approximately $78.5 million, or 49.6%, represent time
deposits that are scheduled to mature within one year. Furthermore, we intend to continue to rely heavily on short-term time deposits as a primary source of funding for the foreseeable future. If we are unable to offer a competitive rate as these
deposits mature, we could lose a substantial amount of deposits within a short period of time, which would strain our liquidity. While we consider this scenario to be unlikely, our net interest income and profitability would be negatively affected
if we have to increase rates to maintain deposits.

Management is committed to maintaining capital at a level sufficient to protect depositors, provide for
reasonable growth, and fully comply with all regulatory requirements. Our capital ratios have declined over the last couple of years largely because of our rapid growth. We have filed a registration statement with the Securities and Exchange
Commission for an offering of up to $6 million in common stock. We expect that our capital ratios will improve as proceeds from this offering are collected and will then decline as these proceeds are invested in loans or used to expand our branch
network. If we are successful in implementing our expansion program, we expect our profitability to increase, which would improve our capital position. The table below illustrates our banks regulatory capital ratios at September 30, 2007.



|                           |  |       |   |  |                                |  
|-------------------------- |  | ----- | - |  | ------------------------------ | -
|                           |  | Bank  |   |  | Minimum Regulatory Requirement |  
|Leverage capital ratio     |  | 9.02  | % |  | 4.00                           | %
|Risk-based capital ratios: |  |       |   |  |                                |  
|Tier 1 capital             |  | 9.53  | % |  | 4.00                           | %
|Total capital              |  | 10.48 | % |  | 8.00                           | %

Off-Balance Sheet Risk

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of
credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets.

Our 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. We use
the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. A summary of our commitments is as follows:



|                             |  |                    |           
|---------------------------- |  | ------------------ | ----------
|                             |  | September 30, 2007
|Commitments to extend credit |  | $                  | 34,151,000
|Letters of credit            |  |                    | 20,000    
|                             |  |                    |           
|                             |  | $                  | 34,171,000
|                             |  |                    |           

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. 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 us upon extension of credit, is based on our credit evaluation of the customer.

Standby letters of credit are conditional commitments issued
by us to guarantee the performance of a customer to a third party. Those letters of credit 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 is required in instances which we deem necessary.



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Financial Condition

Our total assets grew by 34.50% for the first nine months of 2007. Deposit growth of $46.3 million and additional FHLB borrowings of $4 million were used to fund net loan growth of $42.3 million and the increase in total securities of $5.5
million. Loan demand continues to be strong in our primary market areas of Jones, Baldwin, Bibb, Monroe, Houston, Greene and Putnam counties. Our loan to deposit ratio has decreased from 106.1% as of December 31, 2006 to approximately 101.7% as
of September 30, 2007 as our deposit growth outpaced our loan growth during the first nine months of the year. Stockholders equity has increased by $743,000 due to net income of $521,000, recognition of stock based employee compensation
cost of $208,000, and the decrease in unrealized losses on investment securities of $14,000.

Results of Operations For The Three and Nine Months Ended
September 30, 2007 and 2006

Net Interest Income

Our profitability is determined by our ability to effectively manage interest income and expense, to minimize loan and security losses, to generate noninterest 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 upon our ability to obtain an adequate net interest spread between the rate paid on interest-bearing liabilities and the rate
earned on interest-earning assets. The increase in net interest income is due primarily to the increased volume of average loans outstanding. Our net interest margin was 3.50% for the nine months ended September 30, 2007, compared to 3.81%
for the same period in 2006, a decrease of 31 basis points. Our yield on interest-earning assets was 8.19% for the first nine months of 2007 as compared to 7.75% for the first nine months of 2006, an increase of 44 basis points. Our cost of
funds increased to 4.98% for the first nine months of 2007 as compared to 4.40% for the first nine months of 2006, an increase of 58 basis points. We continue to experience growth in loans and deposits while maintaining relatively competitive
pricing.

Provisions for Loan Losses

The allowance for
loan losses increased $452,600 from $1,235,044 as of December 31, 2006 to $1,687,644 as of September 30, 2007. The increase is due to provisions recorded in the first nine months of 2007, primarily as a result of the increase in loan
volume. There were no charge-offs or recoveries in the first nine months of 2007.

Noninterest Income

Noninterest income decreased by approximately $14,000 and $89,000 for the third quarter and the first nine months of 2007, respectively, as compared to the same periods
in 2006. Decreases in mortgage origination income accounted for the majority of the quarter and year-to-date decreases in noninterest income and was due to a slowdown in the residential housing market during the first nine months of 2007. The
increase in other components of noninterest income is attributable to our overall growth in deposits and branch expansion.

Noninterest Expenses

Noninterest expenses increased by approximately $320,000 or 40.35% for the third quarter of 2007 compared to the same period in 2006. The increase is
due largely to an increase in salaries and employee benefits expense of $141,000 associated with the opening of the Bass Road, Forsyth Road and Lake Oconee locations and normal increases in salaries and benefits. Net equipment and occupancy
expenses and other operating expense increased $14,000 and $165,000, respectively, for the three month period due to opening new branches. Noninterest expenses increased by $945,000 or 44.95% for the nine months ended September 30, 2007
compared to the same period in 2006. The increase consists of increases in salaries and employee benefits expense of $420,000, net occupancy and equipment expenses of $95,000 and other operating expenses of $430,000. The salary and employee
benefit increases were due to an increase in the number of full time equivalent employees which increased from 25 at September 30, 2006 to 36 at September 30, 2007, in addition to normal increases in salaries and benefits. The increases in
other operating expenses were primarily attributable to growth and expenses related to the opening of our new branches in the past year.

Income Taxes

We have recorded a provision for income taxes of $153,000 and $388,000 for the three and nine months ended September 30, 2007, respectively. This
represents 39.9% and 42.7% of income before provision for income taxes for the three and nine months ended September 30, 2007, respectively. The comparable effective tax rates for the same periods in 2006 were 31.3% and 32.6%, respectively. The
increase in the effective tax rate and provision for income taxes for the nine months ended September 30, 2007 includes an adjustment of $32,945 related to the prior year.



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Regulatory Matters

From time to time, various bills are introduced in the United States Congress with respect to the regulation of financial institutions. Certain of these proposals, if adopted, could significantly change the regulation of banks and the
financial services industry. We cannot predict whether any of these proposals will be adopted or, if adopted, how these proposals would affect us.

We are
not aware of any current recommendation by our regulatory authorities which, if implemented, would have a material effect on our liquidity, capital resources, or results of operations.



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##### Table of Contents

|ITEM 3. | Controls and Procedures
|------- | -----------------------

We carried out an evaluation, under the
supervision and with the participation of our Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive and Chief Financial Officer concluded that our disclosure controls and procedures are effective for gathering, analyzing and
disclosing the information that we are required to disclose in the reports we file under the Securities Exchange Act of 1934. We are in the process of further reviewing and documenting our disclosure controls and procedures, including our internal
controls and procedures for financial reporting, and may from time to time make changes designed to enhance their effectiveness and to ensure that our systems evolve with our business.

There have been no changes in our internal control over financial reporting during the third quarter 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events.
There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II. OTHER INFORMATION



|ITEM 1. | Legal Proceedings
|------- | -----------------

None other than routine litigation that is
incidental to our business



|ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None



|ITEM 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None



|ITEM 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None



|ITEM 5. | Other Information
|------- | -----------------

None



|ITEM 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                                                                   
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                    
|     | 
|31.2 |  | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                    
|     | 
|32   |  | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



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##### Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                  |  |  |  |                                              |  | 
|----------------- |  |  |  | -------------------------------------------- |  | 
|                  |  |  |  | PIEDMONT COMMUNITY BANK GROUP, INC.         
|                  |  |  |  | (Registrant)                                
|                  |  | 
|November 14, 2007 |  |  |  | /s/ Drew Hulsey                             
|Date              |  |  |  | Drew Hulsey, C.E.O.                         
|                  |  |  |  | (Principal Executive Officer)               
|                  |  | 
|November 14, 2007 |  |  |  | /s/ Julie Simmons                           
|Date              |  |  |  | Julie Simmons, C.F.O.                       
|                  |  |  |  | (Principal Financial and Accounting Officer)



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