EXHIBIT 13
 FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 2009
 TABLE OF CONTENTS
 PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    F-1FINANCIAL STATEMENTSConsolidated balance sheets
    
    F-3Consolidated statements of operations
    
    F-4Consolidated statements of comprehensive income (loss)
    
    F-5Consolidated statements of stockholders equity
    
    F-6Consolidated statements of cash flows
    
    F-7Notes to consolidated financial statements
    
    F-9




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors
FGBC Bancshares, Inc.
Franklin, Georgia
    Internal Control  Integrated Framework
  
 F-1




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors
FGBC Bancshares, Inc.
Franklin, Georgia
 Internal Control  Integrated Framework .
    Internal
Control  Integrated Framework .
   
 F-2




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
 2008
    
    
    2007AssetsCash and due from banks
    
    $
    8,858,796
    
    
    $
    6,112,287Interest-bearing deposits in banks
    
    
    11,042,345
    
    
    
    66,017Federal funds sold
    
    
    722,000
    
    
    
    20,005,000Securities available for sale, at fair value
    
    
    71,764,629
    
    
    
    80,731,983Restricted equity securities, at cost
    
    
    2,053,400
    
    
    
    1,041,800Loans
    
    
    683,177,685
    
    
    
    539,709,171Less allowance for loan losses
    
    
    11,013,996
    
    
    
    6,267,211Loans, net
    
    
    672,163,689
    
    
    
    533,441,960Premises and equipment
    
    
    37,898,122
    
    
    
    34,286,994Foreclosed assets
    
    
    6,041,163
    
    
    
    1,326,196Other assets
    
    
    10,841,477
    
    
    
    7,621,273Total assets
    
    $
    821,385,621
    
    
    $
    684,633,510Liabilities and Stockholders EquityDeposits:Noninterest-bearing
    
    $
    34,959,706
    
    
    $
    31,526,232Interest-bearing
    
    
    702,131,988
    
    
    
    583,710,127Total deposits
    
    
    737,091,694
    
    
    
    615,236,359Other borrowings
    
    
    16,750,000
    
    
    
    Other liabilities
    
    
    1,730,132
    
    
    
    2,607,209Total liabilities
    
    
    755,571,826
    
    
    
    617,843,568Stockholders equityCommon stock, par value $0; 100,000,000 shares authorized;
12,492,206 and 12,185,144 shares issued and
outstanding, respectively
    
    
    71,907,920
    
    
    
    67,478,254Accumulated deficit
    
    
    (5,692,364
    )
    
    
    (617,429
    )Accumulated other comprehensive loss
    
    
    (401,761
    )
    
    
    (70,883
    )Total stockholders equity
    
    
    65,813,795
    
    
    
    66,789,942Total liabilities and stockholders equity
    
    $
    821,385,621
    
    
    $
    684,633,510See notes to consolidated financial statements.
 F-3




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 2008
    
    
    2007
    
    
    2006Interest income:Loans, including fees
    
    $
    40,729,021
    
    
    $
    41,969,780
    
    
    $
    29,763,430Taxable securities
    
    
    3,136,147
    
    
    
    3,219,131
    
    
    
    2,034,072Nontaxable securities
    
    
    618,372
    
    
    
    416,903
    
    
    
    265Federal funds sold
    
    
    126,649
    
    
    
    1,203,009
    
    
    
    1,187,808Other interest income
    
    
    124,759
    
    
    
    188,864
    
    
    
    121,327Total interest income
    
    
    44,734,948
    
    
    
    46,997,687
    
    
    
    33,106,902Interest expense:Deposits
    
    
    23,529,667
    
    
    
    25,135,423
    
    
    
    15,116,060Other borrowings
    
    
    478,208
    
    
    
    57,963
    
    
    
    720,378Total interest expense
    
    
    24,007,875
    
    
    
    25,193,386
    
    
    
    15,836,438Net interest income
    
    
    20,727,073
    
    
    
    21,804,301
    
    
    
    17,270,464Provision for loan losses
    
    
    8,914,368
    
    
    
    2,353,244
    
    
    
    2,740,843Net interest income after
provision for loan losses
    
    
    11,812,705
    
    
    
    19,451,057
    
    
    
    14,529,621Other income:Service charges on deposit accounts
    
    
    2,212,795
    
    
    
    1,869,988
    
    
    
    1,378,399Mortgage origination fees
    
    
    1,272,446
    
    
    
    1,343,204
    
    
    
    1,101,211Net gain on sale of securities available for
sale
    
    
    726,419
    
    
    
    33,851
    
    
    
    Net gain on sale of premises and equipment
    
    
    182,305
    
    
    
    
    
    
    
    Other operating income
    
    
    231,626
    
    
    
    190,563
    
    
    
    77,926Total other income
    
    
    4,625,591
    
    
    
    3,437,606
    
    
    
    2,557,536Other expenses:Salaries and employee benefits
    
    
    13,382,578
    
    
    
    12,830,241
    
    
    
    10,716,964Occupancy and equipment expenses
    
    
    3,335,624
    
    
    
    2,861,536
    
    
    
    2,024,908Other operating expenses
    
    
    7,754,793
    
    
    
    5,721,324
    
    
    
    4,079,154Total other expenses
    
    
    24,472,995
    
    
    
    21,413,101
    
    
    
    16,821,026Net income (loss) before income taxes
    
    
    (8,034,699
    )
    
    
    1,475,562
    
    
    
    266,131Income tax expense (benefit)
    
    
    (2,959,764
    )
    
    
    (579,506
    )
    
    
    Net income (loss)
    
    
    (5,074,935
    )
    
    
    2,055,068
    
    
    
    266,131Basic earnings (losses) per share
    
    $
    (0.41
    )
    
    $
    0.17
    
    
    $
    0.02Diluted earnings (losses) per share
    
    $
    (0.41
    )
    
    $
    0.16
    
    
    $
    0.02Cash dividends per share
    
    $
    
    
    
    $
    
    
    
    $
    
 See notes to consolidated financial statements.
 F-4




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 2008
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    (5,074,935
    )
    
    $
    2,055,068
    
    
    $
    266,131Other comprehensive income (loss):Reclassification adjustment for net gains on sales of
securities
included in net income, net of tax of $276,039, $12,863
and $0 respectively
    
    
    (450,380
    )
    
    
    (20,988
    )
    
    
    Net unrealized holding gains on securities available for sale
arising during period, net of tax benefit of $73,242,
$30,580
and $0 respectively
    
    
    119,502
    
    
    
    376,781
    
    
    
    476,217Other comprehensive income (loss)
    
    
    (330,878
    )
    
    
    355,793
    
    
    
    476,217Comprehensive income (loss)
    
    $
    (5,405,813
    )
    
    $
    2,410,861
    
    
    $
    742,348
 See notes to consolidated financial statements.
 F-5




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 AccumulatedCommon Stock
    
    
    
    
    
    
    Other
    
    
    TotalAt Amount
    
    
    Accumulated
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Paid In
    
    
    Deficit
    
    
    Loss
    
    
    EquityBalance, December 31, 2005
    
    
    6,737,910
    
    
    $
    60,783,189
    
    
    $
    (2,938,628
    )
    
    $
    (902,893
    )
    
    $
    56,941,668Net income
    
    
    
    
    
    
    
    
    
    
    266,131
    
    
    
    
    
    
    
    266,131Stock compensation expense
    
    
    
    
    
    
    66,735
    
    
    
    
    
    
    
    
    
    
    
    66,7355 for 4 stock split
    
    
    1,684,478
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase of fractional shares
    
    
    (115
    )
    
    
    (1,660
    )
    
    
    
    
    
    
    
    
    
    
    (1,660
    )Issuance of common stock
    
    
    526,371
    
    
    
    5,295,739
    
    
    
    
    
    
    
    
    
    
    
    5,295,739Exercise of stock options
    
    
    98,104
    
    
    
    514,457
    
    
    
    
    
    
    
    
    
    
    
    514,457Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    476,217
    
    
    
    476,217Balance, December 31, 2006
    
    
    9,046,748
    
    
    
    66,658,460
    
    
    
    (2,672,497
    )
    
    
    (426,676
    )
    
    
    63,559,287Net income
    
    
    
    
    
    
    
    
    
    
    2,055,068
    
    
    
    
    
    
    
    2,055,068Stock compensation expense
    
    
    
    
    
    
    153,420
    
    
    
    
    
    
    
    
    
    
    
    153,420Exercise of stock options
    
    
    92,110
    
    
    
    586,270
    
    
    
    
    
    
    
    
    
    
    
    586,2704 for 3 stock split
    
    
    3,046,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Excess tax benefit from stock options
exercised
    
    
    
    
    
    
    80,104
    
    
    
    
    
    
    
    
    
    
    
    80,104Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    355,793
    
    
    
    355,793Balance, December 31, 2007
    
    
    12,185,144
    
    
    
    67,478,254
    
    
    
    (617,429
    )
    
    
    (70,883
    )
    
    
    66,789,942Net loss
    
    
    
    
    
    
    
    
    
    
    (5,074,935
    )
    
    
    
    
    
    
    (5,074,935
    )Stock compensation expense
    
    
    
    
    
    
    357,980
    
    
    
    
    
    
    
    
    
    
    
    357,9804 for 3 stock split
    
    
    2,078
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase of fractional shares
    
    
    (532
    )
    
    
    (7,985
    )
    
    
    
    
    
    
    
    
    
    
    (7,985
    )Issuance of common stock
    
    
    253,332
    
    
    
    3,799,981
    
    
    
    
    
    
    
    
    
    
    
    3,799,981Exercise of stock options
    
    
    52,184
    
    
    
    279,690
    
    
    
    
    
    
    
    
    
    
    
    279,690Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (330,878
    )
    
    
    (330,878
    )Balance, December 31, 2008
    
    
    12,492,206
    
    
    $
    71,907,920
    
    
    $
    (5,692,364
    )
    
    $
    (401,761
    )
    
    $
    65,813,795
 See notes to consolidated financial statements.
 F-6




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 2008
    
    
    2007
    
    
    2006OPERATING ACTIVITIESNet income (loss)
    
    $
    (5,074,935
    )
    
    $
    2,055,068
    
    
    $
    266,131Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    1,970,154
    
    
    
    1,589,113
    
    
    
    887,459Amortization and accretion of securities
    
    
    19,348
    
    
    
    19,149
    
    
    
    76,091Provision for loan losses
    
    
    8,914,368
    
    
    
    2,353,244
    
    
    
    2,740,843Writedowns of foreclosed assets
    
    
    1,185,528
    
    
    
    148,275
    
    
    
    Stock compensation expense
    
    
    357,980
    
    
    
    153,420
    
    
    
    66,735Deferred income taxes
    
    
    (2,086,277
    )
    
    
    (1,405,879
    )
    
    
    (689,257
    )Net (gain) on sale of securities available for sale
    
    
    (726,419
    )
    
    
    (33,851
    )
    
    
    Net (gain) loss on sale of foreclosed assets
    
    
    216,840
    
    
    
    216,473
    
    
    
    (9,200
    )Net (gain) loss on sale of premises and equipment
    
    
    (182,305
    )
    
    
    (43,147
    )
    
    
    25,237Increase (decrease) in income taxes payable
    
    
    (1,199,487
    )
    
    
    (824,380
    )
    
    
    660,754Excess tax benefit from stock options exercised
    
    
    
    
    
    
    (80,104
    )
    
    
    (Increase) decrease in interest receivable
    
    
    844,529
    
    
    
    (845,541
    )
    
    
    (2,043,599
    )Increase (decrease) in interest payable
    
    
    (191,607
    )
    
    
    (118,075
    )
    
    
    803,407Net other operating activities
    
    
    (1,869,289
    )
    
    
    558,343
    
    
    
    727,027Net cash provided by operating activities
    
    
    2,178,428
    
    
    
    3,742,108
    
    
    
    3,511,628INVESTING ACTIVITIESNet (increase) decrease in interest bearing deposits in banks
    
    
    (10,976,328
    )
    
    
    11,162,035
    
    
    
    (11,164,145
    )Purchases of securities available for sale
    
    
    (48,099,626
    )
    
    
    (44,124,181
    )
    
    
    (52,439,052
    )Proceeds from maturities of securities available for sale
    
    
    10,090,611
    
    
    
    28,671,358
    
    
    
    22,539,854Proceeds from sales of securities available for sale
    
    
    47,149,764
    
    
    
    5,162,699
    
    
    
    (Purchases) redemptions of restricted equity securities
    
    
    (1,011,600
    )
    
    
    300,900
    
    
    
    (528,800
    )Net (increase) decrease in federal funds sold
    
    
    19,283,000
    
    
    
    33,363,000
    
    
    
    (47,252,000
    )Net increase in loans
    
    
    (154,422,127
    )
    
    
    (135,390,668
    )
    
    
    (145,972,890
    )Purchase of premises and equipment
    
    
    (6,417,974
    )
    
    
    (8,978,454
    )
    
    
    (14,845,236
    )Proceeds from sale of foreclosed assets
    
    
    972,519
    
    
    
    1,462,937
    
    
    
    276,663Proceeds from sale of premises and equipment
    
    
    1,018,997
    
    
    
    217,088
    
    
    
    42,060Additions to other real estate owned
    
    
    303,824
    
    
    
    (3,125
    )
    
    
    (25,673
    )Net cash used in investing activities
    
    
    (142,108,940
    )
    
    
    (108,156,411
    )
    
    
    (249,369,219
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    121,855,335
    
    
    
    118,543,857
    
    
    
    237,900,925Net increase in (repayments of) other borrowings
    
    
    16,750,000
    
    
    
    (15,000,000
    )
    
    
    5,000,000Net increase (decrease) in federal funds purchased and
repurchase agreements
    
    
    
    
    
    
    (1,027,230
    )
    
    
    1,027,230Excess tax benefit from stock options exercised
    
    
    
    
    
    
    80,104
    
    
    
    Proceeds from sale of common stock
    
    
    3,799,981
    
    
    
    
    
    
    
    5,295,739Proceeds from exercise of stock options
    
    
    279,690
    
    
    
    586,270
    
    
    
    514,457Purchase of fractional shares of common stock
    
    
    (7,985
    )
    
    
    
    
    
    
    (1,660
    )Net cash provided by financing activities
    
    
    142,677,021
    
    
    
    103,183,001
    
    
    
    249,736,691Net increase (decrease) in cash and due from banks
    
    
    2,746,509
    
    
    
    (1,231,302
    )
    
    
    3,879,100
 F-7




---



##### 



2008
    
    
    2007
    
    
    2006Cash and due from banks, beginning of period
    
    
    6,112,287
    
    
    
    7,343,589
    
    
    
    3,464,489Cash and due from banks, end of period
    
    $
    8,858,796
    
    
    $
    6,112,287
    
    
    $
    7,343,589SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during period for:Interest
    
    $
    24,282,364
    
    
    $
    25,505,142
    
    
    $
    15,216,081Income taxes
    
    $
    336,000
    
    
    $
    1,650,753
    
    
    $
    28,503NONCASH TRANSACTIONSFinanced sales of foreclosed assets
    
    $
    1,354,337
    
    
    $
    61,711
    
    
    $
    117,500Loans transferred to foreclosed assets
    
    $
    8,140,367
    
    
    $
    3,055,071
    
    
    $
    822,012
 See notes to consolidated financial statements.
 F-8




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
  Basis of Presentation
    Cash, Due from Banks and Cash Flows
   Securities
  F-9




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Securities (continued)
  Loans
   Allowance for Loan Losses
   Accounting for Contingencies Accounting by Creditors for Impairment of a Loan
 F-10




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Allowance for Loan Losses (continued)
    Premises and Equipment
  Land improvements
    
    10-15 yearsBuildings
    
    30-40 yearsEquipment
    
    3-10 years
 Foreclosed Assets
   F-11




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Foreclosed Assets (continued)
  Income Taxes
  Earnings (Losses) Per Share
   Stock-Based Compensation
  Share-Based Payment
  F-12




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Comprehensive Income (Loss)
  Private Placement Offering
  Recent Accounting Pronouncements
 Business
Combinations.
 Noncontrolling Interests in
Consolidated Financial Statements  An Amendment of ARB No. 51.
 Reclassification
  F-13




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 2.
    
    SECURITIES AVAILABLE FOR SALE
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2008:U.S. Government sponsored
agency securities
    
    $
    20,478,647
    
    
    $
    647,993
    
    
    $
    
    
    
    $
    21,126,640Mortgage-backed securities
    
    
    34,199,020
    
    
    
    696,568
    
    
    
    (76,228
    )
    
    
    34,819,360State, county and municipals
    
    
    15,187,226
    
    
    
    2,170
    
    
    
    (1,648,137
    )
    
    
    13,541,259Corporate securities
    
    
    2,547,738
    
    
    
    7,500
    
    
    
    (277,868
    )
    
    
    2,277,370$
    72,412,631
    
    
    $
    1,354,231
    
    
    $
    (2,002,233
    )
    
    $
    71,764,629December 31, 2007:U.S. Government sponsored
agency securities
    
    $
    30,173,685
    
    
    $
    335,021
    
    
    $
    (18,618
    )
    
    $
    30,490,088Mortgage-backed securities
    
    
    32,714,986
    
    
    
    77,262
    
    
    
    (158,763
    )
    
    
    32,633,485State, county and municipals
    
    
    15,381,303
    
    
    
    
    
    
    
    (341,173
    )
    
    
    15,040,130Corporate securities
    
    
    2,576,336
    
    
    
    10,646
    
    
    
    (18,702
    )
    
    
    2,568,280$
    80,846,310
    
    
    $
    422,929
    
    
    $
    (537,256
    )
    
    $
    80,731,983
    F - 14




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 2.
    
    SECURITIES AVAILABLE FOR SALE (continued)
 December 31, 2008Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesDescription of SecuritiesU.S. Government sponsored agencies
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage-backed securities
    
    
    6,336,827
    
    
    
    (73,011
    )
    
    
    971,055
    
    
    
    (3,217
    )
    
    
    7,307,882
    
    
    
    (76,228
    )State, county and municipals
    
    
    12,365,148
    
    
    
    (1,492,817
    )
    
    
    888,316
    
    
    
    (155,320
    )
    
    
    13,253,464
    
    
    
    (1,648,137
    )Corporate securities
    
    
    1,269,870
    
    
    
    (277,868
    )
    
    
    
    
    
    
    
    
    
    
    1,269,870
    
    
    
    (277,868
    )Total temporarily impaired securities
    
    $
    19,971,845
    
    
    $
    (1,843,696
    )
    
    $
    1,859,371
    
    
    $
    (158,537
    )
    
    $
    21,831,21
    
    
    
    6      $(2,002,233
    )December 31, 2007Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesDescription of SecuritiesU.S. Government sponsored agencies
    
    $
    
    
    
    $
    
    
    
    $
    4,724,448
    
    
    $
    (18,618
    )
    
    $
    4,724,448
    
    
    $
    (18,618
    )Mortgage-backed securities
    
    
    6,535,438
    
    
    
    (17,285
    )
    
    
    11,731,101
    
    
    
    (141,478
    )
    
    
    18,266,539
    
    
    
    (158,763
    )State, county and municipals
    
    
    14,138,153
    
    
    
    (332,882
    )
    
    
    901,977
    
    
    
    (8,291
    )
    
    
    15,040,130
    
    
    
    (341,173
    )Corporate securities
    
    
    1,007,500
    
    
    
    (18,702
    )
    
    
    
    
    
    
    
    
    
    
    1,007,500
    
    
    
    (18,702
    )Total temporarily impaired securities
    
    $
    21,681,091
    
    
    $
    (368,869
    )
    
    $
    17,357,526
    
    
    $
    (168,387
    )
    
    $
    39,038,617
    
    
    $
    (537,256
    )The amortized cost and fair value of debt securities as of December 31, 2008 by
contractual maturity are shown on the following page. Actual maturities may
differ from contractual maturities of mortgage-backed securities because the
mortgages underlying the securities may be called or repaid without penalty.
Therefore, these securities are not included in the maturity categories in the
following summary.Amortized
    
    
    FairCost
    
    
    ValueDue in less than one year
    
















    $
    
    
    
    $
    Due from one to five years
    
















    
    2,000,000
    
    
    
    2,023,710Due from five to ten years
    
















    
    11,407,738
    
    
    
    11,719,691After ten years
    
















    
    24,805,873
    
    
    
    23,201,868Mortgage-backed securities
    
















    
    34,199,020
    
    
    
    34,819,360$
    72,412,631
    
    
    $
    71,764,629
  2008
    
    2007
    
    2006Proceeds
    
    $
    47,149,764
    
    
    $
    5,162,699
    
    
    $
    Gross gains
    
    
    752,075
    
    
    
    33,851
    
    
    
    Gross losses
    
    
    (25,656
    )
    
    
    
    
    
    
    
 F - 15




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 3.
    
    LOANS
  December 31,2008
    
    
    2007Commercial and industrial
    
    $
    49,640,782
    
    
    $
    47,362,775Real estate  construction
    
    
    202,523,075
    
    
    
    163,206,168Real estate  mortgage
    
    
    402,843,487
    
    
    
    299,218,661Installment loans to individuals
    
    
    28,367,914
    
    
    
    30,136,470683,375,258
    
    
    
    539,924,074Deferred loan fees and costs
    
    
    (197,573
    )
    
    
    (214,903
    )Allowance for loan losses
    
    
    (11,013,996
    )
    
    
    (6,267,211
    )Loans, net
    
    $
    672,163,689
    
    
    $
    533,441,960
  Years Ended December 31,2008
    
    
    2007
    
    
    2006Balance, beginning of year
    
    $
    6,267,211
    
    
    $
    5,244,200
    
    
    $
    3,193,806Provision for loan losses
    
    
    8,914,368
    
    
    
    2,353,244
    
    
    
    2,740,843Loans charged off
    
    
    (4,245,515
    )
    
    
    (1,388,685
    )
    
    
    (750,093
    )Recoveries of loans previously charged off
    
    
    77,932
    
    
    
    58,452
    
    
    
    59,644Balance, end of year
    
    $
    11,013,996
    
    
    $
    6,267,211
    
    
    $
    5,244,200
 Accounting by Creditors for Impairment
of a Loan
  Balance, beginning of year
    
    $
    14,479,957Advances
    
    
    5,030,913Repayments
    
    
    (3,960,037
    )Changes in related parties
    
    
    569,883Balance, end of year
    
    $
    16,120,716
 F - 16




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 4.
    
    FORECLOSED ASSETS
  Years Ended December 31,2008
    
    
    2007Balance, beginning of year
    
    $
    1,326,196
    
    
    $
    462,722Additions
    
    
    8,140,367
    
    
    
    3,055,196Disposals
    
    
    (972,519
    )
    
    
    (1,462,938
    )Internally financed sales
    
    
    (1,354,337
    )
    
    
    (61,711
    )Capitalized costs
    
    
    303,824
    
    
    
    3,125Writedowns and losses
    
    
    (1,402,368
    )
    
    
    (670,073
    )Balance, end of year
    
    $
    6,041,163
    
    
    $
    1,326,196
  Years Ended December 31,2008
    
    
    2007
    
    
    2006Net loss (gain) on sales
    
    $
    216,840
    
    
    $
    216,473
    
    
    $
    (9,200
    )Writedowns
    
    
    1,185,528
    
    
    
    148,275
    
    
    
    Operating expenses, net of rental income
    
    
    (9,144
    )
    
    
    
    
    
    
    $
    1,393,224
    
    
    
    364,748
    
    
    
    (9,200
    )
 NOTE 5.
    
    PREMISES AND EQUIPMENT
  December 31,2008
    
    
    2007Land and land improvements
    
    $
    8,915,260
    
    
    $
    7,676,883Buildings
    
    
    24,574,243
    
    
    
    18,429,720Construction and equipment installation in
progress, estimated cost to complete $610,529
    
    
    2,172,629
    
    
    
    4,955,956Equipment
    
    
    6,951,300
    
    
    
    6,103,86942,613,432
    
    
    
    37,166,428Accumulated depreciation
    
    
    (4,715,310
    )
    
    
    (2,879,434
    )$
    37,898,122
    
    
    $
    34,286,994
  Leases
  F - 17




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 5.
    
    PREMISES AND EQUIPMENT (continued)
 Leases (continued)
  2009
    
    $
    43,4202010
    
    
    30,0002011
    
    
    12,500$
    85,920
 NOTE 6.
    
    DEPOSITS
  2009
    
    $
    413,300,4402010
    
    
    47,446,2802011
    
    
    18,095,3342012
    
    
    6,708,7032013
    
    
    6,983,105$
    492,533,862
  NOTE 7.
    
    OTHER BORROWINGS
  December 31,2008
    
    
    2007Fixed rate credit at 2.95% due March 23, 2011
    
    $
    5,000,000
    
    
    $
    Fixed rate credit at 4.055% due July 31, 2012
    
    
    1,750,000
    
    
    
    Fixed rate credit at 3.47% due March 23, 2013
    
    
    5,000,000
    
    
    
    Fixed rate credit at 3.83% due March 23, 2015
    
    
    5,000,000
    
    
    
    $
    16,750,000
    
    
    
    
  F - 18




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 8.
    
    STOCK-BASED COMPENSATION
 Stock Options
   Years Ended December 31,2008
    
    2007
    
    2006Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseNumber
    
    Price
    
    Number
    
    Price
    
    Number
    
    PriceOptions outstanding, beginning of year
    
    
    1,293,275
    
    
    $
    6.45
    
    
    
    1,304,320
    
    
    $
    5.46
    
    
    
    1,403,008
    
    
    $
    5.19Granted
    
    
    55,167
    
    
    
    15.00
    
    
    
    137,067
    
    
    
    14.60
    
    
    
    89,167
    
    
    
    8.75Exercised
    
    
    (69,018
    )
    
    
    4.78
    
    
    
    (122,813
    )
    
    
    4.77
    
    
    
    (130,806
    )
    
    
    3.93Forfeited
    
    
    (19,685
    )
    
    
    7.44
    
    
    
    (25,299
    )
    
    
    7.90
    
    
    
    (57,049
    )
    
    
    7.45Options outstanding, end of year
    
    
    1,259,739
    
    
    
    6.90
    
    
    
    1,293,275
    
    
    
    6.45
    
    
    
    1,304,320
    
    
    
    5.46Exercisable, end of year
    
    
    999,277
    
    
    
    5.86
    
    
    
    829,562
    
    
    
    5.07
    
    
    
    723,516
    
    
    
    4.46
  Years ended December 31,2008
    
    2007
    
    2006Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected life
    
    6.5
    years
    
    6.5
    years
    
    6.5
    yearsRisk-free interest rate
    
    
    2.9
    %
    
    
    4.31 to 4.96
    %
    
    
    4.29 to 4.95
    %Expected
volatility/weighted
average expected
volatility
    
    
    24
    %
    
    
    24
    %
    
    
    24
    %
   F - 19




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 8.
    
    STOCK-BASED COMPENSATION (continued)
 Stock Options (continued)
   NOTE 9.
    
    401(k) RETIREMENT PLAN
  NOTE 10.
    
    INCOME TAXES
  Years Ended December 31,2008
    
    
    2007
    
    
    2006Current
    
    $
    (873,487
    )
    
    $
    826,373
    
    
    $
    689,257Deferred
    
    
    (2,086,277
    )
    
    
    (381,692
    )
    
    
    (569,149
    )Change in valuation allowance
    
    
    
    
    
    
    (1,024,187
    )
    
    
    (120,108
    )Income tax benefit
    
    $
    (2,959,764
    )
    
    $
    (579,506
    )
    
    $
    
  Years Ended December 31,2008
    
    
    2007
    
    
    2006Tax provision at statutory federal rate
    
    $
    (2,731,797
    )
    
    $
    501,691
    
    
    $
    90,484State income taxes
    
    
    (220,198
    )
    
    
    (35,154
    )
    
    
    (44,027
    )Change in valuation allowance
    
    
    
    
    
    
    (1,024,188
    )
    
    
    (120,108
    )Nondeductible expenses
    
    
    46,578
    
    
    
    40,566
    
    
    
    51,033Stock compensation
    
    
    121,713
    
    
    
    52,163
    
    
    
    22,690Tax free interest
    
    
    (176,060
    )
    
    
    (112,229
    )
    
    
    (72
    )Other
    
    
    
    
    
    
    (2,355
    )
    
    
    Income tax expense
    
    $
    (2,959,764
    )
    
    $
    (579,506
    )
    
    $
    
 F - 20




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 10.
    
    INCOME TAXES (continued)
  December 31,2008
    
    
    2007Deferred tax assets:Loan loss reserves
    
    $
    3,987,288
    
    
    $
    2,089,604Pre-opening expenses
    
    
    7,370
    
    
    
    50,778Deferred loan fees
    
    
    74,555
    
    
    
    81,095Securities available for sale
    
    
    246,241
    
    
    
    43,444Contributions
    
    
    3,598
    
    
    
    Nonaccrual loan interest
    
    
    45,086
    
    
    
    31,257Reserve for repossessed assets
    
    
    431,141
    
    
    
    55,9534,795,279
    
    
    
    2,352,131Deferred tax liabilities:Depreciation
    
    
    353,522
    
    
    
    199,448Net deferred taxes
    
    $
    4,441,757
    
    
    $
    2,152,683
  NOTE 11.
    
    EARNINGS (LOSSES) PER SHARE
  Years Ended December 31,2008
    
    
    2007
    
    
    2006Basic earnings (losses) per share:Weighted average common shares outstanding
    
    
    12,297,893
    
    
    
    12,124,152
    
    
    
    11,770,479Net income (loss)
    
    $
    (5,074,935
    )
    
    $
    2,055,068
    
    
    $
    266,131Basic earnings (losses) per share
    
    $
    (.41
    )
    
    $
    .17
    
    
    $
    .02Diluted earnings (losses) per share:Weighted average common shares outstanding
    
    
    12,297,893
    
    
    
    12,124,152
    
    
    
    11,770,479Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market prices for the year
    
    
    
    
    
    
    765,001
    
    
    
    512,353Total weighted average common shares and
common stock equivalents outstanding
    
    
    12,297,893
    
    
    
    12,889,153
    
    
    
    12,282,832Net income (loss)
    
    $
    (5,074,935
    )
    
    $
    2,055,068
    
    
    $
    266,131Diluted earnings (losses) per share
    
    $
    (.41
    )
    
    $
    .16
    
    
    $
    .02
  F - 21




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 12.
    
    COMMITMENTS AND CONTINGENCIES
 Loan Commitments
   December 31,2008
    
    
    2007Commitments to extend credit
    
    $
    52,381,387
    
    
    $
    62,064,418Letters of credit
    
    
    957,485
    
    
    
    1,403,833$
    53,338,872
    
    
    $
    63,468,251
       F - 22




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 12.
    
    COMMITMENTS AND CONTINGENCIES (continued)
 Contingencies
  Employee Agreements
  NOTE 13.
    
    CONCENTRATIONS OF CREDIT
    NOTE 14.
    
    REGULATORY MATTERS
   F - 23




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 14.
    
    REGULATORY MATTERS (continued)
    To Be WellFor Capital
    
    Capitalized UnderAdequacy
    
    Prompt CorrectiveActual
    
    Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in Thousands)As of December 31, 2008:Total Capital to Risk Weighted AssetsConsolidated
    
    $
    71,777
    
    
    
    10.67
    %
    
    $
    53,804
    
    
    
    8
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    70,932
    
    
    
    10.55
    %
    
    $
    53,790
    
    
    
    8
    %
    
    $
    67,237
    
    
    
    10
    %Tier 1 Capital to Risk Weighted AssetsConsolidated
    
    $
    63,338
    
    
    
    9.42
    %
    
    $
    26,902
    
    
    
    4
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    62,495
    
    
    
    9.29
    %
    
    $
    26,895
    
    
    
    4
    %
    
    $
    40,342
    
    
    
    6
    %Tier 1 Capital to Average AssetsConsolidated
    
    $
    63,338
    
    
    
    7.65
    %
    
    $
    33,099
    
    
    
    4
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    62,495
    
    
    
    7.55
    %
    
    $
    33,099
    
    
    
    4
    %
    
    $
    41,374
    
    
    
    5
    %As of December 31, 2007:Total Capital to Risk Weighted AssetsConsolidated
    
    $
    73,128
    
    
    
    13.38
    %
    
    $
    43,711
    
    
    
    8
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    70,863
    
    
    
    12.97
    %
    
    $
    43,700
    
    
    
    8
    %
    
    $
    54,625
    
    
    
    10
    %Tier 1 Capital to Risk Weighted AssetsConsolidated
    
    $
    66,861
    
    
    
    12.24
    %
    
    $
    21,856
    
    
    
    4
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    64,596
    
    
    
    11.83
    %
    
    $
    21,850
    
    
    
    4
    %
    
    $
    32,775
    
    
    
    6
    %Tier 1 Capital to Average AssetsConsolidated
    
    $
    66,861
    
    
    
    9.88
    %
    
    $
    27,063
    
    
    
    4
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    64,596
    
    
    
    9.55
    %
    
    $
    27,063
    
    
    
    4
    %
    
    $
    33,828
    
    
    
    5
    %
 NOTE 15.
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS
 Fair Value Measurements
  F-24




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 15.
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
      The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115
 Disclosures about Fair Value of Financial Instruments,
 F-25




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 15.
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
  Securities Available for Sale:
 Impaired Loans: Accounting by Creditors for Impairment of a Loan
 Foreclosed Assets:
  Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TotalAssetsAvailable for sale investment
securities
    
    $
    
    
    
    $
    71,764,629
    
    
    $
    
    
    
    $
    71,764,629Total assets at fair value
    
    $
    
    
    
    $
    71,764,629
    
    
    $
    
    
    
    $
    71,764,629
 F-26




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 15.
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
  Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TotalAssetsImpaired loans
    
    $
    
    
    
    $
    6,765,601
    
    
    $
    31,859,787
    
    
    $
    38,625,388Foreclosed assets
    
    
    
    
    
    
    840,742
    
    
    
    5,200,421
    
    
    
    6,041,163Total assets at fair value
    
    $
    
    
    
    $
    7,606,343
    
    
    $
    37,060,208
    
    
    $
    44,666,551
  Cash, Due From Banks, Interest Bearing Deposits in Banks and Federal Funds Sold:
 Securities:
 Restricted Equity Securities:
 Loans:
 Deposits:
 Other Borrowings:
 Accrued Interest:
  F-27




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 15.
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
 December 31,2008
    
    2007Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash, due from banks, interest
bearing deposits in banks,
and federal funds sold
    
    $
    20,623,141
    
    
    $
    20,623,141
    
    
    $
    26,183,304
    
    
    $
    26,183,304Securities available for sale
    
    
    71,764,629
    
    
    
    71,764,629
    
    
    
    80,731,983
    
    
    
    80,731,983Restricted equity securities
    
    
    2,053,400
    
    
    
    2,053,400
    
    
    
    1,041,800
    
    
    
    1,041,800Loans
    
    
    672,163,689
    
    
    
    667,130,139
    
    
    
    533,441,960
    
    
    
    533,238,880Accrued interest receivable
    
    
    3,880,284
    
    
    
    3,880,284
    
    
    
    4,724,813
    
    
    
    4,724,813Financial liabilities:Deposits
    
    
    737,091,694
    
    
    
    741,079,357
    
    
    
    615,236,359
    
    
    
    617,932,115Other borrowings
    
    
    16,750,000
    
    
    
    17,010,059
    
    
    
    
    
    
    
    Accrued interest payable
    
    
    953,088
    
    
    
    953,088
    
    
    
    1,144,695
    
    
    
    1,144,695
 NOTE 16.
    
    SUPPLEMENTAL FINANCIAL DATA
  Years Ended December 31,2008
    
    2007
    
    2006Data processing
    
    $
    1,512,379
    
    
    $
    1,198,749
    
    
    $
    872,050Write downs on foreclosed assets
    
    
    1,185,528
    
    
    
    148,275
    
    
    
    Director fees
    
    
    581,123
    
    
    
    523,924
    
    
    
    193,375FDIC insurance
    
    
    501,160
    
    
    
    300,012
    
    
    
    36,900
 NOTE 17.
    
    PARENT COMPANY FINANCIAL INFORMATION
  CONDENSED BALANCE SHEETS
 2008
    
    
    2007AssetsCash
    
    $
    729,263
    
    
    $
    2,131,273Investment in subsidiary
    
    
    64,971,194
    
    
    
    64,525,511Other assets
    
    
    173,336
    
    
    
    143,158Total assets
    
    $
    65,873,793
    
    
    $
    66,799,942LiabilitiesOther liabilities
    
    $
    59,998
    
    
    $
    10,000Stockholders equity
    
    
    65,813,795
    
    
    
    66,789,942Total liabilities and stockholders equity
    
    $
    65,873,793
    
    
    $
    66,799,942
 F-28




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 17.
    
    PARENT COMPANY FINANCIAL INFORMATION (continued)
 CONDENSED STATEMENTS OF OPERATIONS
 2008
    
    
    2007
    
    
    2006Expenses:Other operating expenses
    
    $
    438,061
    
    
    $
    350,821
    
    
    $
    136,851Loss before income tax benefit
    
    
    (438,061
    )
    
    
    (350,821
    )
    
    
    (136,851
    )Income tax benefit
    
    
    (165,306
    )
    
    
    (193,377
    )
    
    
    Loss before equity in income (loss)
of subsidiary
    
    
    (272,755
    )
    
    
    (157,444
    )
    
    
    (136,851
    )Equity in income (loss) of subsidiary
    
    
    (4,802,180
    )
    
    
    2,212,512
    
    
    
    402,982Net income (loss)
    
    $
    (5,074,935
    )
    
    $
    2,055,068
    
    
    $
    266,131
 CONDENSED STATEMENTS OF CASH FLOWS
 2008
    
    
    2007
    
    
    2006OPERATING ACTIVITIESNet income (loss)
    
    $
    (5,074,935
    )
    
    $
    2,055,068
    
    
    $
    266,131Adjustments to reconcile net income (loss) to
net cash used in operating activities:Equity in (income) loss of subsidiary
    
    
    4,802,180
    
    
    
    (2,212,512
    )
    
    
    (402,982
    )Stock compensation
    
    
    
    
    
    
    
    
    
    
    Net other operating activities
    
    
    19,819
    
    
    
    (143,159
    )
    
    
    (11,000
    )Net cash used in operating activities
    
    
    (252,936
    )
    
    
    (300,603
    )
    
    
    (147,851
    )INVESTING ACTIVITIESInvestment in subsidiary
    
    
    (5,220,760
    )
    
    
    
    
    
    
    (11,900,000
    )Net cash used in investing activities
    
    
    (5,220,760
    )
    
    
    
    
    
    
    (11,900,000
    )FINANCING ACTIVITIESProceeds from sale of common stock
    
    
    3,799,981
    
    
    
    
    
    
    
    5,295,739Proceeds from exercise of stock options
    
    
    279,690
    
    
    
    586,270
    
    
    
    514,457Purchase of fractional shares of common stock
    
    
    (7,985
    )
    
    
    
    
    
    
    (1,660
    )Net cash provided by financing activities
    
    
    4,071,686
    
    
    
    586,270
    
    
    
    5,808,536Net increase (decrease) in cash
    
    
    (1,402,010
    )
    
    
    285,667
    
    
    
    (6,239,315
    )Cash at beginning of year
    
    
    2,131,273
    
    
    
    1,845,606
    
    
    
    8,084,921Cash at end of year
    
    $
    729,263
    
    
    $
    2,131,273
    
    
    $
    1,845,606
 NOTE 18.
    
    SUBSEQUENT EVENTS
  F-29