##### 



EXHIBIT 13
 FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 2006
 TABLE OF CONTENTS
 PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-1FINANCIAL STATEMENTSConsolidated balance sheets
    
    
    F-2Consolidated statements of operations
    
    
    F-3Consolidated statements of comprehensive income (loss)
    
    
    F-4Consolidated statements of stockholders equity
    
    
    F-5Consolidated statements of cash flows
    
    
    F-6Notes to consolidated financial statements
    
    
    F-8




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors
FGBC Bancshares, Inc.
Franklin, Georgia
 FGBC Bancshares, Inc. and
subsidiary
    
 F-1




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
 2006
    
    
    2005AssetsCash and due from banks
    
    $
    7,343,589
    
    
    $
    3,464,489Interest bearing deposits in banks
    
    
    11,228,052
    
    
    
    63,907Federal funds sold
    
    
    53,368,000
    
    
    
    6,116,000Securities available for sale
    
    
    70,114,808
    
    
    
    39,815,484Restricted equity securities
    
    
    1,342,700
    
    
    
    813,900Loans
    
    
    408,642,096
    
    
    
    264,064,167Less allowance for loan losses
    
    
    5,244,200
    
    
    
    3,193,806Loans, net
    
    
    403,397,896
    
    
    
    260,870,361Premises and equipment
    
    
    27,071,594
    
    
    
    13,181,114Other assets
    
    
    5,543,664
    
    
    
    2,365,191Total assets
    
    $
    579,410,303
    
    
    $
    326,690,446Liabilities and Stockholders EquityDeposits:Noninterest-bearing
    
    $
    24,101,011
    
    
    $
    12,910,879Interest-bearing
    
    
    472,591,491
    
    
    
    245,880,698Total deposits
    
    
    496,692,502
    
    
    
    258,791,577Other borrowings
    
    
    15,000,000
    
    
    
    10,000,000Securities sold under repurchase agreement
    
    
    1,027,230
    
    
    
    Other liabilities
    
    
    3,131,284
    
    
    
    957,201Total liabilities
    
    
    515,851,016
    
    
    
    269,748,778Commitments and contingenciesStockholders equity:Common stock, no par value; 100,000,000 shares authorized;
9,046,748 and 6,737,910 issued and outstanding, respectively
    
    
    66,658,460
    
    
    
    60,783,189Accumulated deficit
    
    
    (2,672,497
    )
    
    
    (2,938,628
    )Accumulated other comprehensive loss
    
    
    (426,676
    )
    
    
    (902,893
    )Total stockholders equity
    
    
    63,559,287
    
    
    
    56,941,668Total liabilities and stockholders equity
    
    $
    579,410,303
    
    
    $
    326,690,446
 See Notes to Consolidated Financial Statements.
 F-2




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
 2006
    
    
    2005
    
    
    2004Interest income:Loans, including fees
    
    $
    29,763,430
    
    
    $
    12,967,840
    
    
    $
    5,802,344Taxable securities
    
    
    2,034,072
    
    
    
    1,247,064
    
    
    
    871,664Nontaxable securities
    
    
    265
    
    
    
    
    
    
    
    Federal funds sold
    
    
    1,187,808
    
    
    
    216,380
    
    
    
    80,153Other interest income
    
    
    121,327
    
    
    
    5,947
    
    
    
    Total interest income
    
    
    33,106,902
    
    
    
    14,437,231
    
    
    
    6,754,161Interest expense:Deposits
    
    
    15,116,060
    
    
    
    6,260,298
    
    
    
    2,708,183Other borrowings
    
    
    720,378
    
    
    
    32,309
    
    
    
    571Total interest expense
    
    
    15,836,438
    
    
    
    6,292,607
    
    
    
    2,708,754Net interest income
    
    
    17,270,464
    
    
    
    8,144,624
    
    
    
    4,045,407Provision for loan losses
    
    
    2,740,843
    
    
    
    1,814,746
    
    
    
    1,277,459Net interest income after provision for
loan losses
    
    
    14,529,621
    
    
    
    6,329,878
    
    
    
    2,767,948Other income:Service charges on deposit accounts
    
    
    1,378,399
    
    
    
    1,069,669
    
    
    
    565,189Mortgage origination fees
    
    
    1,101,211
    
    
    
    551,572
    
    
    
    354,673Other operating income
    
    
    77,926
    
    
    
    72,505
    
    
    
    71,917Total other income
    
    
    2,557,536
    
    
    
    1,693,746
    
    
    
    991,779Other expenses:Salaries and employee benefits
    
    
    10,716,964
    
    
    
    5,365,633
    
    
    
    2,618,410Equipment and occupancy expenses
    
    
    2,024,908
    
    
    
    1,247,405
    
    
    
    351,952Other operating expenses
    
    
    4,079,154
    
    
    
    2,275,613
    
    
    
    1,265,272Total other expenses
    
    
    16,821,026
    
    
    
    8,888,651
    
    
    
    4,235,634Income (loss) before income taxes
    
    
    266,131
    
    
    
    (865,027
    )
    
    
    (475,907
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    266,131
    
    
    $
    (865,027
    )
    
    $
    (475,907
    )Basic earnings (losses) per share
    
    $
    0.03
    
    
    $
    (0.16
    )
    
    $
    (0.13
    )Diluted earnings (losses) per share
    
    $
    0.03
    
    
    $
    (0.16
    )
    
    $
    (0.13
    )
 See Notes to Consolidated Financial Statements.
 F-3




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
 2006
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    266,131
    
    
    $
    (865,027
    )
    
    $
    (475,907
    )Other comprehensive income (loss):Net unrealized holding gains (losses)
on securities available
for sale arising during period
    
    
    476,217
    
    
    
    (520,353
    )
    
    
    (381,901
    )Comprehensive income (loss)
    
    $
    742,348
    
    
    $
    (1,385,380
    )
    
    $
    (857,808
    )
 See Notes to Consolidated Financial Statements.
 F-4




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
 AccumulatedCommon Stock
    
    
    
    
    
    
    Other
    
    
    TotalAt Amount
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Stockholders'Shares
    
    
    Paid In
    
    
    Deficit
    
    
    Loss
    
    
    EquityBalance, December 31, 2003
    
    
    1,700,000
    
    
    $
    17,000,000
    
    
    $
    (1,597,694
    )
    
    $
    (639
    )
    
    $
    15,401,667Net loss
    
    
    
    
    
    
    
    
    
    
    (475,907
    )
    
    
    
    
    
    
    (475,907
    )5 for 4 stock split
    
    
    425,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase of fractional shares
    
    
    (9
    )
    
    
    (113
    )
    
    
    
    
    
    
    
    
    
    
    (113
    )Issuance of common stock
    
    
    34,671
    
    
    
    433,388
    
    
    
    
    
    
    
    
    
    
    
    433,388Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (381,901
    )
    
    
    (381,901
    )Balance, December 31, 2004
    
    
    2,159,662
    
    
    
    17,433,275
    
    
    
    (2,073,601
    )
    
    
    (382,540
    )
    
    
    14,977,134Net loss
    
    
    
    
    
    
    
    
    
    
    (865,027
    )
    
    
    
    
    
    
    (865,027
    )Stock compensation expense
    
    
    
    
    
    
    106,138
    
    
    
    
    
    
    
    
    
    
    
    106,1384.25 for 3 stock split
    
    
    1,118,746
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase of fractional shares
    
    
    (253
    )
    
    
    (3,173
    )
    
    
    
    
    
    
    
    
    
    
    (3,173
    )Issuance of common stock
    
    
    3,459,755
    
    
    
    43,246,949
    
    
    
    
    
    
    
    
    
    
    
    43,246,949Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (520,353
    )
    
    
    (520,353
    )Balance, 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
    
    
    624,475
    
    
    
    5,810,196
    
    
    
    
    
    
    
    
    
    
    
    5,810,196Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    476,217
    
    
    
    476,217Balance, December 31, 2006
    
    
    9,046,748
    
    
    $
    66,658,460
    
    
    $
    (2,672,497
    )
    
    $
    (426,676
    )
    
    $
    63,559,287
 See Notes to Consolidated Financial Statements.
 F-5




---



##### 



FGBC BANCSHARES, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
 2006
    
    
    2005
    
    
    2004OPERATING ACTIVITIESNet income (loss)
    
    $
    266,131
    
    
    $
    (865,027
    )
    
    $
    (475,907
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Stock compensation expense
    
    
    66,735
    
    
    
    106,138
    
    
    
    Depreciation
    
    
    887,459
    
    
    
    484,550
    
    
    
    164,484Provision for loan losses
    
    
    2,740,843
    
    
    
    1,814,746
    
    
    
    1,277,459Amortization and accretion of securities
    
    
    76,091
    
    
    
    121,829
    
    
    
    126,026Deferred taxes
    
    
    (689,257
    )
    
    
    (14,103
    )
    
    
    (Gain) loss on sale of premises and equipment
    
    
    25,237
    
    
    
    (4,757
    )
    
    
    Gain on sale of other real estate owned
    
    
    (9,200
    )
    
    
    
    
    
    
    Contribution of premises and equipment
    
    
    
    
    
    
    171,839
    
    
    
    Increase in interest receivable
    
    
    (2,043,599
    )
    
    
    (873,458
    )
    
    
    (795,545
    )Increase in interest payable
    
    
    803,407
    
    
    
    175,638
    
    
    
    251,444Increase in income taxes payable
    
    
    660,754
    
    
    
    14,103
    
    
    
    Net other operating activities
    
    
    727,027
    
    
    
    97,404
    
    
    
    (25,956
    )Net cash provided by operating activities
    
    
    3,511,628
    
    
    
    1,228,902
    
    
    
    522,005INVESTING ACTIVITIESIncrease in interest bearing deposits in
financial institutions
    
    
    (11,164,145
    )
    
    
    (63,907
    )
    
    
    Purchases of securities available for sale
    
    
    (52,439,052
    )
    
    
    (10,464,141
    )
    
    
    (42,476,060
    )Proceeds from maturities of securities available
for sale
    
    
    22,539,854
    
    
    
    6,815,423
    
    
    
    19,196,006Purchases of restricted equity securities
    
    
    (528,800
    )
    
    
    (813,900
    )
    
    
    Net (increase) decrease in federal funds sold
    
    
    (47,252,000
    )
    
    
    (6,116,000
    )
    
    
    10,633,000Net increase in loans
    
    
    (145,972,890
    )
    
    
    (129,058,807
    )
    
    
    (99,337,233
    )Purchase of premises and equipment
    
    
    (14,845,236
    )
    
    
    (5,889,357
    )
    
    
    (6,416,677
    )Proceeds from sale of premises and equipment
    
    
    42,060
    
    
    
    13,680
    
    
    
    Proceeds from sale of foreclosed assets
    
    
    276,663
    
    
    
    32,000
    
    
    
    Additions to other real estate owned
    
    
    (25,673
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (249,369,219
    )
    
    
    (145,545,009
    )
    
    
    (118,400,964
    )
 F-6




---



##### 



2006
    
    
    2005
    
    
    2004FINANCING ACTIVITIESNet increase in deposits
    
    
    237,900,925
    
    
    
    91,551,259
    
    
    
    119,042,453Net increase (decrease) in federal funds
purchased and repurchase agreements
    
    
    1,027,230
    
    
    
    (297,000
    )
    
    
    297,000Net increase in other borrowings
    
    
    5,000,000
    
    
    
    9,973,500
    
    
    
    26,500Proceeds from sale of common stock
    
    
    5,295,739
    
    
    
    43,246,949
    
    
    
    592,388Proceeds from exercise of stock options
    
    
    514,457
    
    
    
    
    
    
    
    Purchase of fractional shares of common stock
    
    
    (1,660
    )
    
    
    (3,173
    )
    
    
    (113
    )Net cash provided by financing activities
    
    
    249,736,691
    
    
    
    144,471,535
    
    
    
    119,958,228Net increase in cash and due from banks
    
    
    3,879,100
    
    
    
    155,428
    
    
    
    2,079,269Cash and due from banks at beginning of year
    
    
    3,464,489
    
    
    
    3,309,061
    
    
    
    1,229,792Cash and due from banks at end of year
    
    $
    7,343,589
    
    
    $
    3,464,489
    
    
    $
    3,309,061SUPPLEMENTAL DISCLOSURESCash paid for:Interest
    
    $
    15,216,081
    
    
    $
    6,123,567
    
    
    $
    2,457,310Income taxes
    
    $
    28,503
    
    
    $
    
    
    
    $
    NONCASH TRANSACTIONSLoans transferred to foreclosed assets
    
    $
    822,012
    
    
    $
    38,000
    
    
    $
    Financed sales of foreclosed assets
    
    $
    117,500
    
    
    $
    
    
    
    $
    
 See Notes to Consolidated Financial Statements.
 F-7




---



##### 



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-8




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Securities (Continued)
  Loans
    Allowance for Loan Losses
  F-9




---



##### 



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-10




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Income Taxes
  Earnings (Losses) Per Share
  Stock-Based Compensation
 Accounting for
Stock Issued to Employees Accounting for Stock-Based Compensation Share-Based Payment
   F-11




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Stock-Based Compensation (Continued)
  Years Ended December 31,2005
    
    
    2004Net loss, as reported
    
    $
    (865,027
    )
    
    $
    (475,907
    )Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards
    
    
    297,556
    
    
    
    254,920Pro forma net loss
    
    $
    (1,162,583
    )
    
    $
    (730,827
    )Losses per share:Basic  as reported
    
    $
    (0.16
    )
    
    $
    (0.13
    )Basic  pro forma
    
    $
    (0.22
    )
    
    $
    (0.19
    )Diluted  as reported
    
    $
    (0.16
    )
    
    $
    (0.13
    )Diluted  pro forma
    
    $
    (0.22
    )
    
    $
    (0.19
    )
 Comprehensive Income (Loss)
  Recent Accounting Pronouncements
 Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109 Accounting for Income Taxes.
 F-12




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Recent Accounting Pronouncements (Continued)
 Fair Value Measurements.
 NOTE 2. SECURITIES AVAILABLE FOR SALE
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2006:U.S. Government sponsored
agency securities
    
    $
    49,673,653
    
    
    $
    71,186
    
    
    $
    (209,462
    )
    
    $
    49,535,377Mortgage-backed securities
    
    
    19,957,492
    
    
    
    19,372
    
    
    
    (307,773
    )
    
    
    19,669,091State, county and municipals
    
    
    910,340
    
    
    
    
    
    
    
    
    
    
    
    910,340$
    70,541,485
    
    
    $
    90,558
    
    
    $
    (517,235
    )
    
    $
    70,114,808December 31, 2005:U.S. Government sponsored
agency securities
    
    $
    29,803,747
    
    
    $
    
    
    
    $
    (489,291
    )
    
    $
    29,314,456Mortgage-backed securities
    
    
    10,914,630
    
    
    
    
    
    
    
    (413,602
    )
    
    
    10,501,028$
    40,718,377
    
    
    $
    
    
    
    $
    (902,893
    )
    
    $
    39,815,484
   F-13




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 2.
    
    SECURITIES AVAILABLE FOR SALE (Continued)
  December 31, 2006Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of Securities
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Government sponsored agencies
    
    $
    21,431,538
    
    
    $
    (33,163
    )
    
    $
    13,814,309
    
    
    $
    (176,299
    )
    
    $
    35,245,847
    
    
    $
    (209,462
    )Mortgage-backed securities
    
    
    6,650,521
    
    
    
    (15,640
    )
    
    
    8,001,470
    
    
    
    (292,133
    )
    
    
    14,651,991
    
    
    
    (307,773
    )Total temporarily impaired securities
    
    $
    28,082,059
    
    
    $
    (48,803
    )
    
    $
    21,815,779
    
    
    $
    (468,432
    )
    
    $
    49,897,838
    
    
    $
    (517,235
    )
 December 31, 2005Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of Securities
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Government sponsored agencies
    
    $
    6,874,149
    
    
    $
    (91,176
    )
    
    $
    22,440,307
    
    
    $
    (398,115
    )
    
    $
    29,314,456
    
    
    $
    (489,291
    )Mortgage-backed securities
    
    
    1,651,833
    
    
    
    (52,474
    )
    
    
    7,849,195
    
    
    
    (361,128
    )
    
    
    9,501,028
    
    
    
    (413,602
    )Total temporarily impaired securities
    
    $
    8,525,982
    
    
    $
    (143,650
    )
    
    $
    30,289,502
    
    
    $
    (759,243
    )
    
    $
    38,815,484
    
    
    $
    (902,893
    )
  Amortized
    
    
    FairCost
    
    
    ValueU.S. Government sponsored agencies,
state, county and municipals:Due in less than one year
    
    $
    15,237,644
    
    
    $
    15,187,083Due from one to five years
    
    
    30,927,267
    
    
    
    30,842,090Due from five to ten years
    
    
    4,099,619
    
    
    
    4,097,081After ten years
    
    
    319,463
    
    
    
    319,463Mortgage-backed securities
    
    
    19,957,492
    
    
    
    19,669,091$
    70,541,485
    
    
    $
    70,114,808
  F-14




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 3. LOANS
  December 31,2006
    
    
    2005Commercial and agricultural
    
    $
    42,405,199
    
    
    $
    35,761,000Real estate  construction
    
    
    114,528,258
    
    
    
    60,967,000Real estate  other
    
    
    225,119,010
    
    
    
    142,520,000Consumer
    
    
    26,858,734
    
    
    
    24,996,909408,911,201
    
    
    
    264,244,909Deferred loan fees and costs
    
    
    (269,105
    )
    
    
    (180,742
    )Allowance for loan losses
    
    
    (5,244,200
    )
    
    
    (3,193,806
    )Loans, net
    
    $
    403,397,896
    
    
    $
    260,870,361
  Years Ended December 31,2006
    
    
    2005
    
    
    2004Balance, beginning of year
    
    $
    3,193,806
    
    
    $
    1,705,435
    
    
    $
    459,529Provision for loan losses
    
    
    2,740,843
    
    
    
    1,814,746
    
    
    
    1,277,459Loans charged off
    
    
    (750,093
    )
    
    
    (353,052
    )
    
    
    (38,250
    )Recoveries of loans previously charged off
    
    
    59,644
    
    
    
    26,677
    
    
    
    6,697Balance, end of year
    
    $
    5,244,200
    
    
    $
    3,193,806
    
    
    $
    1,705,435
 Accounting by Creditors for Impairment of a Loan
  Balance, beginning of period
    
    $
    9,288,436Advances
    
    
    2,730,431Repayments
    
    
    (5,027,357
    )Changes in related parties
    
    
    160,526Balance, end of year
    
    $
    7,152,036
 F-15




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 4.
    
    PREMISES AND EQUIPMENT
  December 31,2006
    
    
    2005Land and land improvements
    
    $
    7,386,006
    
    
    $
    4,909,823Buildings
    
    
    7,913,746
    
    
    
    5,359,707Construction and equipment installation in
progress, estimated cost to complete $4,128,132
    
    
    8,942,344
    
    
    
    1,635,385Equipment
    
    
    4,230,841
    
    
    
    1,878,37728,472,937
    
    
    
    13,783,292Accumulated depreciation
    
    
    (1,401,343
    )
    
    
    (602,178
    )$
    27,071,594
    
    
    $
    13,181,114
  Leases
   2007
    
    $
    85,2252008
    
    
    39,0002009
    
    
    44,2502010
    
    
    45,0002011
    
    
    21,875$
    235,350
 NOTE 5.
    
    DEPOSITS
  2007
    
    $
    280,823,5252008
    
    
    24,890,8832009
    
    
    14,051,1222010
    
    
    8,126,4502011
    
    
    5,634,555$
    333,526,535
 F-16




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 5.
    
    DEPOSITS (Continued)
   NOTE 6.
    
    SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
  NOTE 7.
    
    OTHER BORROWINGS
  December 31,2006
    
    
    2005Adjustable rate advance from Federal Home Loan Bank
(5.437% at December 31, 2005) repaid March 22, 2006
    
    $
    
    
    
    $
    5,000,000Adjustable rate advance from Federal Home Loan Bank
(5.45% at December 31, 2006) due July 27, 2007
    
    
    5,000,000
    
    
    
    Adjustable rate advance from Federal Home Loan Bank
(5.45% at December 31, 2006) due October 27, 2007
    
    
    5,000,000
    
    
    
    5,000,000Adjustable rate advance from Federal Home Loan Bank
(5.45% at December 31, 2006) due February 28, 2008
    
    
    5,000,000
    
    
    
    $
    15,000,000
    
    
    $
    10,000,000
  NOTE 8.
    
    STOCK-BASED COMPENSATION
 Stock Options
  F-17




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 8.
    
    STOCK-BASED COMPENSATION (Continued)
 Stock Options (Continued)
  Years Ended December 31,2006
    
    2005
    
    2004Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseNumber
    
    Price
    
    Number
    
    Price
    
    Number
    
    PriceOptions outstanding, beginning of year
    
    
    1,052,256
    
    
    $
    6.92
    
    
    
    598,763
    
    
    $
    4.52
    
    
    
    577,734
    
    
    $
    4.52Granted
    
    
    66,875
    
    
    
    11.66
    
    
    
    535,394
    
    
    
    9.23
    
    
    
    23,243
    
    
    
    4.68Forfeited
    
    
    (42,787
    )
    
    
    9.94
    
    
    
    (81,901
    )
    
    
    4.52
    
    
    
    (2,214
    )
    
    
    4.52Exercised
    
    
    (98,104
    )
    
    
    5.24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options outstanding, end of year
    
    
    978,240
    
    
    
    7.28
    
    
    
    1,052,256
    
    
    
    6.92
    
    
    
    598,763
    
    
    
    4.52Exercisable, end of year
    
    
    542,637
    
    
    
    5.95
    
    
    
    296,037
    
    
    
    4.85
    
    
    
    155,864
    
    
    
    4.52
  December 31,2006Dividend yield
    
    
    0
    %Expected life
    
    6.5 yearsRisk-free interest rate
    
    4.29% to 4.95%Expected volatility/weighed average expected volatility
    
    
    24
    %
   F-18




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 9.
    
    KEY PERSON STOCK PURCHASE PLAN
  NOTE 10.
    
    401(k) RETIREMENT PLAN
  NOTE 11.
    
    INCOME TAXES
  Years Ended December 31,2006
    
    
    2005
    
    
    2004Current
    
    $
    689,257
    
    
    $
    321,684
    
    
    $
    43,352Deferred
    
    
    (569,149
    )
    
    
    (677,986
    )
    
    
    (228,940
    )Change in valuation allowance
    
    
    (120,108
    )
    
    
    356,302
    
    
    
    185,588Income tax expense
    
    $
    
    
    
    $
    
    
    
    $
    
  Years Ended December 31,2006
    
    
    2005
    
    
    2004Tax provision at statutory federal rate
    
    $
    90,484
    
    
    $
    (294,109
    )
    
    $
    (161,808
    )State income taxes
    
    
    (44,027
    )
    
    
    (39,198
    )
    
    
    (29,484
    )Change in valuation allowance
    
    
    (120,108
    )
    
    
    356,302
    
    
    
    185,588Nondeductible expenses
    
    
    51,033
    
    
    
    19,622
    
    
    
    5,704Stock compensation
    
    
    22,690
    
    
    
    
    
    
    
    Tax free interest
    
    
    (72
    )
    
    
    
    
    
    
    Fair value of property contributed in excess of cost
    
    
    
    
    
    
    (30,867
    )
    
    
    Surtax exemption
    
    
    
    
    
    
    (11,750
    )
    
    
    Income tax expense
    
    $
    
    
    
    $
    
    
    
    $
    
 F-19




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 11.
    
    INCOME TAXES (Continued)
  December 31,2006
    
    
    2005Deferred tax assets:Loan loss reserves
    
    $
    1,672,965
    
    
    $
    978,332Pre-opening expenses
    
    
    102,736
    
    
    
    154,694Deferred loan fees
    
    
    101,549
    
    
    
    68,204Stock compensation
    
    
    
    
    
    
    40,052Securities available for sale
    
    
    162,137
    
    
    
    343,099Contributions
    
    
    39,812
    
    
    
    107,8412,079,199
    
    
    
    1,692,222Deferred tax liabilities:Depreciation
    
    
    189,515
    
    
    
    190,725Valuation allowance
    
    
    1,186,324
    
    
    
    1,487,394Net deferred taxes
    
    $
    703,360
    
    
    $
    14,103
 NOTE 12.
    
    EARNINGS (LOSSES) PER SHARE
  Years Ended December 31,2006
    
    
    2005
    
    
    2004Basic earnings (losses) per share:Weighted average common shares outstanding
    
    
    8,827,859
    
    
    
    5,321,918
    
    
    
    3,763,863Net income (loss)
    
    $
    266,131
    
    
    $
    (865,027
    )
    
    $
    (475,907
    )Basic earnings (losses) per share
    
    $
    .03
    
    
    $
    (0.16
    )
    
    $
    (0.13
    )Diluted earnings (losses) per share:Weighted average common shares outstanding
    
    
    8,827,859
    
    
    
    5,321,918
    
    
    
    3,763,863Net effect of the assumed exercise of stock
Options based on the treasury stock method
using average market prices for the year
    
    
    384,265
    
    
    
    
    
    
    
    Total weighted average common shares and
common stock equivalents outstanding
    
    
    9,212,124
    
    
    
    5,321,918
    
    
    
    3,763,863Net income (loss)
    
    $
    266,131
    
    
    $
    (865,027
    )
    
    $
    (475,907
    )Diluted earnings (losses) per share
    
    $
    .03
    
    
    $
    (0.16
    )
    
    $
    (0.13
    )
 F-20




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 13.
    
    COMMITMENTS AND CONTINGENCIES
 Loan Commitments
   December 31,2006
    
    
    2005Commitments to extend credit
    
    $
    67,460,136
    
    
    $
    63,516,583Letters of credit
    
    
    702,213
    
    
    
    206,900$
    68,162,349
    
    
    $
    63,723,483
      F-21




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 13.
    
    COMMITMENTS AND CONTINGENCIES (Continued)
 Contingencies
  Employee Agreements
  NOTE 14.
    
    CONCENTRATIONS OF CREDIT
    NOTE 15.
    
    Regulatory Matters
    F-22




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 15.
    
    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, 2006:Total Capital to Risk Weighted AssetsConsolidated
    
    $
    69,230
    
    
    
    16.08
    %
    
    $
    34,436
    
    
    
    8
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    67,395
    
    
    
    15.66
    %
    
    $
    34,436
    
    
    
    8
    %
    
    $
    43,045
    
    
    
    10
    %Tier 1 Capital to Risk Weighted AssetsConsolidated
    
    $
    63,986
    
    
    
    14.86
    %
    
    $
    17,218
    
    
    
    4
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    62,151
    
    
    
    14.44
    %
    
    $
    17,218
    
    
    
    4
    %
    
    $
    25,827
    
    
    
    6
    %Tier 1 Capital to Average AssetsConsolidated
    
    $
    63,986
    
    
    
    11.63
    %
    
    $
    22,008
    
    
    
    4
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    62,151
    
    
    
    11.30
    %
    
    $
    22,008
    
    
    
    4
    %
    
    $
    27,510
    
    
    
    5
    %As of December 31, 2005:Total Capital to Risk Weighted AssetsConsolidated
    
    $
    61,039
    
    
    
    21.47
    %
    
    $
    22,745
    
    
    
    8
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    60,675
    
    
    
    20.78
    %
    
    $
    23,361
    
    
    
    8
    %
    
    $
    29,202
    
    
    
    10
    %Tier 1 Capital to Risk Weighted AssetsConsolidated
    
    $
    57,845
    
    
    
    20.35
    %
    
    $
    11,373
    
    
    
    4
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    57,481
    
    
    
    19.68
    %
    
    $
    11,681
    
    
    
    4
    %
    
    $
    17,521
    
    
    
    6
    %Tier 1 Capital to Average AssetsConsolidated
    
    $
    57,845
    
    
    
    19.46
    %
    
    $
    11,887
    
    
    
    4
    %
    
    $
    N/A
    
    
    
    N/ABank
    
    $
    57,841
    
    
    
    19.34
    %
    
    $
    11,887
    
    
    
    4
    %
    
    $
    14,859
    
    
    
    5
    %
 NOTE 16.
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS
 Disclosures
about Fair Values of Financial Instruments,
 F-23




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 16.
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
  Cash, Due From Banks, Interest Bearing Deposits in Banks, and Federal Funds Sold:
 Securities:
 Loans:
 Deposits:
 Securities Sold Under Repurchase Agreements:
 Other Borrowings:
 Accrued Interest:
 Off-Balance Sheet Instruments:
  December 31,2006
    
    2005Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash, due from banks, interest
bearing deposits in banks,
and federal funds sold
    
    $
    71,939,641
    
    
    $
    71,939,641
    
    
    $
    9,644,396
    
    
    $
    9,644,396Securities available for sale
    
    
    70,114,808
    
    
    
    70,114,808
    
    
    
    39,815,484
    
    
    
    39,815,484Restricted equity securities
    
    
    1,342,700
    
    
    
    1,342,700
    
    
    
    813,900
    
    
    
    813,900Loans
    
    
    403,397,896
    
    
    
    401,632,224
    
    
    
    260,870,361
    
    
    
    260,377,807Accrued interest receivable
    
    
    3,879,272
    
    
    
    3,879,272
    
    
    
    1,835,673
    
    
    
    1,835,673Financial liabilities:Deposits
    
    
    496,692,502
    
    
    
    489,275,892
    
    
    
    258,791,577
    
    
    
    258,210,209Securities sold under repurchase agreement
    
    
    1,027,230
    
    
    
    1,027,230
    
    
    
    
    
    
    
    Other borrowings
    
    
    15,000,000
    
    
    
    15,000,000
    
    
    
    10,000,000
    
    
    
    10,000,000Accrued interest payable
    
    
    1,262,770
    
    
    
    1,262,770
    
    
    
    459,363
    
    
    
    459,363
 F-24




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 17.
    
    SUPPLEMENTAL FINANCIAL DATA
  Years Ended December 31,2006
    
    2005
    
    2004Data processing
    
    $
    872,050
    
    
    $
    556,567
    
    
    $
    354,039Advertising
    
    
    317,951
    
    
    
    102,804
    
    
    
    96,988Supplies and printing
    
    
    238,731
    
    
    
    148,947
    
    
    
    98,173Contributions
    
    
    18,973
    
    
    
    185,255
    
    
    
    13,861
 NOTE 18.
    
    PARENT COMPANY FINANCIAL INFORMATION
  CONDENSED BALANCE SHEETS
 2006
    
    
    2005AssetsCash
    
    $
    1,845,606
    
    
    $
    8,084,921Investment in subsidiary
    
    
    61,723,681
    
    
    
    56,577,747Other assets
    
    
    52,302
    
    
    
    Total assets
    
    $
    63,621,589
    
    
    $
    64,662,668LiabilitiesDue to subsidiary
    
    $
    
    
    
    
    7,700,000Other liabilities
    
    
    62,302
    
    
    
    21,000Total liabilities
    
    
    62,302
    
    
    
    7,721,000Stockholders equity
    
    
    63,559,287
    
    
    
    56,941,668Total liabilities and stockholders equity
    
    $
    63,621,589
    
    
    $
    64,662,668
 F-25




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 18.
    
    PARENT COMPANY FINANCIAL INFORMATION (Continued)
 CONDENSED STATEMENTS OF OPERATIONS
 2006
    
    
    2005
    
    
    2004Expenses:Interest
    
    $
    
    
    
    $
    1,539
    
    
    $
    549Stock compensation
    
    
    
    
    
    
    106,138
    
    
    
    Other operating expenses
    
    
    136,851
    
    
    
    84,921
    
    
    
    26,234136,851
    
    
    
    192,598
    
    
    
    26,783Loss before equity in income (loss)
of subsidiary
    
    
    (136,851
    )
    
    
    (192,598
    )
    
    
    (26,783
    )Equity in income (loss) of subsidiary
    
    
    402,982
    
    
    
    (1,125,445
    )
    
    
    Net income (loss)
    
    $
    266,131
    
    
    $
    (1,318,043
    )
    
    $
    (26,783
    )
  F-26




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 18.
    
    PARENT COMPANY FINANCIAL INFORMATION (Continued)
 CONDENSED STATEMENTS OF CASH FLOWS
 2006
    
    
    2005
    
    
    2004OPERATING ACTIVITIESNet income (loss)
    
    $
    266,131
    
    
    $
    (1,318,043
    )
    
    $
    (26,783
    )Adjustments to reconcile net income (loss) to
net cash used in operating activities:Equity in (income) loss of subsidiary
    
    
    (402,982
    )
    
    
    1,125,445
    
    
    
    Stock compensation
    
    
    
    
    
    
    106,138
    
    
    
    Net other operating activities
    
    
    (11,000
    )
    
    
    20,451
    
    
    
    549Net cash used in operating activities
    
    
    (147,851
    )
    
    
    (66,009
    )
    
    
    (26,234
    )INVESTING ACTIVITIESInvestment in subsidiary
    
    
    (11,900,000
    )
    
    
    (28,500,000
    )
    
    
    Net cash used in investing activities
    
    
    (11,900,000
    )
    
    
    (28,500,000
    )
    
    
    FINANCING ACTIVITIESProceeds from sale of common stock
    
    
    5,295,739
    
    
    
    36,680,337
    
    
    
    Proceeds from exercise of stock options
    
    
    514,457
    
    
    
    
    
    
    
    Purchase of fractional shares of common stock
    
    
    (1,660
    )
    
    
    (3,173
    )
    
    
    Proceeds from (repayment of) other borrowings
    
    
    
    
    
    
    (26,500
    )
    
    
    26,500Net cash provided by financing activities
    
    
    5,808,536
    
    
    
    36,650,664
    
    
    
    26,500Net increase (decrease) in cash
    
    
    (6,239,315
    )
    
    
    8,084,655
    
    
    
    266Cash at beginning of year
    
    
    8,084,921
    
    
    
    266
    
    
    
    Cash at end of year
    
    $
    1,845,606
    
    
    $
    8,084,921
    
    
    $
    266
 NOTE 19.
    
    COMMON STOCK SPLIT
  F-27