##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 000-51957
 FGBC BANCSHARES, INC.
 Georgia
(State or Other Jurisdiction 
of Incorporation or Organization)
    
    20-02743161
(I.R.S. Employer Identification Number)
 101 Main Street
Franklin, Georgia 30217
 (770) 839-4510
 None
 Common Stock, no par value
 Yes o No þ
 Yes o No þ
 Yes þ No o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



Table of Contents
 PagePART
I
    
    
    
    
    3ITEM
1.
    
    Business
    
    
    3ITEM
1A.
    
    Risk Factors
    
    
    18ITEM
1B.
    
    Unresolved Staff
Comments
    
    
    18ITEM
2.
    
    Properties
    
    
    18ITEM
3.
    
    Legal Proceedings
    
    
    19ITEM
4.
    
    Submission of
Matters to a Vote of Security Holders
    
    
    19PART
II
    
    
    
    
    19ITEM
5.
    
    Market For Registrants Common Equity, Related Shareholder Matters and Issuer
Purchasers of Equity Securities
    
    
    19ITEM
6.
    
    Selected Financial
Data
    
    
    19ITEM
7.
    
    Managements Discussion and
Analysis of Financial Condition and Results of
Operations
    
    
    20ITEM
7A.
    
    Quantitative and Qualitative
Disclosures About Market Risk
    
    
    35ITEM
8.
    
    Financial Statements
and Supplementary Data
    
    
    35ITEM
9.
    
    Changes
and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    36ITEM
9A.
    
    Controls and
Procedures
    
    
    36ITEM
9B.
    
    Other Information
    
    
    37PART
III
    
    
    
    
    37ITEM
10.
    
    Directors,
Executive Officers and Corporate Governance
    
    
    37ITEM
11.
    
    Executive
Compensation
    
    
    37ITEM
12.
    
    Securities
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    37ITEM
13.
    
    Certain
Relationships and Related Transactions, and Director Independence
    
    
    38ITEM
14.
    
    Principal Accountant
Fees and Services
    
    
    38PART
IV
    
    
    
    
    38ITEM
15.
    
    Exhibits and
Financial Statement Schedules
    
    
    38EX-13 CONSOLIDATED FINANCIAL STATEMENTSEX-23 CONSENT OF MAULDIN & JENKINS, LLCEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32 SECTION 906 CERTIFICATIONS OF THE CEO AND CFO




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PART I
 Forward-Looking Statements
  
 ITEM 1. Business.
 Overview
    3




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Types of Loans
  Real Estate Mortgage Loans.
  Real Estate Construction Loans.
  4




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Commercial and Industrial Loans.
   Installment
Loans to Individuals.
 Loan Participations
  5




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Managements Policy for Determining the Loan Loss Allowance
  
    
    the asset quality of individual loans;
    
    changes in the national and local economy and business conditions/development,
including underwriting standards, collections, charge off and recovery practices;
    
    changes in the nature and volume of the loan portfolio;
    
    changes in the experience, ability and depth of our lending staff and
management;
    
    changes in the trend of the volume and severity of past dues and classified
loans; and trends in the volume of non-accrual loans, troubled debt restructurings
and other modifications;
    
    possible deterioration in collateral segments or other portfolio concentrations;
    
    historical loss experience (when available) used for pools of loans (i.e.
collateral types, borrowers, purposes, etc.);
    
    changes in the quality of our loan review system and the degree of oversight by
our board of directors; and
    
    the effect of external factors such as competition and the legal and regulatory
requirement on the level of estimated credit losses in our current loan portfolio.
     6




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Managements Policy for Investing in Securities
  
    
    provide an investment medium for funds which are not needed to meet loan demand
or deposit withdrawal;
    
    optimize income generated from the investment account consistent with the stated
objectives for liquidity and quality standards;
    
    meet regulatory standards;
    
    provide collateral which we are required to pledge against public monies;
    
    provide an investment medium for funds which may be needed for liquidity
purposes; and
    
    provide an investment medium which will balance market and credit risk for other
assets and our liability structure.
 Industry and Competition
    7




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Employees
  Risk Factors
  The markets for our services are highly competitive and we face substantial competition.
   If economic conditions in our market areas deteriorate, our business may be negatively
affected.
  Because a significant portion of our loan portfolio is secured by real estate, any negative
developments affecting real estate may harm our business.
  8




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Current and anticipated deterioration in the housing market and the homebuilding industry may
lead to increased loss severities and further worsening of delinquencies and nonperforming assets
in our loan portfolio. Consequently, our results of operations may be adversely impacted.
  Changes in interest rates could have an adverse effect on our income.
   Our net interest income and liquidity could be negatively affected if we are unable to retain
maturing time deposits at competitive rates.
  If our allowance for loan losses is not adequate to cover actual losses, our net income may
decrease.
  9




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Losing key personnel will negatively affect us.
  There are limitations on your ability to transfer our common stock.
  We do not intend to pay dividends on our common stock.
  We have a limited operating history.
  We encounter technological change continually and have fewer resources than many of our
competitors to invest in technological improvements.
  We may not be able to successfully expand into new markets.
  10




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Supervision and Regulation
  FGBC Bancshares
  Acquisition of Banks
  
    
    acquiring direct or indirect ownership or control of any voting shares of any
bank if, after the acquisition, the bank holding company will directly or
indirectly own or control more than 5% of the banks voting shares;
    
    acquiring all or substantially all of the assets of any bank; or
    
    merging or consolidating with any other bank holding company.
   Change in Bank Control
  
    
    the bank holding company has registered securities under Section 12 of the
Exchange Act; or
    
    no other person owns a greater percentage of that class of voting securities
immediately after the transaction.
 11




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Permitted Activities
  
    
    banking or managing or controlling banks; and
    
    any activity that the Federal Reserve determines to be so closely related to
banking as to be a proper incident to the business of banking.
  
    
    factoring accounts receivable;
    
    making, acquiring, brokering or servicing loans and usual related activities;
    
    leasing personal or real property;
    
    operating a non-bank depository institution, such as a savings association;
    
    trust company functions;
    
    financial and investment advisory activities;
    
    conducting discount securities brokerage activities;
    
    underwriting and dealing in government obligations and money market instruments;
    
    providing specified management consulting and counseling activities;
    
    performing selected data processing services and support services;
    
    acting as agent or broker in selling credit life insurance and other types of
insurance in connection with credit transactions; and
    
    performing selected insurance underwriting activities.
   
    
    lending, trust and other banking activities;
    
    insuring, guaranteeing, or indemnifying against loss or harm, or providing and
issuing annuities, and acting as principal, agent, or broker for these purposes, in
any state;
    
    providing financial, investment, or advisory services;
 12




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
    
    issuing or selling instruments representing interests in pools of assets
permissible for a bank to hold directly;
    
    underwriting, dealing in or making a market in securities;
    
    other activities that the Federal Reserve may determine to be so closely related
to banking or managing or controlling banks as to be a proper incident to managing
or controlling banks;
    
    foreign activities permitted outside of the United States if the Federal Reserve
has determined them to be usual in connection with banking operations abroad;
    
    merchant banking through securities or insurance affiliates; and
    
    insurance company portfolio investments.
  Support of Subsidiary Institutions
  First Georgia Banking Company
   Branching
   13




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Prompt Corrective Action
    FDIC Insurance Assessments
    14




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Community Reinvestment Act
  Other Regulations
  
    
    federal Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers;
    
    Home Mortgage Disclosure Act of 1975, requiring financial institutions to
provide information to enable the public and public officials to determine whether
a financial institution is fulfilling its obligation to help meet the housing needs
of the community it serves;
    
    Equal Credit Opportunity Act, prohibiting discrimination on the basis of race,
creed or other prohibited factors in extending credit;
    
    Fair Credit Reporting Act of 1978, governing the use and provisions of
information to credit reporting agencies;
    
    Fair Debt Collection Act, governing the manner in which consumer debts may be
collected by collection agencies;
    
    Soldiers and Sailors Civil Relief Act of 1940, governing the repayment terms
of, and property rights underlying, secured obligations of persons in military
service; and
    
    rules and regulations of the various federal agencies charged with the
responsibility of implementing these federal laws.
  
    
    the Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures for
complying with administrative subpoenas of financial records; and
    
    the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve
to implement that act, which govern automatic deposits to and withdrawals from
deposit accounts and customers rights and liabilities arising from the use of
automated teller machines and other electronic banking services.
 Capital Adequacy
   15




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Payment of Dividends
    
    
    total classified assets at the Banks most recent examination do not exceed 80%
of Tier 1 Capital plus the allowance for loan losses as reflected at such
examination;
 16




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
    
    the aggregate amount of dividends declared or anticipated to be declared in the
calendar year does not exceed 50% of the Banks net profits, after taxes but before
dividends, for the previous calendar year; and
    
    the ratio of Tier 1 Capital to adjusted total assets is not less than 6%.
   Restrictions on Transactions with Affiliates
  
    
    a banks loans or extensions of credit to affiliates;
    
    a banks investment in affiliates;
    
    assets a bank may purchase from affiliates, except for real and personal
property exempted by the Federal Reserve;
    
    loans or extensions of credit made by a bank to third parties collateralized by
the securities or obligations of affiliates; and
    
    a banks guarantee, acceptance or letter of credit issued on behalf of an
affiliate.
    Privacy
  17




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Consumer Credit Reporting
   
    
    requirements for financial institutions to develop policies and procedures to
identify potential identity theft and, upon the request of a consumer, place a
fraud alert in the consumers credit file stating that the consumer may be the
victim of identity theft or other fraud.
    
    for entities that furnish information to consumer reporting agencies (which
would include the Bank), requirements to implement procedures and policies
regarding the accuracy and integrity of the furnished information and regarding the
correction of previously furnished information that is later determined to be
inaccurate; and
    
    a requirement for mortgage lenders to disclose credit scores to consumers.
 Anti-Terrorism and Money Laundering Legislation
  Proposed Legislation and Regulatory Action
  
 ITEM 1A. Risk Factors.
  
 ITEM 1B. Unresolved Staff Comments.
  
 ITEM 2. Properties.
  
    
    1989 Historic Homer Highway, Commerce, Georgia 30529 (Banks County)
    
    100 Tom Reeve Drive, Carrollton, Georgia 30117 (Carroll County)  also
Operations Center
 18




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
    
    920 Level Grove Road, Cornelia, Georgia 30531 (Habersham County)
    
    102 Stockbridge Boulevard, Bremen, GA 30110 (Haralson County)
    
    101 Main Street, Franklin, Georgia 30217 (Heard County)
    
    1465 Old Swimming Pool Road, Jefferson, Georgia 30549 (Jackson County)
    
    7320 Veterans Parkway, Columbus, Georgia 31909 (Muscogee County)
    
    1378 Dug Gap Road, Dalton, Georgia 30720 (Whitfield County)
  
 ITEM 3. Legal Proceedings.
  
 ITEM 4. Submission of Matters to a Vote of Security Holders.
  
 PART II
 
 ITEM 5. Market For Registrants Common Equity, Related Shareholder Matters and Issuer
Purchasers of Equity Securities.
   
 ITEM 6. Selected Financial Data.
  Year/period ended December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(Dollars and shares in Thousands except per share data)EARNINGSInterest income
    
    $
    46,997,687
    
    
    $
    33,106,902
    
    
    $
    14,437,231
    
    
    $
    6,754,161
    
    
    $
    295,216Interest expense
    
    
    25,193,386
    
    
    
    15,836,438
    
    
    
    6,292,607
    
    
    
    2,708,754
    
    
    
    73,233Provision for loan loss
    
    
    2,353,244
    
    
    
    2,740,843
    
    
    
    1,814,746
    
    
    
    1,277,459
    
    
    
    459,529Net interest income (after
provision)
    
    
    19,451,057
    
    
    
    14,529,621
    
    
    
    6,329,878
    
    
    
    2,767,948
    
    
    
    (237,546
    )Non-interest income
    
    
    3,437,606
    
    
    
    2,557,536
    
    
    
    1,693,746
    
    
    
    991,779
    
    
    
    21,319Non-interest expense
    
    
    21,413,101
    
    
    
    16,821,026
    
    
    
    8,888,651
    
    
    
    4,235,634
    
    
    
    1,381,467Net income (loss)
    
    
    2,055,068
    
    
    
    266,131
    
    
    
    (865,027
    )
    
    
    (475,907
    )
    
    
    (1,597,694
    )SELECTED AVERAGE BALANCESAssets
    
    $
    630,034,000
    
    
    $
    449,611,000
    
    
    $
    238,615,000
    
    
    $
    136,932,000
    
    
    $
    7,722,000Earning assets
    
    
    590,797,000
    
    
    
    425,222,000
    
    
    
    225,955,000
    
    
    
    130,471,000
    
    
    
    5,507,000
 19




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Year/period ended December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(Dollars and shares in Thousands except per share data)Loans
    
    
    485,631,000
    
    
    
    348,869,000
    
    
    
    178,332,000
    
    
    
    90,832,000
    
    
    
    2,538,000Total deposits
    
    
    563,598,000
    
    
    
    374,283,000
    
    
    
    208,480,000
    
    
    
    122,175,000
    
    
    
    3,520,000Shareholders equity
    
    
    63,104,000
    
    
    
    60,075,000
    
    
    
    28,239,000
    
    
    
    14,548,000
    
    
    
    3,854,000Common shares outstanding  diluted
    
    
    12,889,153
    
    
    
    12,282,832
    
    
    
    7,095,891
    
    
    
    5,018,484
    
    
    
    5,017,361YEAR-END BALANCESAssets
    
    $
    684,633,510
    
    
    $
    579,410,303
    
    
    $
    326,690,446
    
    
    $
    182,356,714
    
    
    $
    63,099,185Earning assets
    
    
    641,553,971
    
    
    
    544,695,656
    
    
    
    310,873,458
    
    
    
    171,596,112
    
    
    
    60,151,305Loans (net of allowance)
    
    
    533,441,960
    
    
    
    403,397,896
    
    
    
    260,870,361
    
    
    
    133,081,729
    
    
    
    35,021,955Total deposits
    
    
    615,236,359
    
    
    
    496,692,502
    
    
    
    258,791,577
    
    
    
    166,657,747
    
    
    
    47,615,294Other liabilities
    
    
    2,607,209
    
    
    
    19,158,514
    
    
    
    10,957,201
    
    
    
    721,833
    
    
    
    82,224Shareholders equity
    
    
    66,789,942
    
    
    
    63,559,287
    
    
    
    56,941,668
    
    
    
    14,977,134
    
    
    
    15,401,667Common shares outstanding
    
    
    12,185,144
    
    
    
    12,062,331
    
    
    
    11,229,851
    
    
    
    5,099,201
    
    
    
    5,017,361PER COMMON SHAREEarnings (loss) per share  basic
    
    $
    .17
    
    
    $
    .02
    
    
    $
    (0.12
    )
    
    $
    (0.09
    )
    
    $
    (0.32
    )Earnings (loss) per share  diluted
    
    
    .16
    
    
    
    .02
    
    
    
    (0.12
    )
    
    
    (0.09
    )
    
    
    (0.32
    )Book value
    
    
    5.48
    
    
    
    5.27
    
    
    
    5.07
    
    
    
    2.94
    
    
    
    3.07Cash dividend paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FINANCIAL RATIOSReturn on average assets
    
    
    .33
    %
    
    
    .06
    %
    
    
    (0.36
    %)
    
    
    (0.35
    %)
    
    
    (20.69
    %)Return on average equity
    
    
    3.26
    %
    
    
    .44
    %
    
    
    (3.06
    %)
    
    
    (3.27
    %)
    
    
    (41.46
    %)Average equity to average assets
    
    
    10.02
    %
    
    
    13.36
    %
    
    
    11.83
    %
    
    
    10.62
    %
    
    
    49.91
    %Dividend payout ratio
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aNON-FINANCIALEmployees
    
    
    192
    
    
    
    185
    
    
    
    130
    
    
    
    49
    
    
    
    39Banking offices
    
    
    11
    
    
    
    10
    
    
    
    3
    
    
    
    3
    
    
    
    3ATMs
    
    
    12
    
    
    
    10
    
    
    
    3
    
    
    
    3
    
    
    
    3
 
 ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Critical Accounting Policies
     20




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Accounting for Income Taxes.
 Overview
   Year Ended
    
    Year Ended
    
    Year EndedDecember 31,
    
    December 31,
    
    December 31,2007
    
    2006
    
    2005Total revenues (1)
    
    $
    50,435,293
    
    
    $
    35,664,438
    
    
    $
    16,130,977Net income (loss)
    
    $
    2,055,068
    
    
    $
    266,131
    
    
    
    ($865,027
    )
 At December 31,
    
    At December 31,
    
    At December 31,2007
    
    2006
    
    2005Total assets
    
    $
    684,633,510
    
    
    $
    579,410,303
    
    
    $
    326,690,446Total loans (2)
    
    $
    533,441,960
    
    
    $
    403,397,896
    
    
    $
    260,870,361Total deposits
    
    $
    615,236,359
    
    
    $
    496,692,502
    
    
    $
    258,791,577
 
 (1)
    
    Total revenue equals interest income plus total non-interest income.(2)
    
    Total loans reported net of allowance for loan losses and unearned income.  21




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Results of operations for the years ended December 31, 2007, 2006 and 2005
 Net income (loss)
 2007 Compared to 2006
 2006 Compared to 2005
 Net interest income
 Table 1: Average balances, interest income, and interest expense
  Analysis of net interest incomefor the years ended December 31, 2007, 2006 and 20052007
    
    
    2006
    
    
    2005Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)Assets:Taxable investment
securities
    
    $
    67,247
    
    
    $
    3,219
    
    
    
    4.79
    %
    
    $
    51,173
    
    
    $
    2,035
    
    
    
    3.97
    %
    
    $
    40,394
    
    
    $
    1,247
    
    
    
    3.09
    %Non-taxable investment
securities (1)
    
    
    10,556
    
    
    
    417
    
    
    
    3.95
    %
    
    
    10
    
    
    
    
    
    
    
    2.65
    %
    
    
    
    
    
    
    
    
    
    
    Interest bearing deposits
    
    
    2,749
    
    
    
    131
    
    
    
    4.76
    %
    
    
    901
    
    
    
    46
    
    
    
    5.11
    %
    
    
    
    
    
    
    
    
    
    
    FHLB stock
    
    
    980
    
    
    
    58
    
    
    
    5.92
    %
    
    
    1,213
    
    
    
    75
    
    
    
    6.20
    %
    
    
    227
    
    
    
    6
    
    
    
    2.64
    %Federal funds sold
    
    
    23,810
    
    
    
    1,203
    
    
    
    5.05
    %
    
    
    23,056
    
    
    
    1,188
    
    
    
    5.15
    %
    
    
    7,002
    
    
    
    216
    
    
    
    3.08
    %Loans (2) (3)
    
    
    485,631
    
    
    
    41,970
    
    
    
    8.64
    %
    
    
    348,869
    
    
    
    29,763
    
    
    
    8.53
    %
    
    
    178,332
    
    
    
    12,968
    
    
    
    7.27
    %Allowance for loan
losses
    
    
    (5,729
    )
    
    
    
    
    
    
    
    
    
    
    (4,196
    )
    
    
    
    
    
    
    
    
    
    
    (2,102
    )Cash and due from
banks
    
    
    7,315
    
    
    
    
    
    
    
    
    
    
    
    6,426
    
    
    
    
    
    
    
    
    
    
    
    4,121Other assets
    
    
    37,475
    
    
    
    
    
    
    
    
    
    
    
    22,159
    
    
    
    
    
    
    
    
    
    
    
    10,641Total assets
    
    
    630,034
    
    
    
    
    
    
    
    
    
    
    
    449,611
    
    
    
    
    
    
    
    
    
    
    
    238,615Total interest-earning
assets
    
    
    590,973
    
    
    
    46,998
    
    
    
    7.95
    %
    
    
    425,222
    
    
    
    33,107
    
    
    
    7.79
    %
    
    $
    225,955
    
    
    
    14,437
    
    
    
    6.39
    %Liabilities:Noninterest-bearing
demand
    
    
    32,281
    
    
    
    
    
    
    
    
    
    
    
    22,953
    
    
    
    
    
    
    
    
    
    
    
    11,044Interest bearing demand
and savings
    
    
    147,356
    
    
    
    4,772
    
    
    
    3.24
    %
    
    
    113,039
    
    
    
    3,434
    
    
    
    3.04
    %
    
    
    76,649
    
    
    
    1,787
    
    
    
    2.33
    %Time
    
    
    382,061
    
    
    
    20,364
    
    
    
    5.33
    %
    
    
    238,291
    
    
    
    11,682
    
    
    
    4.90
    %
    
    
    120,787
    
    
    
    4,474
    
    
    
    3.70
    %Total deposits
    
    
    561,698
    
    
    
    
    
    
    
    
    
    
    
    374,283
    
    
    
    
    
    
    
    
    
    
    
    208,480Other borrowings
    
    
    658
    
    
    
    52
    
    
    
    7.87
    %
    
    
    13,699
    
    
    
    718
    
    
    
    5.24
    %
    
    
    733
    
    
    
    32
    
    
    
    4.37
    %
 22




---



##### Table of Contents



Analysis of net interest incomefor the years ended December 31, 2007, 2006 and 20052007
    
    
    2006
    
    
    2005Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)Securities sold under
repurchase agreement
    
    
    126
    
    
    
    6
    
    
    
    4.95
    %
    
    
    39
    
    
    
    2
    
    
    
    5.22
    %Other liabilities
    
    
    2,548
    
    
    
    
    
    
    
    
    
    
    
    1,515
    
    
    
    
    
    
    
    
    
    
    
    1,163Shareholders equity
    
    
    65,004
    
    
    
    
    
    
    
    
    
    
    
    60,075
    
    
    
    
    
    
    
    
    
    
    
    28,239Total liabilities and
shareholders equity
    
    
    630,034
    
    
    
    
    
    
    
    
    
    
    
    449,611
    
    
    
    
    
    
    
    
    
    
    
    238,615Total interest-bearing
liabilities
    
    
    530,201
    
    
    
    25,194
    
    
    
    4.75
    %
    
    
    365,068
    
    
    
    15,836
    
    
    
    4.34
    %
    
    
    198,169
    
    
    
    6,293
    
    
    
    3.18
    %Net interest income
    
    
    
    
    
    
    21,804
    
    
    
    
    
    
    
    
    
    
    
    17,271
    
    
    
    
    
    
    
    
    
    
    
    8,144Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.69
    %
    
    
    
    
    
    
    
    
    
    
    4.07
    %
    
    
    
    
    
    
    
    
    
    
    3.60
    %Net interest spread (5)
    
    
    
    
    
    
    
    
    
    
    3.20
    %
    
    
    
    
    
    
    
    
    
    
    3.45
    %
    
    
    
    
    
    
    
    
    
    
    3.21
    %
 
 (1)
    
    Yield on non-taxable investment securities have not been computed on a tax equivalent basis.
We did not have any tax exempt income during the year ending December 31, 2005.(2)
    
    Interest income from loans includes total fee income of approximately $1,692,000, $1,330,000
and $503,000 for the years ended December 31, 2007, 2006 and 2005, respectively.(3)
    
    Average nonaccrual loans of $1,183,800, $579,325 and $150,163 are included for the years
ended December 31, 2007, 2006 and 2005, respectively.(4)
    
    Net interest margin is net interest income divided by average interest-earning assets.(5)
    
    Interest rate spread is the weighted average yield on interest-earning assets minus the
average rate on interest-bearing liabilities. Table 2: Rate and volume analysis
  23




---



##### Table of Contents



Analysis of changes in net interest income
for the years ended December 31, 2007, 2006 and 2005
(Dollars in thousands)
 2007 Compared to 2006
    
    2006 Compared to 2005Increase (decrease)
    
    Increase (decrease)Due to change in
    
    Due to change inRate
    
    Volume
    
    Change
    
    Rate
    
    Volume
    
    ChangeIncome from interest-earning assets:Interest and fees on loans
    
    
    388
    
    
    
    11,819
    
    
    
    12,207
    
    
    
    2,246
    
    
    
    14,549
    
    
    
    16,795Interest on taxable securities
    
    
    415
    
    
    
    769
    
    
    
    1,184
    
    
    
    388
    
    
    
    400
    
    
    
    788Interest on non-taxable securities
    
    
    1
    
    
    
    416
    
    
    
    417
    
    
    
    
    
    
    
    
    
    
    
    Interest on FHLB stock
    
    
    (3
    )
    
    
    (14
    )
    
    
    (17
    )
    
    
    8
    
    
    
    61
    
    
    
    69Interest on Federal funds sold
    
    
    (22
    )
    
    
    37
    
    
    
    15
    
    
    
    145
    
    
    
    827
    
    
    
    972Interest on deposits in banks
    
    
    (3
    )
    
    
    88
    
    
    
    85
    
    
    
    
    
    
    
    46
    
    
    
    46Total interest income
    
    
    776
    
    
    
    13,115
    
    
    
    13,891
    
    
    
    2,787
    
    
    
    15,883
    
    
    
    18,670Expense from interest-bearing liabilitiesInterest on interest-bearing demand deposits
    
    
    227
    
    
    
    1,111
    
    
    
    1,338
    
    
    
    542
    
    
    
    1,105
    
    
    
    1,647Interest on time deposits
    
    
    1,019
    
    
    
    7,663
    
    
    
    8,682
    
    
    
    1,447
    
    
    
    5,761
    
    
    
    7,208Interest on borrowings
    
    
    360
    
    
    
    (1,026
    )
    
    
    (666
    )
    
    
    6
    
    
    
    680
    
    
    
    686Interest on securities sold under
repurchase agreement
    
    
    1
    
    
    
    3
    
    
    
    4
    
    
    
    
    
    
    
    2
    
    
    
    2Total interest expense
    
    
    1,607
    
    
    
    7,751
    
    
    
    9,358
    
    
    
    1,995
    
    
    
    7,548
    
    
    
    9,543Net interest income
    
    
    (831
    )
    
    
    5,364
    
    
    
    4,533
    
    
    
    792
    
    
    
    8,335
    
    
    
    9,127
 2007 Compared to 2006
   2006 Compared to 2005
  24




---



##### Table of Contents



Other income
 2007 Compared to 2006
 2006 Compared to 2005
 Other expenses
 2007 Compared to 2006
 2006 Compared to 2005
 Balance Sheet Review
 2007 Compared to 2006
  25




---



##### Table of Contents



2006 Compared to 2005
    Securities Portfolio
   December 312007
    
    
    2006
    
    
    2005(Dollars in Thousands)U.S. governmental-sponsored agencies
    
    $
    30,490
    
    
    $
    49,535
    
    
    $
    29,314Mortgage-backed securities
    
    
    32,633
    
    
    
    19,669
    
    
    
    10,501State, county and municipals
    
    
    15,040
    
    
    
    910
    
    
    
    Corporate securities
    
    
    2,568
    
    
    
    
    
    
    
    $
    80,731
    
    
    $
    70,114
    
    
    $
    39,815
  26




---



##### Table of Contents



U.S. governmental-
    
    
    Mortgage-backed
    
    
    State, county
    
    
    Corporatesponsored agencies
    
    
    securities
    
    
    and municipals
    
    
    securitiesCarrying
    
    
    
    
    
    
    Carrying
    
    
    
    
    
    
    Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield(Dollars in Thousands)In one year or less
    
    $
    4,733
    
    
    
    3.96
    %
    
    $
    1,080
    
    
    
    3.15
    %
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    After one year through
five years
    
    
    19,978
    
    
    
    5.04
    %
    
    
    4,605
    
    
    
    3.65
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After five years through
ten years
    
    
    3,811
    
    
    
    5.47
    %
    
    
    4,051
    
    
    
    4.94
    %
    
    
    902
    
    
    
    5.22
    %
    
    
    
    
    
    
    After ten years
    
    
    1,968
    
    
    
    5.56
    %
    
    
    22,897
    
    
    
    5.39
    %
    
    
    14,138
    
    
    
    5.74
    %
    
    
    2,568
    
    
    
    5.95
    %Total
    
    $
    30,490
    
    
    
    4.96
    %
    
    $
    32,633
    
    
    
    5.00
    %
    
    $
    15,040
    
    
    
    5.71
    %
    
    $
    2,568
    
    
    
    5.95
    %
 Loan Portfolio
 Types of Loans
  December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Commercial and industrial
    
    $
    47,363
    
    
    $
    42,405
    
    
    $
    35,761
    
    
    $
    28,971
    
    
    $
    12,042Real estate  construction
    
    
    163,206
    
    
    
    114,528
    
    
    
    60,967
    
    
    
    25,760
    
    
    
    3,837Real estate  mortgage
    
    
    299,219
    
    
    
    225,119
    
    
    
    142,520
    
    
    
    61,037
    
    
    
    12,724Installment loans to individuals
    
    
    30,136
    
    
    
    26,859
    
    
    
    24,997
    
    
    
    19,083
    
    
    
    6,868539,924
    
    
    
    408,911
    
    
    
    264,245
    
    
    
    134,851
    
    
    
    35,471Deferred loan fees and costs
    
    
    (215
    )
    
    
    (269
    )
    
    
    (181
    )
    
    
    (64
    )
    
    
    11Less allowance for loan losses
    
    
    (6,267
    )
    
    
    (5,244
    )
    
    
    (3,194
    )
    
    
    (1,705
    )
    
    
    (460
    )Loans, net
    
    $
    533,442
    
    
    $
    403,398
    
    
    $
    260,870
    
    
    $
    133,082
    
    
    $
    35,022
 Maturities and sensitivities to changes in interest rates
  27




---



##### Table of Contents



Rate Structure forLoans withMaturities OverMaturity in Months (1)
    
    
    One Year(Dollars in Thousands)
    
    
    (Dollars in Thousands)Less than 12 (2)
    
    
    13-60
    
    
    Over 60
    
    
    Total
    
    
    Variable Rates
    
    
    Fixed RatesCommercial and
industrial
    
    $
    19,661
    
    
    $
    24,316
    
    
    $
    3,386
    
    
    $
    47,363
    
    
    $
    12,307
    
    
    $
    15,395Real estate 
construction
    
    
    133,343
    
    
    
    28,053
    
    
    
    1,810
    
    
    
    163,206
    
    
    
    20,048
    
    
    
    9,815Total
    
    $
    153,004
    
    
    $
    52,369
    
    
    $
    5,196
    
    
    $
    210,569
    
    
    $
    32,355
    
    
    $
    25,210
 
 (1)
    
    The amounts are classified based on the contractual maturity date of the loan. Our
installment loans generally require the borrower to make amortizing principal payments over
the terms of the loan. These amortization payments are reported according to the maturity
date of the underlying loan even though the loan requires that they be paid earlier.(2)
    
    We do not have any demand loans or loans without a stated maturity. Risk Elements
  December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(Dollars in Thousands)Loans accounted for on a non-accrual basis
    
    
    2,284
    
    
    
    353
    
    
    
    252
    
    
    
    100
    
    
    
    0Loans contractually past due ninety days or more as
to interest or principal payments and still accruing
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Loans, the terms of which have been renegotiated to
provide a reduction or deferral of interest or
principal because of deterioration in the financial
position of the borrower
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Loans now current about which there are serious
doubts as to the ability of the borrower to comply
with present loan repayment terms
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
  28




---



##### Table of Contents



Interest income that would have been recorded on
nonaccrual loans under original terms
    
    $
    206,299Interest income that was recorded
on nonaccrual loans
    
    
    77,545Reduction in interest income
    
    $
    128,754
     Summary of Loan Loss Experience
  29




---



##### Table of Contents



December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Average balance of loans outstanding
    
    $
    485,631
    
    
    $
    348,869
    
    
    $
    178,332
    
    
    $
    90,832
    
    
    $
    2,538Balance of allowance for loan losses at beginning
of year
    
    $
    5,244
    
    
    $
    3,194
    
    
    $
    1,705
    
    
    $
    460
    
    
    $
    0Charge-offs:Commercial and industrial
    
    
    (207
    )
    
    
    (207
    )
    
    
    (69
    )
    
    
    0
    
    
    
    0Real estate  construction
    
    
    (106
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Real estate  mortgage
    
    
    (609
    )
    
    
    (182
    )
    
    
    (74
    )
    
    
    0
    
    
    
    0Installment loans to individuals
    
    
    (466
    )
    
    
    (361
    )
    
    
    (210
    )
    
    
    (38
    )
    
    
    0Total
    
    
    (1,388
    )
    
    
    (750
    )
    
    
    (353
    )
    
    
    (38
    )
    
    
    0Recoveries:Commercial and industrial
    
    
    1
    
    
    
    2
    
    
    
    0
    
    
    
    0
    
    
    
    0Real estate  construction
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Real estate  mortgage
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Installment loans to individuals
    
    
    57
    
    
    
    57
    
    
    
    27
    
    
    
    6
    
    
    
    0Total
    
    
    58
    
    
    
    59
    
    
    
    27
    
    
    
    6
    
    
    
    0Net charge-offs
    
    
    (1,330
    )
    
    
    (691
    )
    
    
    (326
    )
    
    
    (32
    )
    
    
    0Additions to allowance charged to operations
    
    
    2,353
    
    
    
    2,741
    
    
    
    1,815
    
    
    
    1,277
    
    
    
    460Balance of allowance at end of year
    
    $
    6,267
    
    
    $
    5,244
    
    
    $
    3,194
    
    
    $
    1,705
    
    
    $
    460Ratio of net loan charge-offs during the year to
average loans outstanding during the year
    
    
    .27
    %
    
    
    .20
    %
    
    
    0.18
    %
    
    
    0.04
    %
    
    
    0.0
    %
 30




---



##### Table of Contents



December 312007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    PercentOf Loans
    
    
    
    
    
    
    Of Loans
    
    
    
    
    
    
    Of Loans
    
    
    
    
    
    
    Of Loans
    
    
    
    
    
    
    Of LoansIn Each
    
    
    
    
    
    
    In Each
    
    
    
    
    
    
    In Each
    
    
    
    
    
    
    In Each
    
    
    
    
    
    
    In EachCategory
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    CategoryTo Total
    
    
    
    
    
    
    To Total
    
    
    
    
    
    
    To Total
    
    
    
    
    
    
    To Total
    
    
    
    
    
    
    To TotalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans(Dollars in Thousands)Commercial
and industrial
    
    $
    426
    
    
    
    8.77
    %
    
    $
    1,263
    
    
    
    10.37
    %
    
    $
    839
    
    
    
    13.53
    %
    
    $
    374
    
    
    
    21.48
    %
    
    $
    99
    
    
    
    22.24
    %Real estate 
construction
    
    
    2,281
    
    
    
    30.23
    %
    
    
    838
    
    
    
    28.01
    %
    
    
    368
    
    
    
    23.08
    %
    
    
    82
    
    
    
    19.11
    %
    
    
    39
    
    
    
    9.95
    %Real estate 
mortgage
    
    
    3,191
    
    
    
    55.42
    %
    
    
    2,869
    
    
    
    55.05
    %
    
    
    1,755
    
    
    
    53.93
    %
    
    
    972
    
    
    
    45.26
    %
    
    
    229
    
    
    
    48.54
    %Installment loans
to individuals
    
    
    369
    
    
    
    5.58
    %
    
    
    274
    
    
    
    6.57
    %
    
    
    232
    
    
    
    9.46
    %
    
    
    277
    
    
    
    14.15
    %
    
    
    93
    
    
    
    19.27
    %$
    6,267
    
    
    
    100.00
    %
    
    $
    5,244
    
    
    
    100.00
    %
    
    $
    3,194
    
    
    
    100.00
    %
    
    $
    1,705
    
    
    
    100.00
    %
    
    $
    460
    
    
    
    100.00
    %
   Deposits
  December 31,2006
    
    
    2005
    
    
    2004Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(Dollars in Thousands)Non-interest bearing demand deposits
    
    $
    32,281
    
    
    
    
    
    
    $
    22,953
    
    
    
    
    
    
    $
    11,044Interest-bearing demand and savings
deposits
    
    
    147,356
    
    
    
    3.24
    %
    
    
    113,039
    
    
    
    3.04
    %
    
    
    76,649
    
    
    
    2.33
    %Time deposits
    
    
    382,061
    
    
    
    5.33
    %
    
    
    238,291
    
    
    
    4.90
    %
    
    
    120,787
    
    
    
    3.70
    %$
    561,698
    
    
    
    
    
    
    $
    374,283
    
    
    
    
    
    
    $
    208,480
 31




---



##### Table of Contents



(Dollars in Thousands)Three months or less
    
    $
    60,594Over three months through six months
    
    
    115,750Over six through 12 months
    
    
    14,132Over 12 months
    
    
    3,888$
    194,364
 Return on Equity and Assets
  For the Years EndingDecember 31,2007
    
    2006
    
    2005Return on average assets
    
    
    .33
    %
    
    
    .06
    %
    
    
    (0.36
    %)Return on average equity
    
    
    3.16
    %
    
    
    .44
    %
    
    
    (3.06
    %)Average equity as a percentage
of average assets
    
    
    10.32
    %
    
    
    13.36
    %
    
    
    11.83
    %
 Liquidity
  Regulatory capital requirements
  32




---



##### Table of Contents



Minimum RegulatoryMinimum
    
    Requirement forRegulatory
    
    Well CapitalizedRequirement
    
    Status
    
    ActualTier 1 capital to risk adjusted assets
    
    
    4.00
    %
    
    
    6.00
    %
    
    
    12.24
    %Total capital to risk adjusted assets
    
    
    8.00
    %
    
    
    10.00
    %
    
    
    13.38
    %Tier 1 leverage ratio (to average quarterly assets)
    
    
    4.00
    %
    
    
    5.00
    %
    
    
    9.88
    %
  Off Balance Sheet Arrangements
   December 31,2007
    
    
    2006
    
    
    2005(Dollars in Thousands)Commitments to extend credit
    
    $
    62,064
    
    
    $
    67,460
    
    
    $
    63,516Letters of credit
    
    
    1,404
    
    
    
    702
    
    
    
    207$
    63,468
    
    
    $
    68,162
    
    
    $
    63,723
  Asset/liability management
   33




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##### Table of Contents



Analysis of Interest Sensitivity
As of December 31, 2007
(Dollars in Thousands)
 0  3
    
    
    3  12
    
    
    Over 1Months
    
    
    Months
    
    
    Year
    
    
    TotalInterest-earning assets:Interest-bearing deposits in banks
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    66Securities
    
    
    
    
    
    
    5,818
    
    
    
    74,913
    
    
    
    80,731FHLB stock
    
    
    1,042
    
    
    
    
    
    
    
    
    
    
    
    1,042Federal funds sold
    
    
    20,005
    
    
    
    
    
    
    
    
    
    
    
    20,005Loans
    
    
    330,749
    
    
    
    78,875
    
    
    
    130,085
    
    
    
    539,709Total interest-earning assets
    
    
    351,862
    
    
    
    84,693
    
    
    
    204,998
    
    
    
    641,553Interest-bearing liabilities:Interest-bearing demand deposits
    
    
    82,531
    
    
    
    
    
    
    
    
    
    
    
    82,531Savings and money markets
    
    
    81,594
    
    
    
    
    
    
    
    
    
    
    
    81,594Time deposits
    
    
    134,328
    
    
    
    250,553
    
    
    
    34,704
    
    
    
    419,585Securities sold under repurchase agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Federal Home Loan Bank borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest-bearing liabilities
    
    
    298,453
    
    
    
    250,553
    
    
    
    34,704
    
    
    
    583,710Interest rate sensitivity gap
    
    
    53,409
    
    
    
    (165,860
    )
    
    
    170,294
    
    
    
    57,843Cumulative interest rate sensitivity gap
    
    
    53,409
    
    
    
    (112,451
    )
    
    
    57,843Interest rate sensitivity gap ratio
    
    
    1.18
    
    
    
    .34
    
    
    
    5.91Cumulative interest rate sensitivity gap ratio
    
    
    1.18
    
    
    
    .80
    
    
    
    1.10
  34




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##### Table of Contents



Effects of Inflation
   Contractual Obligations
  Payment Due by PeriodMoreLess than 1
    
    
    
    
    
    
    
    
    
    
    than 5Contractual Obligations
    
    Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsLong-term debt obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    191,068
    
    
    
    79,943
    
    
    
    111,125
    
    
    
    
    
    
    
    Purchase obligations
    
    
    5,035,930
    
    
    
    5,035,930
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    5,226,998
    
    
    $
    5,115,873
    
    
    $
    111,125
    
    
    $
    
    
    
    $
    
 
 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.
  
 ITEM 8. Financial Statements and Supplementary Data.
   Quarterly Period EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Year ended December 31, 2007Interest income
    
    $
    10,752
    
    
    $
    11,579
    
    
    $
    12,393
    
    
    $
    12,274Interest expense
    
    
    (5,656
    )
    
    
    (6,211
    )
    
    
    (6,645
    )
    
    
    (6,682
    )Net interest income
    
    
    5,096
    
    
    
    5,368
    
    
    
    5,748
    
    
    
    5,592Provision for loan losses
    
    
    (292
    )
    
    
    (501
    )
    
    
    (841
    )
    
    
    (719
    )Net interest income after provision
for loans losses
    
    
    4,804
    
    
    
    4,867
    
    
    
    4,907
    
    
    
    4,873
 35




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##### Table of Contents



Quarterly Period EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Other income
    
    
    821
    
    
    
    834
    
    
    
    889
    
    
    
    893Other expenses
    
    
    (5,037
    )
    
    
    (5,150
    )
    
    
    (5,624
    )
    
    
    (5,601
    )Income before income taxes
    
    
    588
    
    
    
    551
    
    
    
    172
    
    
    
    165Income tax (expense) benefit
    
    
    
    
    
    
    636
    
    
    
    (33
    )
    
    
    24Net income
    
    $
    588
    
    
    
    1,187
    
    
    
    139
    
    
    $
    141Basic earnings per share
    
    $
    0.05
    
    
    
    0.10
    
    
    $
    0.01
    
    
    $
    0.01Diluted earnings per share
    
    $
    0.05
    
    
    $
    0.09
    
    
    $
    0.01
    
    
    $
    0.01Year ended December 31, 2006Interest income
    
    $
    6,201
    
    
    $
    7,563
    
    
    $
    8,991
    
    
    $
    10,352Interest expense
    
    
    (2,640
    )
    
    
    (3,417
    )
    
    
    (4,382
    )
    
    
    (5,397
    )Net interest income
    
    
    3,561
    
    
    
    4,146
    
    
    
    4,609
    
    
    
    4,955Provision for loan losses
    
    
    (605
    )
    
    
    (631
    )
    
    
    (725
    )
    
    
    (780
    )Net interest income after provision
for loans losses
    
    
    2,956
    
    
    
    3,515
    
    
    
    3,884
    
    
    
    4,175Other income
    
    
    487
    
    
    
    629
    
    
    
    680
    
    
    
    761Other expenses
    
    
    (3,622
    )
    
    
    (4,085
    )
    
    
    (4,439
    )
    
    
    (4,675
    )Income (loss) before income taxes
    
    
    (179
    )
    
    
    59
    
    
    
    125
    
    
    
    261Income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    (179
    )
    
    $
    59
    
    
    $
    125
    
    
    $
    261Basic earnings (losses) per share
    
    $
    (0.02
    )
    
    $
    
    
    
    $
    0.01
    
    
    $
    0.02Diluted earnings (losses) per share
    
    $
    (0.02
    )
    
    $
    
    
    
    $
    
    
    
    $
    0.02
  
 ITEM 9. Changes and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 ITEM 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
 36




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##### Table of Contents



Managements Annual Report on Internal Control over Financing Reporting
    Attestation Report of the Registered Public Accounting Firm
  
 ITEM 9B. Other Information.
  
 PART III
 
 ITEM 10. Directors, Executive Officers and Corporate Governance.
  
 ITEM 11. Executive Compensation.
  
 ITEM 12. Securities Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
  Equity Compensation Plan Table
  37




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##### Table of Contents



(a)
    
    (b)
    
    (c)Weighted-
    
    Number of securitiesNumber of
    
    average exercise
    
    remaining available forsecurities to be
    
    price of
    
    future issuance underissued upon exercise
    
    outstanding
    
    equity compensationof outstanding
    
    options,
    
    plans (excludingoptions, warrants
    
    warrants and
    
    securities reflected inPlan category
    
    and rights
    
    rights
    
    column (a))Equity compensation
plans approved by
security holders
    
    
    1,293,275
    
    
    $
    6.45
    
    
    
    327,976Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,293,275
    
    
    $
    6.45
    
    
    
    327,976
 
 ITEM 13. Certain Relationships and Related Transactions, and Director Independence.
  
 ITEM 14. Principal Accountant Fees and Services.
  
 PART IV
 
 ITEM 15. Exhibits and Financial Statement Schedules
 (a)
    
    The following documents are filed as a part of this report:Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2007 and 2006Consolidated Statements of Operations for Years Ended December 31, 2007, 2006 and 2005Consolidated Statements of Comprehensive Income (Loss) for Years Ended December 31, 2007,
2006 and 2005Consolidated Statements of Stockholders Equity for Years Ended December 31, 2007, 2006 and
2005Consolidated Statements of Cash Flows for Years Ended December 31, 2007, 2006 and 2005Notes to Consolidated Financial StatementsThe exhibits identified in (b) below.(b)
    
    The following exhibits are furnished with this registration statement.
 Exhibit No.
    
    Name of Exhibit3.1
    
    Articles of Incorporation, as amended (incorporated by reference to exhibit 3.1 of Registrants Form 10 filed with the SEC on May 1, 2006)3.2
    
    Bylaws (incorporated by reference to exhibit 3.2 of Registrants Form 10 filed with the SEC on May 1, 2006)10.1
    
    2004 Stock Option Plan (incorporated by reference to exhibit 10.1 of Registrants Form 10 filed with the SEC on May 1, 2006) *10.2
    
    Employment Agreement with Jackie L. Reed (incorporated by reference to exhibit 10.2 of Registrants Form 10 filed with the SEC on May 1, 2006) *
 38




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##### Table of Contents



Exhibit No.
    
    Name of Exhibit10.3
    
    Employment Agreement with Teresa L. Martin (incorporated by reference to exhibit 10.3 of Registrants Form 10 filed with the SEC on May 1, 2006) *10.4
    
    Employment Agreement with Gregory S. Akins (incorporated by reference to
exhibit 10.4 of Registrants Form 10/A filed with the SEC on June 29, 2006) *10.5
    
    2007 Equity Plan (incorporated by reference to Appendix C to the Registrants
definitive proxy statement filed with the SEC on April 25, 2007, which consists of
pages C-1 through C-18)*13
    
    Consolidated Financial Statements of FGBC Bancshares, Inc.21
    
    List of Subsidiaries (incorporated by reference to exhibit 21 of Registrants
Form 10 filed with the SEC on May 1, 2006)23
    
    Consent of Mauldin & Jenkins, LLC31.1
    
    Certificate of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certificate of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certificate of the CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Indicates a management contract or compensatory plan or arrangement. 39




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##### Table of Contents



SIGNATURES
  FGBC BANCSHARES, INC.By:
    /s/ Jackie L. Reed
    
    Date: March 14, 2008Name:
    Jackie L. ReedTitle:
    President and Chief Executive Officer  /s/ Jackie L. Reed
    
    Date: March 17, 2008Jackie
L. Reed
Chief Executive Officer and Director
[Principal Executive Officer]/s/ Teresa L. Martin
    
    Date: March 17, 2008Teresa
L. Martin
Chief Financial Officer and Executive Vice President
[Principal Financial Officer and Principal Accounting Officer]/s/ Roy L. Denny
    
    Date: March 17, 2008Roy L. Denny, Director/s/ Walter D. Duke
    
    Date: March 17, 2008Walter D. Duke, Director/s/ Wyche T. Green, III
    
    Date: March 17, 2008Wyche T. Green, III, DirectorDate: March , 2008Greg M. Hagan, Director
 40




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##### Table of Contents



/s/ George B. Hamil, Jr.
    
    Date: March 17, 2008George B. Hamil, Jr., Director/s/ Terry L. Harper
    
    Date: March 17, 2008Terry L. Harper, DirectorDate: March , 2008Emmett K. Harrod, Director/s/ Howard J. Lindsey
    
    Date: March 17, 2008Howard J. Lindsey, Director/s/ Dennis H. McDowell
    
    Date: March 17, 2008Dennis H. McDowell, Director/s/ Edward R. Newbern
    
    Date: March 17, 2008Edward R. Newbern, DirectorDate: March , 2008Randall Pugh, DirectorDate: March , 2008Carl R. Sewell, Jr., Director/s/ Bart R. Smith
    
    Date: March 17, 2008Bart R. Smith, DirectorDate: March , 2008Gleamer L. Smith, Jr., Director/s/ Robert L. Stewart, Jr.
    
    Date: March 17, 2008Robert L. Stewart, Jr., Director
 41