UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]      Annual Report Pursuant To Section 13 Or 15(d)of The Securities Exchange
         Act Of 1934 For The Fiscal Year December 31, 1999

                                       Or

[  ]     Transition Report Pursuant To Section 13 Or 15 (D) Of The Securities
         Exchange Act Of 1934 For the Transition Period from ___________
         to ________________

                        Commission file number 333-86371

                          Coastal Banking Company, Inc.
            -------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        South Carolina                                    58-2455444
        --------------                                    ----------
     (State of Incorporation)             (I.R.S. Employer Identification No.)

            1001 Bay Street Suite 202
               Beaufort, S.C.                                29902
   ------------------------------------------                -----
   (Address of principal executive offices)               (Zip Code)

                                  843-522-1228
                                -----------------
                               (Telephone Number)

                                 Not Applicable
--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

        Securities registered pursuant to Section 12(b) of the Act: None
    Securities registered pursuant to Section 12(g) of the Act: Common Stock

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for past 90 days.

Yes    X          No
    --------         -----

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B in this form, and no disclosure will be contained, to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

         The issuer's loss for its most recent  fiscal year was $233,280.  As of
March 15, 2000, 948,281 shares of Common Stock were issued and outstanding.

         The aggregate  market value of the Common Stock held by  non-affiliates
of the Company on March 15, 2000 is $5,930,248.  This  calculation is based upon
an  estimate of the fair  market  value of the Common  Stock of $8.00 per share,
which was the price of the last trade of which management is aware prior to this
date.

 Transitional Small Business Disclosure Format. (Check one): Yes         No X
                                                               ---         ---

                       DOCUMENTS INCORPORATED BY REFERENCE

                            Company's Proxy Statement

<PAGE>

Item 1.    Description of Business

     This Report contains statements which constitute forward-looking statements
within  the  meaning  of  Section  27A of the  Securities  Act of  1933  and the
Securities  Exchange Act of 1934. These statements are based on many assumptions
and estimates and are not guarantees of future  performance.  Our actual results
may differ materially from those projected in any forward-looking statements, as
they will  depend on many  factors  about which we are  unsure,  including  many
factors which are beyond our control. The words "may," "would," "could," "will,"
"expect," "anticipate,"  "believe," "intend," "plan," and "estimate," as well as
similar  expressions,  are meant to identify  such  forward-looking  statements.
Potential risks and uncertainties include, but are not limited to:

o        significant increases in competitive pressure in the banking and
         financial services industries;

o        changes in the interest rate environment which could reduce anticipated
         or actual margins;

o        changes in political conditions or the legislative or regulatory
         environment;

o        general economic conditions, either nationally or regionally and
         especially in primary  service area,  becoming less favorable than
         expected resulting in, among other things, a deterioration in credit
         quality;

o        changes occurring in business conditions and inflation;

o        changes in technology;

o        changes in monetary and tax policies;

o        changes in the securities markets; and

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

General

     We were  incorporated to operate as a bank holding company  pursuant to the
Federal  Bank  Holding  Company Act of 1956 and the South  Carolina  Banking and
Branching  Efficiency  Act, and to purchase  100% of the issued and  outstanding
stock of Lowcountry  National Bank (in organization),  an association  organized
under the laws of the United States,  to conduct a general  banking  business in
Beaufort County, South Carolina.

     Since our inception on June 8, 1999, as a South  Carolina  corporation,  we
have engaged in organizational  and pre-opening  activities  necessary to obtain
regulatory approvals and to prepare our subsidiary, Lowcountry National Bank, to
commence  business  as a financial  institution.  We have  received  preliminary
approval to open the bank and obtain  deposit  insurance from our regulators and
expect to open the bank in April 2000.

     On November 1, 1999, we sold 870,000  shares of our common stock at $10 per
share and on December 2, 1999, we issued 78,821 additional shares for a total of
948,281 shares of common stock. The offering raised  $8,909,624 net of estimated
underwriting  discounts and  commissions.  Our directors and executive  officers
purchased 207,000 shares of common stock at $10 per share in the offering, for a
total of $2,070,000.  We intend to use approximately  $6,700,000 of the proceeds
to capitalize the proposed bank.

Marketing Focus

         Lowcountry National Bank will focus on the local community, emphasizing
personal service to individuals and businesses in Beaufort  County.  Our primary
service area includes a large portion of Beaufort County, excluding Hilton Head.
Our target  market  will be  primarily  individuals  and small- to  medium-sized
businesses who desire a consistent and

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<PAGE>

professional  relationship  with  a  local  banker.  We  plan  to  encorage  and
relationships  with  individuals and companies in this area to more  effectively
market  the  service of the bank.  We  believe  we can offer a personal  banking
relationship to our customers that is not available through larger banks.

Location and Service Area

         Our 5,400  square  foot main  office will be located on West Sea Island
Parkway just across the Beaufort  river from downtown  Beaufort on Ladys Island.
We expect to complete the  renovations in the first quarter of 2000 and open for
business  in  April  2000.  We  believe  that  the  headquarters  facility  will
adequately serve the bank's needs for at least the first year of operation,  but
we may pursue branching opportunities as they arise.

         Our primary service area will consist of the portion of Beaufort County
within a 20 mile radius (specifically  excluding Hilton Head Island) of our main
office. This area covers a large portion of Beaufort County, including Beaufort,
Bluffton,  Burton,  Callawassie  Island,  Coosaw,  Dataw Island,  Harbor Island,
Hunting  Island,  Fripp Island,  Ladys Island,  Port Royal,  Spring Island,  St.
Helena Island,  and the rapidly  growing Sun City,  which is expected to contain
8,900 homes upon completion.  More  particularly,  the service area for deposits
for the bank is within a five mile radius of our main  office,  with the 20 mile
radius primarily utilized for loan generation opportunities.

Lending Activities

         General. We intend to emphasize a range of lending services,  including
real  estate,  commercial,  and  consumer  loans to  individuals  and  small- to
medium-sized  businesses and professional firms that are located in or conduct a
substantial  portion of their  business in  Lowcountry  National  Bank 's market
area. We will compete for these loans with  competitors who are well established
in the Beaufort County area and have greater  resources and lending limits. As a
result, we may have to charge lower interest rates to attract borrowers.

         Loan  Approval and Review.  Lowcountry  National  Bank 's loan approval
policies will provide for various levels of officer lending authority.  When the
amount of aggregate loans to a single borrower  exceeds an individual  officer's
lending  authority,  the loan  request  will be  considered  and  approved by an
officer with a higher lending limit or the directors' loan  committee.  Loans in
excess of the directors'  loan  committee's  limits must be approved by the full
board of  directors.  Lowcountry  National  Bank  will not make any loans to any
director,  officer,  or employee of Lowcountry  National Bank unless the loan is
approved by the board of directors of  Lowcountry  National  Bank and is made on
terms not more  favorable to such person than would be available to a person not
affiliated  with Lowcountry  National Bank . Lowcountry  National Bank currently
intends to adhere to Federal National Mortgage Association and Federal Home Loan
Mortgage  Corporation  guidelines in its mortgage loan review  process,  but may
choose to alter this policy in the future.  Lowcountry  National Bank  currently
intends to sell its mortgage  loans on the secondary  market,  but may choose to
hold them in the portfolio in the future.

         Lending Limits.  Lowcountry National Bank 's lending activities will be
subject to a variety of lending  limits  imposed  by federal  law.  In  general,
Lowcountry  National  Bank will be subject to a legal limit on loans to a single
borrower  equal to 15% of  Lowcountry  National  Bank's  capital and  unimpaired
surplus.  Different limits may apply in certain  circumstances based on the type
of loan or the nature of the borrower,  including the borrower's relationship to
Lowcountry  National Bank.  These limits will increase or decrease as Lowcountry
National Bank's capital increases or decreases. Based upon the capitalization of
Lowcountry  National  Bank  with  $6,700,000,   Lowcountry  National  Bank  will
initially have a self-imposed  loan limit of $804,000,  which  represents 80% of
our anticipated legal lending limit of $1,005,000. These initial limits may drop
as we expect to incur losses, and therefore have less capital,  in first several
years  of  operations.   Unless  Lowcountry   National  Bank  is  able  to  sell
participations in its loans to other financial institutions, Lowcountry National
Bank  will  not be able to  meet  all of the  lending  needs  of loan  customers
requiring aggregate extensions of credit above these limits.

         Real Estate and Mortgage Loans. We estimate that loans secured by first
or second  mortgages  on real  estate  will make up 63% of  Lowcountry  National
Bank's  loan  portfolio.  These  loans  will  generally  fall  into one of three
categories: commercial real estate loans, construction and development loans, or
residential  real estate  loans.  Each of these


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<PAGE>


categories is discussed in more detail below,  including  their specific  risks.
Home equity  loans are not  included  because  they are  classified  as consumer
loans, which are discussed below. Interest rates for all categories may be fixed
or adjustable,  and will more likely be fixed for shorter-term loans. Lowcountry
National Bank will generally charge an origination fee for each loan.

         Real estate loans are subject to the same general risks as other loans.
They are  particularly  sensitive to  fluctuations  in the value of real estate,
which is generally the underlying  security for real estate loans.  Fluctuations
in the value of real estate,  as well as other factors  arising after a loan has
been made, could negatively affect a borrower's cash flow, creditworthiness, and
ability to repay the loan.

         We will have the ability to  originate  real estate loans for sale into
the  secondary  market.  We can limit our interest rate and credit risk on these
loans by locking the interest rate for each loan with the secondary investor and
receiving the investor's underwriting approval prior to originating the loan.

o             Commercial  Real Estate Loans.  Commercial  real estate loans will
              generally have terms of five years or less,  although payments may
              be structured  on a longer  amortization  basis.  We will evaluate
              each borrower on an individual  basis and attempt to determine its
              business  risks and  credit  profile.  We will  attempt  to reduce
              credit risk in the commercial real estate portfolio by emphasizing
              loans on  owner-occupied  office  and retail  buildings  where the
              loan-to-value ratio,  established by independent appraisals,  does
              not exceed 80%. We will also  generally  require  that debtor cash
              flow  exceed 115% of monthly  debt  service  obligations.  We will
              typically review all of the personal  financial  statements of the
              principal  owners and require  their  personal  guarantees.  These
              reviews   generally  reveal  secondary   sources  of  payment  and
              liquidity to support a loan request.

o             Construction  and  Development  Real Estate  Loans.  We will offer
              adjustable and fixed rate residential and commercial  construction
              loans to builders  and  developers  and to  consumers  who wish to
              build their own home.  The term of  construction  and  development
              loans  will  generally  be limited to  eighteen  months,  although
              payments may be structured on a longer  amortization  basis.  Most
              loans will mature and require payment in full upon the sale of the
              property.  Construction  and  development  loans generally carry a
              higher  degree  of risk  than  long  term  financing  of  existing
              properties.  Repayment  depends on the ultimate  completion of the
              project and usually on the sale of the  property.  Specific  risks
              include:

                    o     cost overruns;
                    o     mismanaged construction;
                    o     inferior or improper construction  techniques;
                    o     economic changes or downturns during  construction;
                    o     a downturn in the real estate market;
                    o     rising interest rates which may prevent sale of the
                          property; and
                    o     failure to sell completed projects in a timely manner.

         We will attempt to reduce risk by obtaining  personal  guarantees where
possible,  and by keeping the loan-to-value ratio of the completed project below
specified  percentages.  We also may reduce  risk by selling  participations  in
larger loans to other institutions when possible.

o             Residential  Real Estate  Loans.  Residential  real  estate  loans
              generally  will have  longer  terms up to 30 years.  We will offer
              fixed and adjustable rate  mortgages.  We will have limited credit
              risk on these  loans as most  will be sold to third  parties  soon
              after closing.

         Commercial  Loans.   Lowcountry  National  Bank  will  make  loans  for
commercial  purposes  in  various  lines of  businesses.  Commercial  loans  are
generally considered to have greater risk than first or second mortgages on real
estate because they may be unsecured,  or if they are secured,  the value of the
security  may be  difficult  to assess  and more  likely to  decrease  than real
estate.

                                       4

<PAGE>

         Equipment loans will typically be made for a term of five years or less
at fixed or  variable  rates,  with the loan fully  amortized  over the term and
secured by the financed equipment and with a loan-to-value ratio of 80% or less.
We will  focus our  efforts on  commercial  loans  less than  $500,000.  Working
capital loans will  typically have terms not exceeding one year and will usually
be secured by accounts  receivable,  inventory,  or personal  guarantees  of the
principals  of the  business.  For  loans  secured  by  accounts  receivable  or
inventory,  principal will  typically be repaid as the assets  securing the loan
are converted into cash,  and in other cases  principal will typically be due at
maturity.  Asset based lending,  leasing,  and factoring will be offered through
third party  vendors who can handle the paper work and  servicing  and generally
assume most of the credit  risk.  Trade  letters of credit,  standby  letters of
credit,  and foreign  exchange will be handled through a  correspondent  bank as
agent for Lowcountry National Bank.

         We  expect  to  offer  small   business  loans   utilizing   government
enhancements such as the Small Business  Administration's 7(a) program and SBA's
504  programs.  These  loans  will  typically  be  partially  guaranteed  by the
government,  which  may  help  to  reduce  Lowcountry  National  Bank  's  risk.
Government  guarantees  of SBA loans  will not  exceed 80% of the loan value and
will generally be less.

         The well  established  banks in the  Beaufort  County  area  will  make
proportionately  more loans to medium to  large-sized  businesses  than we will.
Many of Lowcountry  National Bank's anticipated  commercial loans likely will be
made to small- to  medium-sized  businesses  which may be less able to withstand
competitive, economic, and financial conditions than larger borrowers.

         Consumer Loans.  Lowcountry  National Bank will make a variety of loans
to  individuals  for  personal and  household  purposes,  including  secured and
unsecured  installment  loans and revolving lines of credit.  Installment  loans
typically will carry balances of less than $50,000 and be amortized over periods
up to 60 months.  Consumer loans may be offered on a single maturity basis where
a specific  source of repayment  is  available.  Revolving  loan  products  will
typically  require monthly  payments of interest and a portion of the principal.
Consumer  loans are  generally  considered  to have  greater  risk than first or
second  mortgages on real estate  because they may be unsecured,  or if they are
secured, the value of the security may be difficult to assess and more likely to
decrease than real estate.

         We will also offer home equity loans. Our underwriting criteria for and
the risks  associated  with home equity loans and lines of credit will generally
be the same as those for first mortgage loans.  Home equity lines of credit will
typically  have terms of 15 years or less,  will  typically  carry balances less
than  $125,000,  and  may  extend  up to 100% of the  available  equity  of each
property.

Deposit Services

         We intend to offer a full range of deposit  services that are typically
available in most banks and savings and loan  associations,  including  checking
accounts,  commercial  accounts,  savings  accounts,  and other time deposits of
various  types,   ranging  from  daily  money  market  accounts  to  longer-term
certificates of deposit.  The transaction accounts and time certificates will be
tailored to our primary market area at rates competitive to those offered in the
Beaufort County area. In addition, we intend to offer certain retirement account
services,  such as IRAs. We intend to solicit these  accounts from  individuals,
businesses, associations, organizations, and governmental authorities.

Other Banking Services

We  anticipate  that  Lowcountry  National  Bank will offer other bank  services
including drive up ATMs, safe deposit boxes,  traveler's checks, direct deposit,
U.S. Savings Bonds, and banking by mail. We plan for Lowcountry National Bank to
become  associated  with the Plus and Cirrus ATM networks,  which may be used by
its customers  throughout  Beaufort County and other regions. We believe that by
being  associated with a shared network of ATMs, we will be better able to serve
our  customers and will be able to attract  customers who are  accustomed to the
convenience  of using ATMs,  although we do not believe  that  maintaining  this
association  will be critical to our success.  We intend to begin offering these
services  shortly  after  opening  Lowcountry  National  Bank.  We do not expect
Lowcountry  National  Bank to  exercise  trust  powers  during its first year of
operation

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<PAGE>

Market Share

         As of June 30, 1999,  total  deposits in  Lowcountry  National  Bank 's
primary service area were almost $566 million,  which  represented a 15% deposit
growth rate from 1998.  Our plan over the next five years is to grow our deposit
base to $56  million.  Of course,  we cannot be sure that these  deposit  growth
rates will continue, or that we will accomplish this objective.

Employees

         As of  March 1 2000,  the  bank has  three  employees,  and we have two
employees.

                           Supervision and Regulation

         Both the  company  and the bank are  subject  to  extensive  state  and
federal  banking laws and  regulations  which impose  specific  requirements  or
restrictions  on and provide for general  regulatory  oversight of virtually all
aspects of  operations.  These laws and  regulations  are generally  intended to
protect  depositors,  not  shareholders.  The following  summary is qualified by
reference to the  statutory  and  regulatory  provisions  discussed.  Changes in
applicable  laws or regulations  may have a material  effect on our business and
prospects.  Beginning  with the  enactment of the Financial  Institution  Report
Recovery and Enforcement Act in 1989 and following with the FDIC Improvement Act
in 1991,  numerous  additional  regulatory  requirements have been placed on the
national banking industry in the past several years, and additional changes have
been proposed.  Our  operations  may be affected by legislative  changes and the
policies of various  regulatory  authorities.  We cannot predict the effect that
fiscal  or  monetary  policies,  economic  control,  or  new  federal  or  state
legislation may have on our business and earnings in the future.

Gramm-Leach-Bliley Act

         On November 4, 1999, the U.S. Senate and House of Representatives  each
passed the  Gramm-Leach-Bliley  Act,  previously known as the Financial Services
Modernization  Act of 1999. The Act was signed into law by President  Clinton on
November 12, 1999. Among other things, the Act repeals the restrictions on banks
affiliating  with  securities  firms  contained  in  sections  20  and 32 of the
Glass-Steagall  Act. The Act also permits bank holding  companies to engage in a
statutorily  provided  list of financial  activities,  including  insurance  and
securities  underwriting and agency activities,  merchant banking, and insurance
company portfolio investment activities. The Act also authorizes activities that
are "complementary" to financial activities.

         The Act is intended to grant to  community  banks  certain  powers as a
matter of right that larger  institutions  have  accumulated on an ad hoc basis.
Nevertheless,  the  Act  may  have  the  result  of  increasing  the  amount  of
competition that we face from larger  institutions and other types of companies.
In fact, it is not possible to predict the full effect that the Act will have on
us. From time to time other changes are proposed to laws  affecting the national
banking industry, and these changes could have a material effect on our business
and  prospects.  We cannot predict the nature or the extent of the effect on our
business and earnings of fiscal or monetary policies,  economic controls, or new
federal or state legislation.

Coastal Banking Company

         The  company  owns  the  outstanding  capital  stock of the  bank,  and
therefore it is considered  to be a bank holding  company under the federal Bank
Holding  Company  Act of 1956  and the  South  Carolina  Banking  and  Branching
Efficiency Act.

         The Bank Holding  Company Act. Under the Bank Holding  Company Act, the
company is subject to periodic  examination by the Federal  Reserve and required
to file periodic  reports of its operations and any additional  information that
the Federal Reserve may require.  Our activities at the bank and holding company
level are limited to:

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<PAGE>

o             banking and managing or controlling banks;
o             furnishing services to or performing services for its
              subsidiaries; and
o             engaging in other  activities that the Federal Reserve  determines
              to be so closely  related to banking and  managing or  controlling
              banks as to be a proper incident thereto.

         Investments,  Control, and Activities. With certain limited exceptions,
the Bank Holding  Company Act requires every bank holding  company to obtain the
prior approval of the Federal Reserve before:

o             acquiring substantially all the assets of any bank;
o             acquiring  direct or indirect  ownership  or control of any voting
              shares  of any  bank if after  the  acquisition  it  would  own or
              control more than 5% of the voting  shares of such bank (unless it
              already owns or controls the majority of such shares); or
o             merging or consolidating with another bank holding company.

         In  addition,  and  subject to  certain  exceptions,  the Bank  Holding
Company  Act and the  Change in Bank  Control  Act,  together  with  regulations
thereunder,  require  Federal  Reserve  approval  prior to any person or company
acquiring "control" of a bank holding company.  Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of a bank holding company. Control is rebuttably presumed to exist if
a person  acquires  10% or more,  but less  than  25%,  of any  class of  voting
securities and either the company has registered  securities under Section 12 of
the Securities Exchange Act of 1934 or no other person owns a greater percentage
of that  class of  voting  securities  immediately  after the  transaction.  The
company's common stock is registered under the Securities  Exchange Act of 1934.
The  regulations  provide a procedure  for challenge of the  rebuttable  control
presumption.

         Under the Bank Holding Company Act, a bank holding company is generally
prohibited  from  engaging in, or acquiring  direct or indirect  control of more
than 5% of the voting  shares of any company  engaged in  nonbanking  activities
unless the  Federal  Reserve  Board,  by order or  regulation,  has found  those
activities to be so closely related to banking or managing or controlling  banks
as to be a proper  incident  thereto.  Some of the  activities  that the Federal
Reserve  Board  has  determined  by  regulation  to be proper  incidents  to the
business of a bank holding company include:

o        making or servicing  loans and certain types of leases;
o        engaging in certain insurance  and  discount  brokerage activities;
o        performing  certain data processing  services;
o        acting  in  certain  circumstances  as a  fiduciary  or investment or
         financial adviser;
o        owning savings associations; and
o        making investments in certain corporations or projects designed
         primarily to promote community welfare.

         The Federal Reserve Board imposes  certain capital  requirements on the
company under the Bank Holding Company Act,  including a minimum  leverage ratio
and a minimum  ratio of  "qualifying"  capital to  risk-weighted  assets.  These
requirements  are described  below under "Capital  Regulations."  Subject to its
capital  requirements  and certain  other  restrictions,  the company is able to
borrow money to make a capital  contribution to the bank, and these loans may be
repaid  from  dividends  paid from the bank to the  company.  Our ability to pay
dividends  will be subject to  regulatory  restrictions  as  described  below in
"Greenville  First Bank - Dividends."  The company is also able to raise capital
for  contribution  to the bank by issuing  securities  without having to receive
regulatory  approval,  subject to compliance  with federal and state  securities
laws.

         Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
Board policy,  the company is expected to act as a source of financial  strength
to the bank and to commit  resources  to support  the bank in  circumstances  in
which the company might not otherwise do so. Under the Bank Holding Company Act,
the Federal  Reserve  Board may require a bank holding  company to terminate any
activity or  relinquish  control of a nonbank  subsidiary,  other than a nonbank
subsidiary of a bank, upon the Federal Reserve Board's  determination  that such
activity or control  constitutes  a serious risk to the  financial  soundness or
stability of any subsidiary depository  institution of the bank holding company.
Further,  federal bank  regulatory  authorities  have  additional  discretion to
require  a bank  holding  company  to  divest  itself  of

                                       7
<PAGE>

any bank or nonbank subsidiary if the agency determines that divestiture may aid
the depository institution's financial condition.

         South Carolina State Regulation.  As a bank holding company  registered
under the South Carolina Banking and Branching Efficiency Act, we are subject to
limitations  on sale or merger and to regulation by the South  Carolina Board of
Financial Institutions. Prior to acquiring the capital stock of a national bank,
we are not required to obtain the approval of the Board, but we must notify them
at least 15 days prior to doing so. We must receive the Board's  approval  prior
to engaging in the acquisition of banking or nonbanking  institutions or assets,
and we must file periodic  reports with respect to our  financial  condition and
operations,  management,  and intercompany relationships between the company and
its subsidiaries.

Lowcountry National Bank

         Lowcountry National Bank will operate as a national banking association
incorporated  under the laws of the United States and subject to  examination by
the Office of the Comptroller of the Currency.  Deposits in Lowcountry  National
Bank will be  insured  by the FDIC up to a maximum  amount,  which is  generally
$100,000 per depositor subject to aggregation rules.

         The  Office  of the  Comptroller  of the  Currency  and the  FDIC  will
regulate  or  monitor  virtually  all  areas  of  Lowcountry  National  Bank  's
operations, including:

o        security devices and procedures;
o        adequacy of capitalization and loss reserves;
o        loans;
o        investments;
o        borrowings;
o        deposits;
o        mergers;
o        issuances of securities;
o        payment of dividends;
o        interest rates payable on deposits;
o        interest rates or fees chargeable on loans;
o        establishment of branches;
o        corporate reorganizations;
o        maintenance of books and records; and
o        adequacy of staff training to carry on safe lending and deposit
         gathering practices.

         The  Office of the  Comptroller  of the  Currency  requires  Lowcountry
National Bank to maintain  specified  capital ratios and imposes  limitations on
Lowcountry  National Bank's aggregate  investment in real estate, bank premises,
and furniture and fixtures.  The Office of the  Comptroller of the Currency will
also require Lowcountry National Bank to prepare quarterly reports on Lowcountry
National  Bank's  financial  condition  and to  conduct  an annual  audit of its
financial affairs in compliance with its minimum standards and procedures.

         Under the FDIC Improvement Act, all insured  institutions  must undergo
regular on site  examinations by their appropriate  banking agency.  The cost of
examinations  of  insured  depository  institutions  and any  affiliates  may be
assessed by the appropriate  agency against each  institution or affiliate as it
deems  necessary or  appropriate.  Insured  institutions  are required to submit
annual reports to the FDIC,  their federal  regulatory  agency,  and their state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository  institutions to provide supplemental disclosure
of the  estimated  fair market  value of assets and  liabilities,  to the extent
feasible and practicable,  in any balance sheet, financial statement,  report of
condition or any other report of any insured  depository  institution.  The FDIC
Improvement  Act also  requires  the  federal  banking  regulatory  agencies  to
prescribe, by regulation,

                                       8

<PAGE>

standards for all insured  depository  institutions  and depository  institution
holding companies relating, among other things, to the following:

o        internal controls;
o        information systems and audit systems;
o        loan documentation;
o        credit underwriting;
o        interest rate risk exposure; and
o        asset quality.

         National banks and their holding companies which have been chartered or
registered  or have  undergone a change in control  within the past two years or
which have been deemed by the Office of the  Comptroller  of the Currency or the
Federal  Reserve Board to be troubled  institutions  must give the Office of the
Comptroller  of the  Currency or the Federal  Reserve  Board  thirty days' prior
notice of the appointment of any senior  executive  officer or director.  Within
the 30 day period,  the Office of the Comptroller of the Currency or the Federal
Reserve  Board,  as the  case  may  be,  may  approve  or  disapprove  any  such
appointment.

         Deposit  Insurance.  The FDIC  establishes  rates  for the  payment  of
premiums  by  federally  insured  banks and thrifts  for  deposit  insurance.  A
separate  Bank  Insurance  Fund  and  Savings  Association  Insurance  Fund  are
maintained for commercial banks and savings associations with insurance premiums
from the industry  used to offset losses from  insurance  payouts when banks and
thrifts  fail. In 1993,  the FDIC adopted a rule which  establishes a risk-based
deposit insurance premium system for all insured depository institutions.  Under
this system, until mid-1995 depository  institutions paid to Bank Insurance Fund
or Savings  Association  Insurance  Fund from $0.23 to $0.31 per $100 of insured
deposits depending on its capital levels and risk profile,  as determined by its
primary federal  regulator on a semiannual  basis.  Once the Bank Insurance Fund
reached  its  legally  mandated  reserve  ratio in  mid-1995,  the FDIC  lowered
premiums  for  well-capitalized   banks,  eventually  eliminating  premiums  for
well-capitalized banks, with a minimum semiannual assessment of $1,000. However,
in 1996  Congress  enacted  the  Deposit  Insurance  Funds  Act of  1996,  which
eliminated  even  this  minimum  assessment.  It also  separated  the  Financial
Corporation  assessment  to service the  interest on its bond  obligations.  The
amount assessed on individual institutions,  including Lowcountry National Bank,
by  Financial  Corporation  assessment  is in  addition  to the amount  paid for
deposit  insurance  according  to the  risk-related  assessment  rate  schedule.
Increases in deposit insurance premiums or changes in risk  classification  will
increase  Lowcountry  National  Bank's cost of funds,  and we may not be able to
pass these costs on to our customers.

         Transactions  With  Affiliates and Insiders.  Lowcountry  National Bank
will be subject to the  provisions  of Section 23A of the Federal  Reserve  Act,
which  places  limits on the  amount  of loans or  extensions  of credit  to, or
investments in, or certain other transactions with, affiliates and on the amount
of advances to third parties  collateralized by the securities or obligations of
affiliates.  The aggregate of all covered  transactions is limited in amount, as
to any one affiliate,  to 10% of Lowcountry  National Bank's capital and surplus
and, as to all affiliates combined, to 20% of Lowcountry National Bank's capital
and surplus.  Furthermore,  within the foregoing  limitations as to amount, each
covered transaction must meet specified collateral  requirements.  Compliance is
also  required  with  certain  provisions  designed  to avoid the  taking of low
quality assets.

         Lowcountry  National  Bank will also be  subject to the  provisions  of
Section 23B of the Federal Reserve Act which,  among other things,  prohibits an
institution from engaging in certain transactions with certain affiliates unless
the transactions are on terms  substantially  the same, or at least as favorable
to such  institution or its  subsidiaries,  as those  prevailing at the time for
comparable transactions with nonaffiliated  companies.  Lowcountry National Bank
will be subject to certain  restrictions  on  extensions  of credit to executive
officers,   directors,   certain  principal  shareholders,   and  their  related
interests.  Such extensions of credit (i) must be made on substantially the same
terms, including interest rates and collateral,  as those prevailing at the time
for  comparable  transactions  with third parties and (ii) must not involve more
than the normal risk of repayment or present other unfavorable features.

         Dividends.  A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided  profits then on hand,  after  deducting
expenses,  including reserves for losses and bad debts. In addition,  a national
bank is

                                       9

<PAGE>

prohibited  from  declaring a dividend  on its shares of common  stock until its
surplus equals its stated capital,  unless there has been transferred to surplus
no less  than  one-tenth  of  Lowcountry  National  Bank's  net  profits  of the
preceding two consecutive half-year periods (in the case of an annual dividend).
The approval of the Office of the Comptroller of the Currency is required if the
total of all dividends  declared by a national bank in any calendar year exceeds
the  total of its net  profits  for that year  combined  with its  retained  net
profits for the preceding two years, less any required transfers to surplus.

         Branching.  National  banks are  required by the  National  Bank Act to
adhere to branch office banking laws  applicable to state banks in the states in
which they are located.  Under current South Carolina law,  Lowcountry  National
Bank may open branch offices  throughout  South Carolina with the prior approval
of the  Office of the  Comptroller  of the  Currency.  In  addition,  with prior
regulatory  approval,  Lowcountry National Bank will be able to acquire existing
banking operations in South Carolina. Furthermore,  federal legislation has been
passed  which  permits  interstate  branching.   The  law  permits  out-of-state
acquisitions by bank holding companies, interstate branching by banks if allowed
by state law, and interstate merging by banks.

         Community  Reinvestment  Act. The Community  Reinvestment  Act requires
that, in connection  with  examinations of financial  institutions  within their
respective  jurisdictions,  the Federal Reserve,  the FDIC, or the Office of the
Comptroller  of the  Currency,  shall  evaluate  the  record  of each  financial
institution  in meeting the credit needs of its local  community,  including low
and  moderate  income  neighborhoods.  These  factors  are  also  considered  in
evaluating mergers, acquisitions, and applications to open a branch or facility.
Failure to adequately meet these criteria could impose  additional  requirements
and limitations on Lowcountry National Bank.

         Other  Regulations.  Interest and other charges collected or contracted
for by Lowcountry National Bank are subject to state usury laws and federal laws
concerning  interest rates.  Lowcountry National Bank's loan operations are also
subject to federal laws applicable to credit transactions, such as:

o          the federal  Truth-In-Lending  Act,  governing  disclosures of credit
           terms to consumer  borrowers;
o          the 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;
o          the Equal Credit Opportunity Act, prohibiting discrimination on the
           basis of race, creed or other prohibited factors in extending credit;
o          the Fair Credit Reporting Act of 1978, governing the use and
           provision of information to credit reporting agencies;
o          the Fair Debt Collection Act, governing the manner in which consumer
           debts may be collected by collection agencies; and
o          the rules and  regulations  of the  various  federal  agencies
           charged with the  responsibility  of implementing such federal laws.

The deposit operations of Lowcountry National Bank also are subject to:

o          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
o          the  Electronic  Funds  Transfer  Act and  Regulation E issued by the
           Federal Reserve Board to implement that act, which governs  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  Regulations.  The federal  bank  regulatory  authorities  have
adopted  risk-based capital guidelines for banks and bank holding companies that
are  designed  to  make  regulatory  capital   requirements  more  sensitive  to
differences in risk profiles among banks and bank holding  companies and account
for  off-balance  sheet items.  The  guidelines  are  minimums,  and the federal
regulators  have  noted  that  banks and bank  holding  companies  contemplating
significant  expansion

                                       10

<PAGE>

programs  should not allow expansion to diminish their capital ratios and should
maintain  ratios in excess of the  minimums.  We have not  received  any  notice
indicating  that either the Company or  Lowcountry  National  Bank is subject to
higher capital  requirements.  The current  guidelines  require all bank holding
companies and  federally-regulated  banks to maintain a minimum risk-based total
capital  ratio equal to 8%, of which at least 4% must be Tier 1 capital.  Tier 1
capital includes common  shareholders'  equity,  qualifying  perpetual preferred
stock, and minority  interests in equity accounts of consolidated  subsidiaries,
but excludes  goodwill and most other intangibles and excludes the allowance for
loan and lease losses. Tier 2 capital includes the excess of any preferred stock
not included in Tier 1 capital, mandatory convertible securities, hybrid capital
instruments,  subordinated  debt  and  intermediate  term-preferred  stock,  and
general reserves for loan and lease losses up to 1.25% of risk-weighted assets.

         Under these guidelines,  banks' and bank holding  companies' assets are
given  risk-weights of 0%, 20%, 50%, or 100%. In addition,  certain  off-balance
sheet  items  are given  credit  conversion  factors  to  convert  them to asset
equivalent  amounts  to  which  an  appropriate   risk-weight   applies.   These
computations result in the total  risk-weighted  assets. Most loans are assigned
to the 100% risk  category,  except for first  mortgage  loans fully  secured by
residential property and, under certain circumstances,  residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category,  except for municipal or state revenue bonds,  which have a
50% rating,  and direct  obligations of or obligations  guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.

         The  federal  bank  regulatory  authorities  have  also  implemented  a
leverage  ratio,  which is equal to Tier 1 capital  as a  percentage  of average
total  assets less  intangibles,  to be used as a supplement  to the  risk-based
guidelines.  The  principal  objective  of the  leverage  ratio  is to  place  a
constraint  on the maximum  degree to which a bank holding  company may leverage
its equity  capital  base.  The minimum  required  leverage  ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional
cushion of at least 100 to 200 basis points.

         The FDIC  Improvement  Act established a new  capital-based  regulatory
scheme designed to promote early  intervention for troubled banks which requires
the FDIC to choose the least  expensive  resolution  of bank  failures.  The new
capital-based  regulatory  framework contains five categories of compliance with
regulatory  capital  requirements,  including  "well  capitalized,"  "adequately
capitalized,"   "undercapitalized,"    "significantly   undercapitalized,"   and
"critically undercapitalized." To qualify as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total  risk-based  capital ratio of no less than 10%, and
Lowcountry  National  Bank  must not be under any  order or  directive  from the
appropriate  regulatory  agency to meet and maintain a specific  capital  level.
Initially, we will qualify as "well capitalized."

     Under the FDIC Improvement Act regulations, the applicable agency can treat
an institution as if it were in the next lower category if the agency determines
(after  notice and an  opportunity  for hearing) that the  institution  is in an
unsafe or unsound condition or is engaging in an unsafe or unsound practice. The
degree of  regulatory  scrutiny of a financial  institution  increases,  and the
permissible  activities  of the  institution  decreases,  as it  moves  downward
through the  capital  categories.  Institutions  that fall into one of the three
undercapitalized categories may be required to do some or all of the following:

o        submit a capital restoration plan;
o        raise additional capital;
o        restrict their growth, deposit interest rates, and other activities;
o        improve their management;
o        eliminate management fees; or
o        divest themselves of all or a part of their operations.

Bank holding companies controlling financial  institutions can be called upon to
boost the  institutions'  capital and to partially  guarantee the  institutions'
performance under their capital restoration plans.

         These capital guidelines can affect us in several ways. If we grow at a
rapid pace, our capital may be depleted too quickly, and a capital infusion from
the holding  company  may be  necessary  which  could  impact our ability to pay

                                       11
<PAGE>

dividends.  Our capital levels will  initially be more than  adequate;  however,
rapid growth, poor loan portfolio performance,  poor earnings performance,  or a
combination  of these factors could change our capital  position in a relatively
short period of time.

         The FDIC  Improvement  Act requires the federal  banking  regulators to
revise the risk-based capital standards to provide for explicit consideration of
interest rate risk, concentration of credit risk, and the risks of untraditional
activities. We are uncertain what effect these regulations would have.

         Failure to meet these capital requirements would mean that a bank would
be  required  to  develop  and file a plan  with  its  primary  federal  banking
regulator  describing the means and a schedule for achieving the minimum capital
requirements.  In addition,  such a bank would generally not receive  regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger  application,  unless Lowcountry  National Bank could
demonstrate  a  reasonable  plan  to  meet  the  capital  requirement  within  a
reasonable period of time.

         Enforcement  Powers.  The  Financial  Institution  Report  Recovery and
Enforcement  Act expanded and increased civil and criminal  penalties  available
for use by the federal regulatory  agencies against depository  institutions and
certain   "institution-affiliated   parties."   Institution-affiliated   parties
primarily include management,  employees, and agents of a financial institution,
as well as  independent  contractors  and  consultants  such  as  attorneys  and
accountants  and  others  who  participate  in  the  conduct  of  the  financial
institution's affairs. These practices can include the failure of an institution
to timely file required reports or the filing of false or misleading information
or the  submission  of  inaccurate  reports.  Civil  penalties may be as high as
$1,000,000 a day for such  violations.  Criminal  penalties  for some  financial
institution crimes have been increased to 20 years. In addition,  regulators are
provided  with  greater  flexibility  to commence  enforcement  actions  against
institutions and  institution-affiliated  parties.  Possible enforcement actions
include the termination of deposit  insurance.  Furthermore,  banking  agencies'
power to issue  cease-and-desist  orders were  expanded.  Such orders may, among
other things,  require  affirmative  action to correct any harm resulting from a
violation or practice, including restitution, reimbursement,  indemnification or
guarantees against loss. A financial institution may also be ordered to restrict
its growth, dispose of certain assets, rescind agreements or contracts,  or take
other actions as determined by the ordering agency to be appropriate.

         Effect of Governmental Monetary Policies.  Our earnings are affected by
domestic economic  conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had,  and are  likely  to  continue  to have,  an  important  impact on the
operating  results of commercial  banks through its power to implement  national
monetary  policy in order,  among other  things,  to curb  inflation or combat a
recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans,  investments and deposits through its open market
operations in United States government  securities and through its regulation of
the discount  rate on  borrowings  of member banks and the reserve  requirements
against member bank deposits. It is not possible to predict the nature or impact
of future changes in monetary and fiscal policies.


                                       12
<PAGE>



Item 2.    Description of Property.
----------------------------------

         Lowcountry National Bank's main office will be located at 36 Sea Island
Parkway in Beaufort,  South Carolina. We have already purchased this property at
a total cost of $900,000. We are renovating a 5,400 square foot facility at this
location at a projected  cost of $816,000,  and we expect to open this office by
April, 2000.

Item 3.    Legal Proceedings.
-----------------------------
         None.

Item 4.    Submission of Matters to a Vote of Security Holders.
--------------------------------------------------------------

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.

Item 5.    Market for Common Equity and Related Stockholder Matters.
-------------------------------------------------------------------

         Since our public  offering on November  1, 1999,  our common  stock has
been quoted on the OTC Bulletin  Board under the symbol  "CBCO." Our articles of
incorporation  authorize us to issue up to 10,000,000 shares of common stock, of
which 948,281 shares, for a total of $9,482,810, were sold in the initial public
offering and are  outstanding as of March 1, 2000. We have 864  shareholders  of
record.  To date,  we have not paid  cash  dividends  on our  common  stock.  We
currently intend to retain earnings to support  operations and finance expansion
and therefore do not anticipate paying cash dividends in the foreseeable future.

         The following table sets forth the high and low sales price information
as quoted on the OTC Bulletin Board during the period indicated since our common
stock began trading publicly on November 2, 1999.

                                                           Stock Price
                                                           -----------
                                                      High             Low

1999
----
Fourth Quarter                                        $10.50           $8.75

         All  outstanding  shares  of our  common  stock are  entitled  to share
equally in dividends  from funds  legally  available  therefor,  when, as and if
declared by the Board of Directors.

         (b) Pursuant to Commission  Rule 463, we are obligated to report on the
use of proceeds from our initial public offering. The information provided below
is given as of December 31, 1999.

                  (1)      Our  registration  statement on Form SB-2 (File No.
                           333-86371) was declared  effective by the Commission
                           on November 1, 1999.

                  (2)      The offering commenced on November 1, 1999.

                  (3)      The offering closed on November 4, 1999 upon the sale
                           of 870,000 shares we had registered.

                  (4)      (i)      On  December  2,  1999,  the  underwiter
                                    exercised  its  over-allotment  option and
                                    purchased  an  additional 78,281 securities
                                    that we had registered.

                           (ii)     Edgar Norris & Co., Inc., served as
                                    underwriter for the offering.

                           (iii)    Common stock was the only class of
                                    securities registered in the offering.


                                       13
<PAGE>


                           (iv)     1,202,000   shares  of  common   stock  were
                                    registered,  of which,  948,281  shares were
                                    sold. Warrants to purchase 202,000 shares of
                                    our  common  stock for $10.00 per share were
                                    registered  in the  offering.  We granted to
                                    our organizers  warrants to purchase a total
                                    of  202,000  shares  of  common  stock.  The
                                    warrants  granted  to  our  organizers  were
                                    based on shares they purchased.

                           (v)      We   incurred   approximately   $694,636  in
                                    expenses  (including  sales  commissions) in
                                    connection    with    the    issuance    and
                                    distribution  of  the  common  stock  in the
                                    offering.  All of these  expenses  were paid
                                    directly   or   indirectly   to  persons  or
                                    entities  other  than  directors,  officers,
                                    persons   owning   10%   or   more   of  our
                                    securities, or our affiliates.

                           (vi)     The net proceeds we received after deducting
                                    the total expenses described above were
                                    $8,788,173.

                           (vii)    Through  December 31, 1999,  $989,172 of the
                                    net proceeds of the  offering  were invested
                                    in  cash and  $121,571   was  used   to  pay
                                    organization costs. None of the net proceeds
                                    have been paid directly or indirectly to our
                                    directors,  officers,  persons owning 10% or
                                    more of our securities,  and our affiliates,
                                    except for an aggregate of $104,115  paid as
                                    salaries to our officers and the officers of
                                    Lowcountry National Bank.

                           (viii)   The use of proceeds described above does not
                                    represent a material  change from the use of
                                    proceeds disclosed in the prospectus for the
                                    offering.

                                       14
<PAGE>


Item 6.  Management's Discussion and Analysis of Results of Operation
---------------------------------------------------------------------

                             Selected Financial Data

The  following  selected  financial  data  for the  period  September  29,  1998
(inception)  to December 31, 1999 is derived from the financial  statements  and
other data of the Company. The financial statements for the period September 29,
1998  (inception)  to December 31, 1999,  were audited by  Tourville,  Simpson &
Caskey, L.L.P,  independent auditors. The selected financial data should be read
in  conjunction  with the  financial  statements  of the Company,  including the
accompanying notes, included elsewhere herein.

(Dollars in thousands)                                                    1999

Income Statement Data:

     Interest income                                               $        62

     Interest expense                                                       11

     Net interest income                                                    51

     Provision for loan losses                                               -

     Net interest income after provision for loan losses                    51

     Net securities gains (losses)                                           -

     Noninterest income                                                      -

     Noninterest expense                                                   284

     Income (loss) before income taxes                                    (233)

     Income tax expense (benefit)                                            -

     Net income (loss)                                             $      (233)

Balance Sheet Data:

     Assets                                                        $     8,528

     Earning assets                                                      6,527

     Securities (1)                                                      6,527

     Shareholders' equity                                                8,527
----------------------

All securities are available for sale and are stated at fair value.


                                       15
<PAGE>


                                     General

The Company's principal activities to date have related to its organization, the
conducting of its initial public offering, the pursuit of approvals from the OCC
for its  application  to charter the Bank, and the pursuit of approvals from the
FDIC for its application for insurance of the deposits of the Bank. On September
29, 1999, the Company received  preliminary approval from the OCC to charter the
Bank.  On November 2, 1999,  the FDIC  granted  preliminary  approval of deposit
insurance  application  for the Bank.  We expect  the Bank to open for  business
during the  second  quarter of 2000.  We  completed  our  initial  public  stock
offering on December 2, 1999.  The offering  resulted in the issuance of 948,281
shares  of  the  Company's  common  stock.   Proceeds  from  the  offering  were
$9,482,810, less expenses associated with the offering totaling $694,637 through
December 31, 1999.

At December 31, 1999, the Company had total assets of $8,527,583,  consisting of
securities  available-for-sale  of  $6,527,012,  cash of $989,172,  property and
equipment of $972,042, and other assets of $39,357.

The Company's  liabilities at December 31, 1999 were $100,  consisting solely of
notes payable  totaling  this amount.  The Company had  shareholders'  equity of
$8,527,483 at December 31, 1999.

The  Company  had a net loss of  $233,280  for the  period  September  29,  1998
(inception) to December 31, 1999.  These losses resulted from expenses  incurred
in connection with activities related to the organization of the Company and the
Bank. These activities included (without  limitation) the preparation and filing
of an application  with the OCC to charter the Bank, the  preparation and filing
of an application with the FDIC to obtain insurance of the deposits of the Bank,
responding to questions and providing additional  information to the OCC and the
FDIC in connection  with the application  process,  the selling of the Company's
common stock in the offering,  meetings and discussions among various organizers
regarding application  information,  target markets, and capitalization  issues,
and planning and organizing for the opening of the Bank.  Because the Company is
in the  organizational  stage,  it has had no operations  from which to generate
revenues. However, funds from the stock sale were invested in federal funds sold
and investment securities.

Since the inception of the Company,  all activities have consisted of organizing
the Company and Bank, obtaining all required regulatory  approvals,  and selling
stock  subscriptions.  All operations have been funded through the initial stock
purchases by the organizers and subsequently from the stock offering.

The  Company   intends  to  devote  the  next  several  months   completing  the
organization  of the Bank,  and  organizing  and  developing  the other business
activities of the Company.  These organizational  activities will include,  with
respect to the Bank,  completing  all required steps for final approval from the
OCC for the bank to open for business, hiring qualified personnel to work in the
various offices of the Bank, conducting public relations activities on behalf of
the Bank, developing prospective business contacts for the Bank and the Company,
and taking other actions  necessary for a successful bank opening.  With respect
to the Company,  these  activities  include the pursuit of approval from the OCC
seeking  approval  to become a bank  holding  company  by  acquiring  all of the
capital stock to be issued by the Bank.

The Company,  through the Bank,  will offer a full range of  commercial  banking
services to  individuals,  and small business  customers in its primary  service
area.  These  services  will  include  personal  and  business  loans,  checking
accounts,  savings,  and time  certificates of deposit.  The loans,  transaction
accounts,  and time certificates will be at rates competitive with those offered
in the Bank's  primary  service  area.  Customer  deposits with the Bank will be
insured to the maximum extent provided by law through the FDIC. The Bank intends
to offer night depository and bank-by-mail services and to sell travelers checks
(issued  by an  independent  entity)  and  cashiers  checks.  The Bank  does not
anticipate  offering  trust and  fiduciary  services  initially and will rely on
trust and  fiduciary  services  offered by  correspondent  banks  until the Bank
determines that it is profitable to offer such services directly.

Initially,  the Bank anticipates  deriving its income  principally from interest
charged on loans and, to a lesser extent,  from interest  earned on investments,
from fees received in connection with the  origination of loans,  and from other
services.  The Bank's principal  expenses are anticipated to be interest expense
on deposits and operating expenses.


                                       16
<PAGE>


As a result of the  offering,  management  believes the Company and the Bank can
satisfy  future  cash  requirements  indefinitely,  and  will  not have to raise
additional  capital  during  the first  twelve  months of  operations.  The Bank
intends to accept  deposits and make loans and investments in accordance with an
asset and liability management  framework that emphasizes  appropriate levels of
liquidity and interest rate risk.

Currently,  the Company has six employees and expects this number to increase to
approximately nine by the end of March 2000.

                              Results of Operations

For the period September 29, 1998 (inception) to December 31, 1999

The net loss for the period  September 29, 1998 (inception) to December 31, 1999
was $233,280.  Total interest income for the period totaled $61,870. The primary
component  of this  income was from  interest on  securities  available-for-sale
which totaled $49,243. Interest on federal funds totaled $12,627 for the period.
This  income  was  offset by  expenses  totaling  $295,150.  This was  comprised
primarily of salaries  and benefits of $116,551 and other  expenses of $162,260.
Other  expenses  included the expenses  associated  with forming the Company and
Bank such as consulting, application and filing fees.


                                       17
<PAGE>

                          COASTAL BANKING COMPANY, INC.
            Management's Discussion and Analysis or Plan of Operation

                                 Earning Assets

All of  the  Company's  securities  were  classified  as  available-for-sale  at
December  31,  1999.  The  following  table  sets  forth  the book  value of the
securities held by the Company at December 31, 1999.

Book Value of Securities

                                                               1999
                                                          ------------
(Dollars in thousands)

U.S. government agencies                                    $6,527
     Total securities                                       $6,527
                                                             =====


The following  table sets forth the scheduled  maturities  and average yields of
securities held at December 31, 1999.

Investment Securities Maturity Distribution and Yields

                                         Within One
                                            Year                 Total
                                     -------------------- ---------------------
                                       Amount    Yield      Amount     Yield
                                     -------------------- ---------------------
(Dollars in thousands)

U.S. government agencies             $    6,527    5.52%  $     6,527    5.52%
                                          -----                 -----
     Total                           $    6,527    5.52%  $     6,527    5.52%
                                          =====                 =====


                                     Capital

The  Company,  through an  underwriter,  offered and sold to the general  public
870,000 shares of $.01 par value common stock at an offering price of $10.00 per
share. The underwriter also exercised its over-allotment option and purchased an
additional  78,281 shares of common stock at $10.00 per share, less its discount
of $.70 per share.  The total  aggregate  amount  raised  from the public  stock
offering was $9,482,810.  Expenses  associated  with the stock offering  totaled
$694,637 through December 31, 1999 and have been netted against paid in capital.



                                       18
<PAGE>

Item 7.  Financial Statements
-----------------------------



                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

                          Index to Financial Statements

Independent Accountants' Report                                             F-2

Financial Statements:
  Balance Sheet as of December 31, 1999                                     F-3

  Statement of Operations and Accumulated Deficit For the Period

     September 29, 1998 (Inception) to December 31, 1999                    F-4

  Statement of Changes in Stockholders' Equity and Comprehensive Income

     For the Period September 29, 1998 (Inception) to December 31, 1999     F-5

  Statement of Cash Flows For the Period September 29, 1998 (Inception)
     to December 31, 1999                                                   F-6

Notes to Financial Statements                                          F-7-F-11



                                      F-1
<PAGE>




                         INDEPENDENT ACCOUNTANTS' REPORT

The Board of Directors
Coastal Banking Company, Inc.
Beaufort, South Carolina

We have audited the accompanying balance sheet of Coastal Banking Company, Inc.,
(a  Company  in the  Development  Stage) as of  December  31,  1999 and  related
statements of  operations  and  accumulated  deficit,  stockholders'  equity and
comprehensive  income and cash flows for the period from inception September 29,
1998 to December 31, 1999. These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Coastal Banking Company, Inc.,
(a Company in the Development Stage) as of December 31, 1999, and the results of
its operations  and its cash flows for the period from  inception  September 29,
1998 to December  31, 1999 in  conformity  with  generally  accepted  accounting
principles.

/s/ Tourville, Simpson & Caskey, L. L. P.
Columbia, South Carolina
March 9, 2000


                                      F-2

<PAGE>


<TABLE>
<CAPTION>

                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

                                  Balance Sheet

                                December 31, 1999



<S>                                                                                  <C>
Assets

Cash                                                                                 $     989,172
Securities available-for-sale                                                            6,527,012
Premises and equipment                                                                     972,042
Accrued interest receivable                                                                 25,236
Other assets                                                                                14,121
                                                                                     -------------
    Total assets                                                                     $   8,527,583
                                                                                     =============

Liabilities
   Borrowings                                                                        $         100
                                                                                     -------------

Stockholders' Equity
   Preferred stock, par value $.01 per share; 10,000,000 shares authorized
       and unissued                                                                              -
   Common stock, par value $.01 per share; 10,000,000 shares authorized;
       948,281 shares issued and outstanding                                                 9,483
   Paid-in-capital                                                                       8,778,690
   Accumulated other comprehensive income (loss)                                           (27,410)
   Deficit accumulated in the development stage                                           (233,280)
                                                                                     -------------
       Total stockholders' equity                                                        8,527,483
                                                                                     -------------
       Total liabilities and stockholders' equity                                    $   8,527,583
                                                                                     =============

</TABLE>



The accompanying notes are an integral part of these financial statements.


                                      F-3
<PAGE>

                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

                 Statement of Operations and Accumulated Deficit
       For the Period September 29, 1998 (Inception) to December 31, 1999

Income:
   Interest on securities, taxable                             $      49,243
   Interest on federal funds sold                                     12,627
                                                               -------------
      Total income                                                    61,870
                                                               -------------

Expenses:
   Interest                                                           10,689
   Salaries and employee benefits                                    116,551
   Occupancy expense                                                   5,650
   Other expenses                                                    162,260
                                                               -------------
      Total expenses                                                 295,150
                                                               -------------
Net loss and accumulated deficit                               $    (233,280)
                                                               =============



The accompanying notes are an integral part of these financial statements.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

      Statement of Changes in Stockholders' Equity and Comprehensive Income
       For the Period September 29, 1998 (Inception) to December 31, 1999


                                                                          Accumulated     Deficit
                                    Common Stock                             Other       Accumulated
                               ------------------------       Paid In     Comprehensive  In the Develop
                                 Shares          Amount       Capital       Income(Loss) -ment Stage        Total
                               ----------   ------------   -------------  -------------- --------------   ---------


<S>                              <C>       <C>          <C>            <C>            <C>             <C>
Issuance of common stock            948,281   $   9,483   $ 9,473,327    $         -    $          -    $ 9,482,810

Costs of common stock issuance                               (694,637)                                     (694,637)

Net loss for the period
   September 29, 1998
     to December 31, 1999                                                                   (233,280)      (233,280)

Other comprehensive income,
   net of tax of $14,122                                                     (27,410)                       (27,410)
                                                                                                        -----------
Comprehensive income                                                                                       (260,690)
                                 ----------   ---------   -----------    -----------    ------------    -----------
Balance, December 31, 1999          948,281   $   9,483   $ 8,778,690    $   (27,410)   $   (233,280)   $ 8,527,483
                                 ==========   =========   ===========    ===========    ============    ===========


</TABLE>


The accompanying notes are an integral part of these financial statements.


                                      F-5
<PAGE>

                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

       For the Period September 29, 1998 (Inception) to December 31, 1999

Cash flows from operating activities--
   Net loss and accumulated deficit                            $    (233,280)
   Amortization less accretion on securities                         (24,007)
   Increase in interest receivable                                   (25,236)
   Increase in other assets                                                -
                                                               -------------
        Cash used by operating activities                           (282,523)
                                                               -------------

Cash flows from investing activities--
      Purchases of securities available for sale                  (6,544,536)
      Purchases of premises and equipment                           (972,042)
                                                               -------------
        Cash used by investing activities                         (7,516,578)
                                                               -------------

Cash flows from financing activities--

   Proceeds from borrowings                                              100
   Issuance of common stock                                        9,482,810
   Costs of common stock issuance                                   (694,637)
                                                               -------------
        Cash provided by financing activities                      8,788,273
                                                               -------------
Cash balance at end of period                                  $     989,172
                                                               =============




The accompanying notes are an integral part of these financial statements.


                                      F-6

<PAGE>


                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

                          Notes to Financial Statements

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization  - Coastal  Banking  Company,  Inc.  (the  Company)  was  formed to
organize  and own all of the  capital  stock of  Lowcountry  National  Bank (the
Bank),  a  proposed  national  bank to be  located  in  Beaufort  County,  South
Carolina, by a group of thirteen individuals (the Organizers). Upon opening, the
proposed bank will engage in general  banking  activities.  The Organizers  have
filed  applications  and obtained  preliminary  approvals with the Office of The
Comptroller  of the  Currency  to obtain a national  bank  charter  and with the
Federal  Deposit  Insurance  Corporation  (FDIC) for  deposit  insurance.  It is
expected that operations will commence in the second quarter of 2000. All of the
Organizers will serve on the initial board of directors.

Organizational and Pre-Opening Costs - Activities since inception have consisted
of  organizational  activities  necessary  to obtain  regulatory  approvals  and
preparation activities to commence business as a commercial bank. Organizational
costs are primarily legal fees, consulting fees, and application fees related to
the  incorporation and initial  organization of the Bank.  Pre-opening costs are
primarily  employees'  salaries and benefits,  temporary  occupancy  expense and
other  operational  expenses  related to the preparation for the Bank's opening.
The  organizational  and  pre-opening  costs will be charged  against the Bank's
initial period's operating results.

The  Company  has  incurred   approximately   $295,150  in  organizational   and
pre-opening  costs for the period September 29, 1998 (inception) to December 31,
1999.

Offering  Expenses  -  Offering  expenses,   consisting  principally  of  direct
incremental  costs of the public stock  offering,  have been  deducted  from the
proceeds of the offering.  These expenses were  approximately  $694,637  through
December 31, 1999.

Securities  Available-for-Sale  - Securities  available-for-sale  are carried at
amortized cost and adjusted to estimated fair value by recognizing the aggregate
unrealized  gains or losses in a valuation  account.  Aggregate market valuation
adjustments are recorded in  stockholders'  equity net of deferred income taxes.
Reductions in market value  considered by management to be other than  temporary
are  reported  as a  realized  loss and a  reduction  in the  cost  basis of the
security.   The  adjusted  cost  basis  of  investments   available-for-sale  is
determined by specific  identification and is used in computing the gain or loss
upon sale.

Premises  and  Equipment - Premises and  equipment  are stated at cost since the
assets have not been placed in service.  The provision for depreciation  will be
computed by the  straight-line  method,  based on the estimated useful lives for
buildings of 40 years and furniture  and  equipment of 5 to 10 years.  Leasehold
improvements  will be  amortized  over 20  years.  The  cost of  assets  sold or
otherwise  disposed  of, and the  related  allowance  for  depreciation  will be
eliminated from the accounts and the resulting gains or losses  reflected in the
income statement when incurred.


                                      F-7

<PAGE>


                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

                          Notes to Financial Statements

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Comprehensive  Income - Accounting  principles generally require that recognized
revenue,  expenses, gains and losses be included in net income. Although certain
changes  in assets  and  liabilities,  such as  unrealized  gains and  losses on
available-for-sale  securities,  are  reported  as a separate  component  of the
equity  section of the balance  sheet,  such items,  along with net income,  are
components of comprehensive income.

The  components  of other  comprehensive  income and  related tax effects are as
follows:

                                                      For the period
                                                       September 29, 1998
                                                      to December 31, 1999
                                                    ----------------------
Unrealized holding gains (losses) on
   available-for-sale securities                      $      (41,532)
Reclassification adjustment for losses
   (gains) realized in income                                      -
                                                      --------------

Net unrealized gains                                         (41,532)

Tax effect                                                    14,122
                                                      --------------

Net-of-tax amount                                     $      (27,410)
                                                      ==============

NOTE 2 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of securities available-for-sale at
December 31, 1999 were:
<TABLE>
<CAPTION>

                                                                              1999
                                            ---------------------------------------------------------------
                                                              Gross            Gross           Estimated
                                                Amortized    Unrealized       Unrealized        Fair
                                                 Cost         Gains            Losses           Value

<S>                                          <C>            <C>             <C>              <C>
U.S. Government agencies and corporations    $  6,568,544   $      65       $    (41,597)    $   6,527,012
                                             ============   ===========     ============     =============

There were no sales of securities in 1999.
</TABLE>

                                      F-8

<PAGE>


                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

                          Notes to Financial Statements

NOTE 2 - INVESTMENT SECURITIES - Continued

The following is a summary of maturities of securities  available-for-sale as of
December 31, 1999. The amortized cost and estimated fair values are based on the
contractual  maturity  dates.  Actual  maturities  may differ  from  contractual
maturities  because  borrowers may have the right to call or prepay  obligations
with or without penalty.

                                                                   Estimated
                                                   Amortized        Fair
                                                    Cost            Value
                                              --------------     -------------
Due within one year or less                   $    6,568,544     $   6,527,012
                                              ==============     =============

There were no securities pledged at December 31, 1999.

NOTE 3 - PREMISES AND EQUIPMENT

Premises and equipment consisted of the following at December 31, 1999:

                                                                           1999
                                                                   -------------
Land                                                               $     781,644
Buildings                                                                108,772
Furniture and equipment                                                   41,169
Construction in progress                                                  40,457
                                                                   -------------
                                                                         972,042

Less, accumulated depreciation                                                 -
                                                                   -------------

Premises and equipment, net                                        $     972,042
                                                                   =============

At December 31, 1999, the Company has committed to spend approximately  $800,000
to complete the  renovation  of the building  acquired to serve as the corporate
headquarters.

NOTE 4 - BORROWINGS

As of  December  31,  1999,  borrowings  consist  of $100  drawn  on a  $500,000
unsecured line of credit obtained from The Bankers Bank of Atlanta, Georgia.

The line of  credit  was being  used to fund the  Company's  organizational  and
pre-opening costs.

                                      F-9

<PAGE>

                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

                          Notes to Financial Statements

NOTE 5 - STOCKHOLDERS' EQUITY

Common stock - Coastal  Banking  Company,  Inc. has the authority to issue up to
10,000,000 shares of voting common stock, par value $.01 per share.

Preferred stock - Coastal Banking Company, Inc. has the authority to issue up to
10,000,000  shares of preferred stock, par value $.01 per share.  Also,  Coastal
Banking Company, Inc. has the right to establish and designate from time to time
any part or all of the shares by filing an amendment to Coastal Banking Company,
Inc.'s Articles of Incorporation, which is effective without shareholder action,
in such series and with such  preferences,  limitations,  and relative rights as
may be determined by the Board of Directors.  The number of authorized shares of
preferred  stock may be increased or  decreased by the  affirmative  vote of the
holders of the  majority  of the shares of common  stock,  without a vote of the
holders of the shares of preferred stock.

Cumulative voting rights - Coastal Banking Company, Inc. has elected not to have
cumulative voting, and no shares issued by Coastal Banking Company,  Inc. may be
cumulatively voted.

Preemptive rights - The stockholders of Coastal Banking Company,  Inc. shall not
have any preemptive  rights  regarding any issuance of Coastal Banking  Company,
Inc.'s common stock.

Stock Offering - The Company,  through its  underwriter,  Edgar M. Norris & Co.,
Inc.,  offered and sold to the general  public  870,000 shares of $.01 par value
common  stock at an  offering  price of $10.00 per share.  Edgar M.  Norris also
exercised its over-allotment option and purchased an additional 78,281 shares of
common stock at $10.00 per share, less its discount of $.70 per share. The total
aggregate amount raised from the public stock offering was $9,482,810.  Expenses
associated with the stock offering  totaled  $694,637  through December 31, 1999
and have been netted against paid in capital.

The  Organizers  received  one stock  warrant  for each  share of  common  stock
purchased in the  offering.  The exercise  price for the warrants will be $10.00
per share and may be  exercised  over a ten year period.  The  warrants  will be
subject to certain conditions and limitations.

NOTE 6 - STOCK OPTIONS

The Company has entered into an agreement  with a consultant  to assist with the
formation of the Bank. As part of the  consultant's  fee, he was granted options
to purchase 10,000 shares of the Company's  common stock for $10 per share.  The
options are for a ten year period  beginning  with the date of the public  stock
offering.

NOTE 7 - INCOME TAXES

As of December 31, 1999, Coastal Banking Company, Inc. had a net operating loss
carryforward of $233,280.

There was no provision  (benefit) for income taxes for the period from September
29,  1998  to  December  31,  1999,  since a 100%  valuation  reserve  is  being
maintained for the net operating loss carryforward.


                                      F-10
<PAGE>


                          COASTAL BANKING COMPANY, INC.
                      (A Company in the Development Stage)

                          Notes to Financial Statements

NOTE 8 - OTHER OPERATING EXPENSE

Other  operating  expense  for the period  September  29,  1998  (inception)  to
December 31, 1999, is summarized below:

                                                                        1999
                                                                 ---------------
Professional fees                                                $      34,321
Consultant fees                                                         82,867
Insurance                                                                4,347
Telephone                                                                3,790
Other                                                                   36,935
                                                                 -------------

                                                                 $     162,260

NOTE 9 - EMPLOYMENT CONTRACT

Coastal Banking Company,  Inc. has entered into a five-year  employment contract
with its President beginning August 12, 1999. Subject to certain conditions,  at
the end of each year of the  contract,  the  contract  shall be extended  for an
additional  year so that the remaining term of the contract shall continue to be
five years.  The contract  provides that the  President  will receive an initial
annual salary of $96,000,  and shall receive a minimum annual  increase equal to
the increase in the Consumer Price Index.

The contract  provides that the President  shall receive a $10,000 cash bonus on
the date the Bank opens for  business and shall be eligible to receive an annual
cash bonus not to exceed 5% of the  Bank's  pretax  income if the Bank  achieves
certain performance levels established by the board of directors.

Additionally, the President will receive other benefits including being eligible
for the grant of stock  options.  Upon the  adoption of a stock  option plan the
President  will be granted  the option to purchase  5% of the  Company's  common
stock sold in the stock offering.


                                      F-11
<PAGE>


Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure
------------------------------------------------------------------------

         None.

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act
----------------------------------------------------------------------

         In response to this Item, the  information  contained on page 11 of our
Proxy  Statement for the Annual  Meeting of  Shareholders  to be held on May 23,
2000 is incorporated herein by reference.

Item 10.  Executive Compensation
--------------------------------

         In response to this Item,  the  information  contained on page 8 of our
Proxy  Statement for the Annual  Meeting of  Shareholders  to be held on May 23,
2000 is incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         In response to this Item, the  information  contained on page 10 of our
Proxy  Statement for the Annual  Meeting of  Shareholders  to be held on May 23,
2000 is incorporated herein by reference.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

         In response to this Item, the  information  contained on page 11 of our
Proxy  Statement for the Annual  Meeting of  Shareholders  to be held on May 23,
2000 is incorporated herein by reference.

Item 13.   Exhibits, List and Reports on Form 8-K
-------------------------------------------------

(a)      The following documents are filed as part of this report:

1.1      Form of Underwriting agreement between the company and Edgar M. Norris
         & Co., Inc. (incorporated by reference to Exhibit 1.1 of the
         Registration Statement on Form SB-2, File No. 333-86371)

3.1.     Articles of Incorporation (incorporated by reference to Exhibit 3.1 of
         the Registration Statement on Form SB-2, File No. 333-86371).

3.2      Amended and Restated Articles of Incorporation (incorporated by
         reference to Exhibit 3.1 of the Registration Statement on  Form SB-2,
         File No. 333-86371).

3.3.     Bylaws (incorporated by reference to Exhibit 3.3 of the Registration
         Statement on Form SB-2, File No. 333-86371).

4.1.     See Exhibits 3.1, 3.2, and 3.3 for provisions in the company's Articles
         of  Incorporation  and Bylaws  defining  the rights of  holders' of the
         common stock  (incorporated by reference to Exhibits 3.1 and 3.2 of the
         Registration Statement on Form SB-2, File No. 333-86371).

4.2.     Form of certificate of common stock (incorporated by reference to
         Exhibit 4.2 of the Registration Statement on Form SB-2, File No.
         333-86371).

5.1.     Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 of
         the Registration Statement on Form SB-2, File No. 333-86371).

10.1     Employment Agreement dated August 12, 1999 between the company and
         Randolph Kohn (incorporated by reference to Exhibit 10.1
         of the Registration Statement on Form SB-2, File No. 333-86371).

10.2     Purchase and Sale dated February 2, 1999, between  Lowcountry  National
         Bank and Sterling Graydon and Helene Dowling (incorporated by reference
         to Exhibit 10.2 of the  Registration  Statement on Form SB-2,  File No.
         333-86371).


                                       20
<PAGE>


10.3     Line of Credit Agreement with The Banker's Bank dated April 1, 1999
         (incorporated by reference to Exhibit 10.3 of the
         Registration Statement on Form SB-2, File No. 333-86371).

10.5     Form of Stock Warrant Agreement (incorporated by reference to Exhibit
         10.8 of the Registration Statement on Form SB-2, File No. 333-86371).

27.1     *Financial Data Schedule (for electronic filing purposes)

         ------------------------

         *Filed herewith

(b)      Reports on Form 8-K

         The  Company  did not file any  reports  on Form 8-K  during the fourth
quarter of 1999.



                                       21
<PAGE>

                                   SIGNATURES

         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934 (the "Exchange Act"), the registrant  caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



                                           COASTAL BANKING COMPANY, INC.

Date:   March  29, 2000           By:      /s/ Randolph C. Kohn
       ------------------                  -------------------------------------
                                           President and Chief Executive Officer

         KNOW  ALL MEN BY THESE  PRESENTS,  that  each  person  whose  signature
appears below  constitutes  and appoints  Randolph C. Kohn,  his true and lawful
attorney-in-fact  and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all  amendments to this Annual Report on Form 10-KSB,  and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange  Commission,  granting unto  attorney-in-fact  and agent
full  power  and  authority  to do and  perform  each and  every  act and  thing
requisite  or necessary  to be done in and about the  premises,  as fully to all
intents and  purposes as he might or could do in person,  hereby  ratifying  and
confirming  all  that   attorney-in-fact   and  agent,   or  his  substitute  or
substitutes, may lawfully do or cause to be done by virtue hereof.

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant in the  capacities and on
the dates indicated.
<TABLE>
<CAPTION>

Signature                            Title                         Date
---------                            -----                         ----
<S>                             <C>                          <C>
/s/ Marjorie Trask Gray
--------------------------------
Marjorie Trask Gray, DMD             Director                      March 29, 2000


/s/ Dennis O. Green
--------------------------------
Dennis O. Green, CPA                 Director, Vice-               March 29, 2000
                                     Chairman of the Board

/s/ Mark B. Heles
--------------------------------
Mark B. Heles                        Director                      March 29, 2000


/s/ J. Phillip Hodges
--------------------------------
J. Phillip Hodges, Jr.               Director                      March 29, 2000


/s/ James W. Holden
--------------------------------
James W. Holden, Jr., DVM            Director                      March 29, 2000


/s/ Ladson F. Howell
--------------------------------
Ladson F. Howell                     Director                      March 29, 2000
                                     Chairman of the Board

/s/ James C. Key
--------------------------------
James C. Key                         Director                      March 29, 2000



                                       22

<PAGE>

/s/ Randolph C. Kohn
--------------------------------
Randolph C. Kohn                     Director, President and        March 29, 2000
                                     Chief Executive Officer

/s/ Ron Lewis
--------------------------------
Ron Lewis                            Director                       March 29, 2000


/s/ Charlie T. Lovering
--------------------------------
Charlie T. Lovering                  Senior Vice President         March 29, 2000
                                     and Chief Financial
                                     Officer
/s/ Lila N. Meeks
--------------------------------
Lila N. Meeks                        Director                      March 29, 2000


/s/ Robert B. Pinkerton
--------------------------------
Robert B. Pinkerton                  Director                      March 29, 2000


/s/ John M. Trask
--------------------------------
John M. Trask, III                   Director                      March 29, 2000


/s/ Matt A. Trumps
--------------------------------
Matt A. Trumps                       Director                      March 29, 2000

</TABLE>


                                       23

<PAGE>

                                  EXHIBIT INDEX
                                  -------------
Exhibit
Number                     Description
-------                    -----------

1.1      Form of Underwriting agreement between the company and Edgar M. Norris
         & Co., Inc. (incorporated by reference to Exhibit 1.1 of the
         Registration Statement on Form SB-2, File No. 333-86371)

3.1.     Articles of Incorporation (incorporated by reference to Exhibit 3.1 of
         the Registration Statement on Form SB-2, File No. 333-86371).

3.2      Amended and Restated Articles of Incorporation (incorporated by
         reference to Exhibit 3.1 of the Registration Statement on
         Form SB-2, File No. 333-86371).

3.3.     Bylaws (incorporated by reference to Exhibit 3.3 of the Registration
         Statement on Form SB-2, File No. 333-86371).

4.1.     See Exhibits 3.1, 3.2, and 3.3 for provisions in the company's Articles
         of  Incorporation  and Bylaws  defining  the rights of  holders' of the
         common stock  (incorporated by reference to Exhibits 3.1 and 3.2 of the
         Registration Statement on Form SB-2, File No. 333-86371).

4.2.     Form of certificate of common stock (incorporated by reference to
         Exhibit 4.2 of the Registration Statement on Form SB-2, File No.
         333-86371).

5.1.     Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 of
         the Registration Statement on Form SB-2, File No. 333-86371).

10.1     Employment Agreement dated August 12, 1999 between the company and
         Randolph Kohn (incorporated by reference to Exhibit 10.1
         of the Registration Statement on Form SB-2, File No. 333-86371).

10.2     Purchase and Sale dated February 2, 1999, between  Lowcountry  National
         Bank and Sterling Graydon and Helene Dowling (incorporated by reference
         to Exhibit 10.2 of the  Registration  Statement on Form SB-2,  File No.
         333-86371).

10.3     Line of Credit Agreement with The Banker's Bank dated April 1, 1999
         (incorporated by reference to Exhibit 10.3 of the
         Registration Statement on Form SB-2, File No. 333-86371).

10.5     Form of Stock Warrant Agreement (incorporated by reference to Exhibit
         10.8 of the Registration Statement on Form SB-2, File No. 333-86371).

27.1     *Financial Data Schedule (for electronic filing purposes)

         -----------------------------
         *Filed herewith