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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------

For the quarterly period ended: September 30, 2007



| ̈ | Transition report under Section 13 or 15(d) of the Exchange Act
|- | ---------------------------------------------------------------

For the transition period from  to

Commission file number: 001-33014

LOGO



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OMNI FINANCIAL SERVICES, INC.

(Exact name of Registrant as Specified in Its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Georgia                                                        |  | 58-1990666                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

Nine Concourse Parkway, Suite 2300

Atlanta, Georgia 30328

(Address of Principal Executive Offices)

(770) 396-0000

(Registrants Telephone Number)



---

Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act.

Large accelerated filer ̈Accelerated filer ̈Non-accelerated
filer  x

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

State the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: At October 31, 2007, 11,113,148
shares of the registrants common stock were outstanding.



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TABLE OF CONTENTS



|         |  |                                                                                                                           |  |       
|-------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | ------
|         |  |                                                                                                                           |  | PAGE  
|PART I  
|Item 1.  |  | Financial Statements                                                                                                      |  |       
|         |  | Condensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006                                      |  | 3     
|         |  | Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2007 and 2006               |  | 4     
|         |  | Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2007 and 2006 |  | 5     
|         |  | Condensed Consolidated Statements of Shareholders Equity for the Nine Months Ended September 30, 2007 and 2006           |  | 6     
|         |  | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006                     |  | 7     
|         |  | Notes to Condensed Consolidated Financial Statements                                                                      |  | 8 - 15
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                     |  | 16-40 
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                |  | 41-42 
|Item 4.  |  | Controls and Procedures                                                                                                   |  | 42-43 
|        
|PART II 
|Item 1.  |  | Legal Proceedings                                                                                                         |  | 44-45 
|Item 1A. |  | Risk Factors                                                                                                              |  | 45    
|Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                               |  | 46    
|Item 3.  |  | Defaults upon Senior Securities                                                                                           |  | 46    
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                       |  | 46    
|Item 5.  |  | Other Information                                                                                                         |  | 46    
|Item 6.  |  | Exhibits                                                                                                                  |  | 46    



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##### Table of Contents

Note: Throughout this report, unless the context indicates otherwise, references to Omni, Omni
Financial Services, the company, we, us, and our mean the combined business of Omni Financial Services, Inc. and its consolidated subsidiaries, and references to the bank mean our
banking subsidiary, Omni National Bank.

CAUTIONARY STATEMENT REGARDING

FORWARD-LOOKING STATEMENTS

This Report contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of 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 those described below under Item 1A- Risk Factors and the following:



| |  | significant increases in competitive pressure in the banking and financial services industries;
|- |  | -----------------------------------------------------------------------------------------------



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



| |  | changes in political conditions or the legislative or regulatory environment;
|- |  | -----------------------------------------------------------------------------



| |  | changes in the amount or timing of credit availability in the secondary market which reduces access to credit;
|- |  | --------------------------------------------------------------------------------------------------------------



| |  | general economic conditions, either nationally or regionally and especially in our primary service area or in discrete locations within our market areas, becoming
less favorable than expected resulting in, among other things, a deterioration in credit quality;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



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



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



| |  | the rates of loan growth and the lack of seasoning of our loan portfolio;
|- |  | -------------------------------------------------------------------------



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



| |  | loss of consumer confidence and economic disruptions resulting from terrorist activities;
|- |  | -----------------------------------------------------------------------------------------



| |  | changes in the securities markets and in the overall availability of financing including brokered or other deposits; and
|- |  | ------------------------------------------------------------------------------------------------------------------------



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

We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise.



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Part I. Financial Information



|Item 1. | Financial Statements
|------- | --------------------

OMNI FINANCIAL SERVICES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2007 AND DECEMBER 31, 2006

(UNAUDITED)



|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                            |  | September 30,2007 |             |   | December 31,2006 |  
|ASSETS                                                                                                                                      |  |                   |             |   |                  |   |             |  
|Cash and due from banks                                                                                                                     |  | $                 | 4,293,608   |   |                  | $ | 5,874,453   |  
|Interest-bearing deposits in other financial institutions                                                                                   |  |                   | 667,956     |   |                  |   | 319,961     |  
|Federal funds sold                                                                                                                          |  |                   | 5,293,000   |   |                  |   | 16,341,000  |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                                             |  |                   | 10,254,564  |   |                  |   | 22,535,414  |  
|Investment securities available-for-sale                                                                                                    |  |                   | 147,883,303 |   |                  |   | 134,553,978 |  
|Other investments                                                                                                                           |  |                   | 7,277,500   |   |                  |   | 4,836,100   |  
|Loans, net of allowance for loan losses of $9,355,439 and $6,646,212                                                                        |  |                   | 653,771,867 |   |                  |   | 494,813,672 |  
|Loans held-for-sale                                                                                                                         |  |                   | 7,000,913   |   |                  |   | 9,635,243   |  
|Other real estate owned                                                                                                                     |  |                   | 7,994,742   |   |                  |   | 3,377,719   |  
|Premises and equipment, net                                                                                                                 |  |                   | 23,017,308  |   |                  |   | 10,707,034  |  
|Goodwill                                                                                                                                    |  |                   | 4,753,887   |   |                  |   | 4,753,887   |  
|Cash surrender value of life insurance policies                                                                                             |  |                   | 1,237,236   |   |                  |   | 1,201,275   |  
|Accrued interest and loan related receivable                                                                                                |  |                   | 6,992,859   |   |                  |   | 4,781,356   |  
|Deferred taxes                                                                                                                              |  |                   | 4,348,679   |   |                  |   | 3,461,111   |  
|Other assets                                                                                                                                |  |                   | 12,495,020  |   |                  |   | 8,107,192   |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|                                                                                                                                            |  | $                 | 887,027,878 |   |                  | $ | 702,763,981 |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|LIABILITIES & STOCKHOLDERS EQUITY                                                                                                          |  |                   |             |   |                  |   |             |  
|Demand deposits                                                                                                                             |  | $                 | 44,654,714  |   |                  | $ | 49,380,211  |  
|Savings and money market                                                                                                                    |  |                   | 52,044,980  |   |                  |   | 36,993,065  |  
|Time deposits less than $100,000                                                                                                            |  |                   | 419,774,782 |   |                  |   | 218,750,720 |  
|Time deposits greater than $100,000                                                                                                         |  |                   | 159,916,952 |   |                  |   | 239,545,676 |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total deposits                                                                                                                              |  |                   | 676,391,428 |   |                  |   | 544,669,672 |  
|Federal Home Loan Bank borrowings                                                                                                           |  |                   | 107,500,000 |   |                  |   | 57,500,000  |  
|Junior subordinated debentures                                                                                                              |  |                   | 20,620,000  |   |                  |   | 20,620,000  |  
|Deferred gain on sale of OREO                                                                                                               |  |                   | 747,500     |   |                  |   | 576,808     |  
|Escrow accounts, accrued interest payable and other liabilities                                                                             |  |                   | 8,140,038   |   |                  |   | 7,050,415   |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total liabilities                                                                                                                           |  |                   | 813,398,966 |   |                  |   | 630,416,895 |  
|Common stock, par value $1.00; 25,000,000 shares authorized: 11,390,069 and 10,842,978 shares issued; 11,113,148 and 10,826,357 outstanding |  |                   | 11,390,069  |   |                  |   | 11,348,928  |  
|Additional paid-in capital                                                                                                                  |  |                   | 54,912,185  |   |                  |   | 54,567,172  |  
|Retained earnings                                                                                                                           |  |                   | 10,434,066  |   |                  |   | 7,296,572   |  
|Accumulated other comprehensive loss                                                                                                        |  |                   | (707,316    | ) |                  |   | (765,499    | )
|Treasury stock, at cost; 276,921 and 16,621 shares                                                                                          |  |                   | (2,400,092  | ) |                  |   | (100,087    | )
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total shareholders equity                                                                                                                  |  |                   | 73,628,912  |   |                  |   | 72,347,086  |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|                                                                                                                                            |  | $                 | 887,027,878 |   |                  | $ | 702,763,981 |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  

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



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OMNI FINANCIAL SERVICES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)



|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|--------------------------------------------------- |  | --------------------------------------- | ---------- | -------------------------------------- | - | ---------- |  | ---- | ---------- |  | - | ---------- | -
|                                                    |  | For the Three Months Ended September 30 |            | For the Nine Months Ended September 30 |  
|                                                    |  | 2007                                    |            | 2006                                   |   | 2007       |  | 2006 |           
|Interest income:                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Interest and fees on loans                          |  | $                                       | 17,038,815 |                                        | $ | 11,784,760 |  | $    | 47,487,666 |  | $ | 30,975,078 |  
|Interest on investment securities                   |  |                                         | 2,140,855  |                                        |   | 1,540,187  |  |      | 5,966,943  |  |   | 4,370,327  |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Total interest income                               |  |                                         | 19,179,670 |                                        |   | 13,324,947 |  |      | 53,454,609 |  |   | 35,345,405 |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Interest expense:                                   |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Interest on deposits                                |  |                                         | 8,324,000  |                                        |   | 5,210,176  |  |      | 22,667,583 |  |   | 12,537,025 |  
|Interest on other borrowings                        |  |                                         | 1,478,864  |                                        |   | 1,495,617  |  |      | 3,740,810  |  |   | 4,174,986  |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Total interest expense                              |  |                                         | 9,802,864  |                                        |   | 6,705,793  |  |      | 26,408,393 |  |   | 16,712,011 |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Net interest income                                 |  |                                         | 9,376,806  |                                        |   | 6,619,154  |  |      | 27,046,216 |  |   | 18,633,394 |  
|Provision for loan losses                           |  |                                         | 1,950,000  |                                        |   | 916,000    |  |      | 4,376,798  |  |   | 1,866,000  |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Net interest income after provision for loan losses |  |                                         | 7,426,806  |                                        |   | 5,703,154  |  |      | 22,669,418 |  |   | 16,767,394 |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Noninterest income:                                 |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Gain on sale of loans                               |  |                                         | 274,544    |                                        |   | 199,281    |  |      | 577,311    |  |   | 916,072    |  
|Service charges on deposit accounts                 |  |                                         | 154,766    |                                        |   | 193,793    |  |      | 477,418    |  |   | 535,438    |  
|Investment securities gains, net                    |  |                                         | 6,326      |                                        |   | 14,661     |  |      | 15,000     |  |   | 12,403     |  
|Other income                                        |  |                                         | 546,005    |                                        |   | 81,303     |  |      | 1,409,840  |  |   | 423,721    |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Total noninterest income                            |  |                                         | 981,641    |                                        |   | 489,038    |  |      | 2,479,569  |  |   | 1,887,634  |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Noninterest Expense:                                |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Salaries and employee benefits                      |  |                                         | 2,788,406  |                                        |   | 2,081,464  |  |      | 8,760,976  |  |   | 6,241,784  |  
|Occupancy and equipment                             |  |                                         | 997,338    |                                        |   | 738,564    |  |      | 2,726,565  |  |   | 2,103,851  |  
|Professional fees                                   |  |                                         | 281,991    |                                        |   | 179,737    |  |      | 987,442    |  |   | 795,747    |  
|Other real estate owned expense                     |  |                                         | 108,636    |                                        |   | 90,731     |  |      | 930,678    |  |   | 316,670    |  
|Telecommunications                                  |  |                                         | 167,484    |                                        |   | 124,544    |  |      | 517,051    |  |   | 409,519    |  
|Advertising and marketing                           |  |                                         | 180,780    |                                        |   | 51,589     |  |      | 507,281    |  |   | 299,361    |  
|Office suppplies                                    |  |                                         | 114,983    |                                        |   | 78,188     |  |      | 293,131    |  |   | 220,128    |  
|Travel expenses                                     |  |                                         | 233,829    |                                        |   | 161,878    |  |      | 611,561    |  |   | 413,184    |  
|Other                                               |  |                                         | 977,430    |                                        |   | 526,589    |  |      | 2,537,532  |  |   | 1,642,611  |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Total noninterest expense                           |  |                                         | 5,850,877  |                                        |   | 4,033,284  |  |      | 17,872,217 |  |   | 12,442,855 |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Income before income taxes                          |  |                                         | 2,557,570  |                                        |   | 2,158,908  |  |      | 7,276,770  |  |   | 6,212,173  |  
|Income tax expense (benefit)                        |  |                                         | 883,621    |                                        |   | 722,280    |  |      | 2,443,495  |  |   | (1,640,593 | )
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Net income                                          |  | $                                       | 1,673,949  |                                        | $ | 1,436,628  |  | $    | 4,833,275  |  | $ | 7,852,766  |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Proforma data: (1)                                  |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Net income:                                         |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|As reported                                         |  | $                                       | 1,673,949  |                                        | $ | 1,436,628  |  | $    | 4,833,275  |  | $ | 7,852,766  |  
|Adjustment for change in tax status                 |  |                                         |           |                                        |   |           |  |      |           |  | $ | (3,691,407 | )
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Adjusted net income                                 |  | $                                       | 1,673,949  |                                        | $ | 1,436,628  |  | $    | 4,833,275  |  | $ | 4,161,359  |  
|                                                    |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Earnings per common share:                          |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Basic                                               |  | $                                       | 0.15       |                                        | $ | 0.19       |  | $    | 0.43       |  | $ | 1.06       |  
|Diluted                                             |  | $                                       | 0.15       |                                        | $ | 0.19       |  | $    | 0.42       |  | $ | 1.04       |  
|Proforma Earnings per common share: (1)             |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Basic earnings per share                            |  | $                                       | 0.15       |                                        | $ | 0.19       |  | $    | 0.43       |  | $ | 0.56       |  
|Diluted earnings per share                          |  | $                                       | 0.15       |                                        | $ | 0.19       |  | $    | 0.42       |  | $ | 0.55       |  
|                                                    |  |                                         |            |                                       
|Weighted average common shares outstanding:         |  |                                         |            |                                        |   |            |  |      |            |  |   |            |  
|Basic                                               |  |                                         | 11,157,659 |                                        |   | 7,549,192  |  |      | 11,256,739 |  |   | 7,419,287  |  
|Diluted                                             |  |                                         | 11,252,629 |                                        |   | 7,713,775  |  |      | 11,390,051 |  |   | 7,583,706  |  

---

|(1) | The nine months ended September 30, 2006 has been adjusted to reflect the $3.69 M tax credit related to our conversion from an S Corporation to a C Corporation, recognized on
January 1, 2006.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



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OMNI FINANCIAL SERVICES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)



|                                                                                                                                     |  |              |           |   |             |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | --------- | - | ----------- | - | --------- | -
|                                                                                                                                     |  | Three Months |           |   | Nine Months |  
|Net income for the Three and Nine months ended 2007                                                                                  |  | $            | 1,673,949 |   |             | $ | 4,833,275 |  
|                                                                                                                                     |  |              |           |   |             |   |           |  
|Other comprehensive loss:                                                                                                            |  |              |           |   |             |   |           |  
|Unrealized holding gains on investment securities available-for-sale arising during the period, net of taxes of $497,406 and
$23,544 |  |              | 1,481,257 |   |             |   | 68,146    |  
|Reclassification adjustment for gains realized on sales of investment securities, net of taxes of $2,186 and $5,037                  |  |              | (4,140    | ) |             |   | (9,963    | )
|                                                                                                                                     |  |              |           |   |             |   |           |  
|Other comprehensive income                                                                                                           |  |              | 1,477,117 |   |             |   | 58,183    |  
|                                                                                                                                     |  |              |           |   |             |   |           |  
|Total comprehensive income                                                                                                           |  | $            | 3,151,066 |   |             | $ | 4,891,458 |  
|                                                                                                                                     |  |              |           |   |             |   |           |  
|                                                                                                                                     |  |             
|Net income for the Three and Nine months ended 2006                                                                                  |  | $            | 1,436,628 |   |             | $ | 7,852,766 |  
|                                                                                                                                     |  |              |           |   |             |   |           |  
|Other comprehensive loss:                                                                                                            |  |              |           |   |             |   |           |  
|Unrealized holding gains on investment securities available-for-sale arising during the period, net of taxes of $253,334 and
$35,507 |  |              | 757,124   |   |             |   | 107,565   |  
|Reclassification adjustment for losses realized on sales of investment securities, net of taxes of $4,906 and $4,095                 |  |              | (9,755    | ) |             |   | (8,308    | )
|                                                                                                                                     |  |              |           |   |             |   |           |  
|Other comprehensive income                                                                                                           |  |              | 747,369   |   |             |   | 99,257    |  
|                                                                                                                                     |  |              |           |   |             |   |           |  
|Total comprehensive income                                                                                                           |  | $            | 2,183,997 |   |             | $ | 7,952,023 |  
|                                                                                                                                     |  |              |           |   |             |   |           |  

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



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OMNI FINANCIAL SERVICES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)



|                                                                          |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------- |  | ------------ |  | ------------------------ | ---------- | ---------------------------- | - | ---------- | ---------------- | - | ----------- | ------------- |  | - | ------------------------------------------ | - |  | ----- | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                          |  | Common
Stock |  | AdditionalPaid-InCapital |            | StockSubscriptionsReceivable |   |            | RetainedEarnings |   |             | TreasuryStock |  |   | AccumulatedOtherComprehensiveIncome
(Loss) |   |  | Total |           
|                                                                          |  | Shares       |  | Amount                   |            |                              |   |            |                  |  
|Beginning Balance, January 1, 2006                                        |  | 7,242,612    |  | $                        | 7,242,612  |                              | $ | 13,724,927 |                  | $ |            |               |  | $ | 9,421,731                                  |   |  | $     | (100,000   | ) |  | $ | (1,207,532 | ) |  | $ | 29,081,738 |  
|Reclassification of retained earnings upon change in tax status           |  |              |  |                          |            |                              |   | 9,421,731  |                  |   |             |               |  |   | (9,421,731                                 | ) |  |       |            |   |  |   |            |   |  |   |           |  
|Net income                                                                |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   | 7,852,766                                  |   |  |       |            |   |  |   |            |   |  |   | 7,852,766  |  
|Issuance of common stock                                                  |  | 250,366      |  |                          | 250,366    |                              |   | 2,124,862  |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   | 2,375,228  |  
|Shares subscribed                                                         |  | 3,350,000    |  |                          | 3,350,000  |                              |   | 25,447,250 |                  |   | (28,797,250 | )             |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   |           |  
|Stock compensation expense                                                |  |              |  |                          |            |                              |   | 78,562     |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   | 78,562     |  
|Purchases of treasury stock                                               |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       | (9         | ) |  |   |            |   |  |   | (9         | )
|Cash dividends/distributions ($.212 per common share)                     |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   | (1,556,632                                 | ) |  |       |            |   |  |   |            |   |  |   | (1,556,632 | )
|Change in net unrealized loss on investment securities available-for-sale |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   | 99,257     |   |  |   | 99,257     |  
|                                                                          |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   |            |  
|Ending Balance, September 30, 2006                                        |  | 10,842,978   |  | $                        | 10,842,978 |                              | $ | 50,797,332 |                  | $ | (28,797,250 | )             |  | $ | 6,296,134                                  |   |  | $     | (100,009   | ) |  | $ | (1,108,275 | ) |  | $ | 37,930,910 |  
|                                                                          |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   |            |  
|Beginning Balance, January 1, 2007                                        |  | 11,348,928   |  | $                        | 11,348,928 |                              | $ | 54,567,172 |                  | $ |            |               |  | $ | 7,296,572                                  |   |  | $     | (100,087   | ) |  | $ | (765,499   | ) |  | $ | 72,347,086 |  
|Net income                                                                |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   | 4,833,275                                  |   |  |       |            |   |  |   |            |   |  |   | 4,833,275  |  
|Stock options exercised                                                   |  | 30,793       |  |                          | 30,793     |                              |   | 142,827    |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   | 173,620    |  
|Stock grants issued to directors                                          |  | 10,348       |  |                          | 10,348     |                              |   | 99,696     |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   | 110,044    |  
|Stock compensation expense                                                |  |              |  |                          |            |                              |   | 102,490    |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   | 102,490    |  
|Purchases of treasury stock (260,300 shares)                              |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       | (2,300,005 | ) |  |   |            |   |  |   | (2,300,005 | )
|Cash dividends ($.15 per common share)                                    |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   | (1,695,781                                 | ) |  |       |            |   |  |   |            |   |  |   | (1,695,781 | )
|Change in net unrealized loss on investment securities available-for-sale |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   | 58,183     |   |  |   | 58,183     |  
|                                                                          |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   |            |  
|Ending Balance, September 30, 2007                                        |  | 11,390,069   |  | $                        | 11,390,069 |                              | $ | 54,912,185 |                  | $ |            |               |  | $ | 10,434,066                                 |   |  | $     | (2,400,092 | ) |  | $ | (707,316   | ) |  | $ | 73,628,912 |  
|                                                                          |  |              |  |                          |            |                              |   |            |                  |   |             |               |  |   |                                            |   |  |       |            |   |  |   |            |   |  |   |            |  

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



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OMNI FINANCIAL SERVICES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)



|                                                                                              |  |      |              |   |      |   |              |  
|--------------------------------------------------------------------------------------------- |  | ---- | ------------ | - | ---- | - | ------------ | -
|                                                                                              |  | 2007 |              |   | 2006 |  
|Cash flows from operating activities:                                                         |  |      |              |   |      |   |              |  
|Net income                                                                                    |  | $    | 4,833,275    |   |      | $ | 7,852,766    |  
|Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |  |      |              |   |      |   |              |  
|Depreciation, amortization and accretion                                                      |  |      | 929,260      |   |      |   | 691,560      |  
|Provision for loan losses                                                                     |  |      | 4,376,798    |   |      |   | 1,866,000    |  
|Gain on sale of other real estate                                                             |  |      | (86,770      | ) |      |   | (41,984      | )
|Gain on sale of premises and equipment                                                        |  |      | (29,474      | ) |      |   | (50,880      | )
|Gain on sale of loans                                                                         |  |      | (577,311     | ) |      |   | (916,071     | )
|Originations of warehouse loans held for sale                                                 |  |      | (175,715,382 | ) |      |   | (134,986,060 | )
|Proceeds from sale of warehouse loans                                                         |  |      | 178,349,712  |   |      |   | 138,324,677  |  
|Deferred income tax benefit                                                                   |  |      | (972,483     | ) |      |   | (3,691,407   | )
|Stock compensation expense recorded                                                           |  |      | 102,490      |   |      |   | 78,562       |  
|Stock grants issued to directors                                                              |  |      | 110,044      |   |      |   |             |  
|Investment securities gains                                                                   |  |      | (15,000      | ) |      |   | (12,403      | )
|Change in:                                                                                    |  |      |              |   |      |   |              |  
|Accrued interest receivable and other assets                                                  |  |      | (6,443,596   | ) |      |   | (2,589,933   | )
|Escrow accounts, accrued interest payable and other liabilities                               |  |      | 1,003,299    |   |      |   | (1,688,955   | )
|                                                                                              |  |      |              |   |      |   |              |  
|Net cash provided by operating activities                                                     |  |      | 5,864,862    |   |      |   | 4,835,872    |  
|                                                                                              |  |      |              |   |      |   |              |  
|Cash flows from investing activities:                                                         |  |      |              |   |      |   |              |  
|Proceeds from maturities, calls, and paydowns of investment securities available-for-sale     |  |      | 3,981,386    |   |      |   | 12,432,113   |  
|Purchases of investment securities available-for-sale                                         |  |      | (17,110,926  | ) |      |   | (35,370,731  | )
|Purchases of other investments                                                                |  |      | (2,441,400   | ) |      |   | (1,391,400   | )
|Proceeds from sales of other investments                                                      |  |      |             |   |      |   | 1,170,000    |  
|Net change in loans                                                                           |  |      | (182,247,301 | ) |      |   | (144,928,291 | )
|Proceeds from sale of other real estate                                                       |  |      | 14,969,686   |   |      |   | 5,600,910    |  
|Purchase of other real estate investments                                                     |  |      | (10,321      | ) |      |   |             |  
|Proceeds from sale of premises and equipment                                                  |  |      | 26,425       |   |      |   | 60,773       |  
|Purchase of premises and equipment                                                            |  |      | (13,212,850  | ) |      |   | (1,837,387   | )
|                                                                                              |  |      |              |   |      |   |              |  
|Net cash used in investing activities                                                         |  |      | (196,045,301 | ) |      |   | (164,264,013 | )
|                                                                                              |  |      |              |   |      |   |              |  
|Cash flows from financing activities:                                                         |  |      |              |   |      |   |              |  
|Net change in deposits                                                                        |  |      | 131,721,755  |   |      |   | 144,506,029  |  
|Proceeds from Federal Home Loan Bank borrowings                                               |  |      | 90,500,000   |   |      |   | 88,500,000   |  
|Repayments of Federal Home Loan Bank borrowings                                               |  |      | (40,500,000  | ) |      |   | (75,500,000  | )
|Purchase of treasury stock                                                                    |  |      | (2,300,005   | ) |      |   | (9           | )
|Proceeds from sale of stock and issuance of stock under option plan                           |  |      | 173,620      |   |      |   | 2,375,228    |  
|Cash dividends to shareholders                                                                |  |      | (1,695,781   | ) |      |   | (1,556,632   | )
|                                                                                              |  |      |              |   |      |   |              |  
|Net cash provided by financing activities                                                     |  |      | 177,899,589  |   |      |   | 158,324,616  |  
|                                                                                              |  |      |              |   |      |   |              |  
|Net change in cash and cash equivalents                                                       |  | $    | (12,280,850  | ) |      | $ | (1,103,525   | )
|Cash and cash equivalents at beginning of period                                              |  |      | 22,535,414   |   |      |   | 10,415,055   |  
|                                                                                              |  |      |              |   |      |   |              |  
|Cash and cash equivalents at end of period                                                    |  | $    | 10,254,564   |   |      | $ | 9,311,530    |  
|                                                                                              |  |      |              |   |      |   |              |  
|Supplemental cash flow information and noncash disclosures:                                   |  |      |              |   |      |   |              |  
|Cash paid during the period for interest                                                      |  | $    | 15,598,915   |   |      | $ | 9,427,649    |  
|Cash paid during the period for taxes                                                         |  | $    | 3,499,079    |   |      | $ | 2,332,297    |  
|Loans transferred to other real estate                                                        |  | $    | 26,312,400   |   |      | $ | 6,672,735    |  
|Other real estate sales financed by Bank                                                      |  | $    | 21,675,850   |   |      | $ | 5,600,910    |  

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



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OMNI FINANCIAL SERVICES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) - Summary of Significant Accounting Policies and Activities

Organization

Omni Financial Services, Inc. (the Company) is incorporated in the state of Georgia as a
bank holding company with its corporate headquarters in Atlanta, Georgia. The Company provides a full range of banking services to commercial and consumer customers through its wholly owned subsidiary, Omni National Bank (the Bank) and
the Banks wholly owned subsidiaries. The Company has operations in metropolitan Atlanta and Dalton, Georgia; Fayetteville, High Point and Parkton, North Carolina; Tampa, Florida; Chicago, Illinois; and Dallas, Texas. The Company also has loan
production offices in Atlanta, Georgia; Charlotte, North Carolina; Birmingham, Alabama and Philadelphia, Pennsylvania. The Bank is chartered and regulated by the Office of the Comptroller of the Currency.

Basis of Presentation

The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiary, the Bank, as well as the consolidated subsidiaries of the Bank. All intercompany accounts and transactions have been eliminated in consolidation. The accounting principles followed by the
Company and its subsidiary, and the method of applying these principles, conform with accounting principles generally accepted in the United States of America. Certain financial information for prior periods have been reclassified to conform to
current period presentation, with no impact on net income or net assets for any prior period.

Interim Financial Information

The accompanying unaudited consolidated financial statements as of September 30, 2007 and 2006 have been prepared in condensed format, and therefore do not include
all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The information furnished in
these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal recurring nature. The results of
operations in the interim statements are not necessarily indicative of the results that may be expected for any other period or for the full year. The interim financial information should be read in conjunction with the Companys audited
financial statements.

Use of Estimates

In preparing
the consolidated financial statements, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual
results could differ. The allowance for loan losses, tax estimates, the fair value of stock based compensation awards and fair values of financial instruments are particularly subject to change in the near term.

Stock Compensation Plan

In December 2004, the Financial Accounting
Standards Board (FASB) issued SFAS No. 123 (revised 2004), Share-Based Payment, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus
on transactions in which an entity obtains employee services in share-based payment transactions. This Statement is a revision to Statement 123 and APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation
guidance.

This Statement requires measurement of the cost of employee services received in exchange for stock compensation based on the grant date fair
value of the employee stock options. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company adopted this Standard on January 1, 2006 under the prospective transition
method. Under that method, the Company recognizes compensation



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costs for any new grants of share-based awards made after the effective date or if existing awards are modified after the effective date.

Prior to adoption of this Standard the Company employee stock options were valued using the minimum value method and compensation expense for stock options was reported
using the intrinsic method.

Net Earnings per Common Share

Basic earnings per common share are based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share.
Anti-dilutive stock options have not been included in the diluted earnings per share calculations. Anti-dilutive shares for September 30, 2007 and 2006 were 437,766 and 0, respectively.

Earnings per common share amounts for the three and nine month periods ended September 30, 2007 and 2006 are as follows:



|                                              |  |                         |           |                           |            |                 |   |       |  
|--------------------------------------------- |  | ----------------------- | --------- | ------------------------- | ---------- | --------------- | - | ----- | -
|                                              |  | Net Earnings(Numerator) |           | Common Share(Denominator) |            | Per ShareAmount |  
|For the Three Months Ended September 30, 2007 |  |                         |           |                           |            |                 |   |       |  
|Basic earnings per share                      |  | $                       | 1,673,949 |                           | 11,157,659 |                 | $ | 0.15  |  
|Effect of dilutive securities  stock options |  |                         |          |                           | 94,970     |                 | $ |      |  
|                                              |  |                         |           |                           |            |                 |   |       |  
|Diluted earnings per share                    |  | $                       | 1,673,949 |                           | 11,252,629 |                 | $ | 0.15  |  
|                                              |  |                         |           |                           |            |                 |   |       |  
|For the Three Months Ended September 30, 2006 |  |                         |           |                           |            |                 |   |       |  
|Basic earnings per share                      |  | $                       | 1,436,628 |                           | 7,549,192  |                 | $ | 0.19  |  
|Effect of dilutive securities  stock options |  |                         |          |                           | 164,583    |                 |   |      |  
|                                              |  |                         |           |                           |            |                 |   |       |  
|Diluted earnings per share                    |  | $                       | 1,436,628 |                           | 7,713,775  |                 | $ | 0.19  |  
|                                              |  |                         |           |                           |            |                 |   |       |  
|                                              |  |                         |          
|                                              |  | Net Earnings(Numerator) |           | Common Share(Denominator) |            | Per ShareAmount |  
|For the Nine Months Ended September 30, 2007  |  |                         |           |                           |            |                 |   |       |  
|Basic earnings per share                      |  | $                       | 4,833,275 |                           | 11,256,739 |                 | $ | 0.43  |  
|Effect of dilutive securities  stock options |  |                         |          |                           | 133,312    |                 | $ | (0.01 | )
|                                              |  |                         |           |                           |            |                 |   |       |  
|Diluted earnings per share                    |  | $                       | 4,833,275 |                           | 11,390,051 |                 | $ | 0.42  |  
|                                              |  |                         |           |                           |            |                 |   |       |  
|For the Nine Months Ended September 30, 2006  |  |                         |           |                           |            |                 |   |       |  
|Basic earnings per share                      |  | $                       | 7,852,766 |                           | 7,419,287  |                 | $ | 1.06  |  
|Effect of dilutive securities  stock options |  |                         |          |                           | 164,419    |                 |   | (0.02 | )
|                                              |  |                         |           |                           |            |                 |   |       |  
|Diluted earnings per share                    |  | $                       | 7,852,766 |                           | 7,583,706  |                 | $ | 1.04  |  
|                                              |  |                         |           |                           |            |                 |   |       |  



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Proforma earnings per common share amounts for the nine month periods ended September 30, 2007 and 2006 are as
follows:



|                                              |  |                        |           |                          |            |                |   |       |  
|--------------------------------------------- |  | ---------------------- | --------- | ------------------------ | ---------- | -------------- | - | ----- | -
|                                              |  | NetEarnings(Numerator) |           | CommonShare(Denominator) |            | PerShareAmount |  
|For the Nine Months Ended September 30, 2007  |  |                        |           |                          |            |                |   |       |  
|Basic earnings per share                      |  | $                      | 4,833,275 |                          | 11,256,739 |                | $ | 0.43  |  
|Effect of dilutive securities  stock options |  |                        |          |                          | 133,312    |                | $ | (0.01 | )
|                                              |  |                        |           |                          |            |                |   |       |  
|Diluted earnings per share                    |  | $                      | 4,833,275 |                          | 11,390,051 |                | $ | 0.42  |  
|                                              |  |                        |           |                          |            |                |   |       |  
|For the Nine Months Ended September 30, 2006  |  |                        |           |                          |            |                |   |       |  
|Basic earnings per share                      |  | $                      | 4,161,358 |                          | 7,419,287  |                | $ | 0.56  |  
|Effect of dilutive securities  stock options |  |                        |          |                          | 164,419    |                |   | (0.01 | )
|                                              |  |                        |           |                          |            |                |   |       |  
|Diluted earnings per share                    |  | $                      | 4,161,358 |                          | 7,583,706  |                | $ | 0.55  |  
|                                              |  |                        |           |                          |            |                |   |       |  

Income Taxes

Prior to January 1, 2006, the Company, with the consent of its shareholders, elected to be taxed under the Internal Revenue Code as an S Corporation. The Companys shareholders terminated the S Corporation election effective
January 1, 2006, and the Company now pays corporate income taxes. In connection with that election, a deferred tax asset was established which resulted in an income tax benefit of $3,691,407 on the consolidated statement of income for the nine
month period ended September 30, 2006.

The Company uses assumptions and estimates in determining income taxes payable or refundable for the current
year, deferred income tax liabilities and assets for events recognized differently in our financial statements and income tax returns, and income tax benefit or expense. Determining these amounts requires analysis of certain transactions and
interpretation of tax laws and regulations. Management exercises judgment in evaluating the amount and timing of recognition of resulting tax liabilities and assets. These judgments and estimates are reevaluated on a continual basis as regulatory
and business factors change. No assurance can be given that either the tax returns submitted by the Company or the income tax reported on the financial statements will not be adjusted by either adverse rulings by the United States Tax Court, changes
in the tax code, or assessments made by the Internal Revenue Service. The Company is subject to potential adverse adjustments, including, but not limited to, an increase in the statutory federal or state income tax rates, the permanent
non-deductibility of amounts currently considered deductible either now or in future periods, and the dependency on the generation of future taxable income, including capital gains, in order to ultimately realize deferred income tax assets.

Initial Public Stock Offering

In September 2006, the
Companys registration statement on Form S-1 relating to the initial public offering of shares of the Companys common stock was declared effective. The Company signed an underwriting agreement on September 28, 2006, pursuant to which
the underwriters agreed to purchase 3,350,000 shares of common stock (with an option to purchase 502,500 shares to cover over-allotments) on a firm commitment basis and closed the transaction on October 4, 2006. The Company issued 3,852,500
shares and received offering proceeds of $33.0 million (net of offering costs of $1.0 million) in October 2006.

Treasury Stock Repurchases

On April 17, 2007, the Companys Board of Directors authorized the repurchase of up to $2.0 million of the Companys common stock. On
July 24, 2007, the Companys Board of Directors authorized the Company to increase the aggregate size of the repurchase plan to provide for the repurchase of an aggregate of $10.0 million of common stock. During the three month period
ended September 30, 2007, 105,000 shares of common stock were repurchased at an aggregate cost of $897,414. In the nine month period ended September 30, 2007, 250,300 shares were repurchased at an aggregate cost of $2,300,005.



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Recent Accounting Pronouncements

SFAS No. 156 (FASB 156), Accounting for Servicing of Financial Assets  An Amendment of FASB Statement No. 140.

In June of 2006, the FASB issued Statement No. 156, Accounting for Servicing of Financial Assets-an amendment of FASB Statement No. 140. This Statement provides the following: 1) revised guidance on when a
servicing asset and servicing liability should be recognized; 2) requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable; 3) permits an entity to elect to measure servicing
assets and servicing liabilities at fair value each reporting date and report changes in fair value in earnings in the period in which the changes occur; 4) upon initial adoption, permits a onetime reclassification of available-for-sale securities
to trading securities for securities which are identified as offsetting the entitys exposure to changes in the fair value of servicing assets or liabilities that a servicer elects to subsequently measure at fair value; and 5) requires separate
presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional footnote disclosures. This standard is effective as of the beginning of an entitys first
fiscal year that begins after September 15, 2006. The Company adopted this standard as of January 1, 2007. The adoption of this statement did not have a material impact on the Companys consolidated financial position or results of
operations.

FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement
No. 109, Accounting for Income Taxes.

In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty
in Income TaxesAn Interpretation of FASB Statement No. 109 (FIN 48). This Interpretation creates a single model to address uncertainty in tax positions and clarifies the accounting for income taxes by prescribing the minimum
recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 utilizes a two-step approach for evaluating tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more likely than not to be
sustained upon examination. Measurement (step two) is only addressed if step one has been satisfied (i.e., the position is more likely than not to be sustained).

Under step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized on ultimate settlement. FIN 48 is effective for fiscal years beginning
after December 15, 2006.

The Company adopted the provisions of FIN 48 on January 1, 2007, and determined there was no need to make an adjustment
to retained earnings due to adoption of this Interpretation. The Company has no unrecognized tax benefits and does not anticipate any increase in unrecognized benefits during 2007 relative to any tax positions taken prior to January 1, 2007.
Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is the Companys policy to record such accruals in its income taxes accounts; no such accruals exist as of January 1, 2007. The Company
and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various returns in the states where its banking offices are located. These returns are subject to examination by taxing authorities for all years after 2002.

SFAS No. 155, Accounting for Certain Hybrid Financial Instruments-an amendment to FASB Statements No. 133 and 140.

In February 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 155, Accounting for Certain Hybrid Financial
Instruments-an amendment to FASB Statements No. 133 and 140. This Statement permits fair value re-measurement for any hybrid financial instruments, clarifies which instruments are subject to the requirements of Statement No. 133, and
establishes a requirement to evaluate interests in securitized financial assets and other items. The new standard is effective for financial assets acquired or issued after the beginning of the entitys first fiscal year that begins after
September 15, 2006. The Company adopted the provision of this standard on January 1, 2007 and the adoption of this standard did not have any impact on its consolidated financial position or results of operations.



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FASB Issue No. 06-5, Accounting for Purchases of Life InsuranceDetermining the Amount That Could Be
Realized in Accordance with FASB Technical Bulletin No. 85-4 (Accounting for Purchases of Life Insurance).

In September 2006, the FASB
Emerging Issues Task Force finalized Issue No. 06-5, Accounting for Purchases of Life InsuranceDetermining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4 (Accounting for Purchases of Life
Insurance). This issue requires that a policyholder consider contractual terms of a life insurance policy in determining the amount that could be realized under the insurance contract.

It also requires that if the contract provides for a greater surrender value if all individual policies in a group are surrendered at the same time, that the surrender
value be determined based on the assumption that policies will be surrendered on an individual basis. Lastly, the issue discusses whether the cash surrender value should be discounted when the policyholder is contractually limited in its ability to
surrender a policy. This issue is effective for fiscal years beginning after December 15, 2006. The adoption of this issue on January 1, 2007 did not have any affect on the Companys consolidated financial statements.

SFAS No.157, Accounting for Fair Value Measurements.

In
September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157), which provides guidance on the use of fair value in such measurements. It also
prescribes expanded disclosures in regards to fair value measurements contained in the financial statements. The new standard is not expected to have a material affect on the Companys financial position or results of operations.
SFAS No. 157 will become effective for the Company as of the first quarter of 2008.

SFAS No.159, Accounting for the Fair Value Option
for Financial Assets and Financial Liabilities.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159). SFAS No. 159 expands opportunities to use fair value measurement in financial reporting and permits entities to choose
to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The new standard is not expected to have a material affect on the
Companys financial position or results of operations.



12



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##### Table of Contents

(2)  Loans

The
Company grants loans and extensions of credit to individuals and entities principally in its general trade area of metropolitan Atlanta and Dalton, Georgia; Birmingham, Alabama; Chicago, Illinois; Tampa, Florida; Fayetteville, High Point, and
Charlotte, North Carolina; Philadelphia, Pennsylvania; and Dallas, Texas. A substantial portion of the Companys loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market.

Loans secured by first mortgages on 1-4 family residences, multifamily residences and commercial real estate totaling approximately $39.0 million and $69.1 million
were pledged as collateral for outstanding FHLB advances as of September 30, 2007 and December 31, 2006, respectively.

Major classifications of
loans at September 30, 2007 and December 31, 2006 are summarized as follows:



|                                |  |                    |             |                   |   |            
|------------------------------- |  | ------------------ | ----------- | ----------------- | - | -----------
|                                |  | September 30, 2007 |             | December 31, 2006
|Real estate-construction        |  | $                  | 69,660,036  |                   | $ | 61,767,736 
|Community redevelopment         |  |                    | 182,242,110 |                   |   | 132,161,743
|Commercial real estate          |  |                    | 251,198,538 |                   |   | 184,014,559
|Residential real estate         |  |                    | 18,087,111  |                   |   | 20,254,071 
|Commercial and Industrial       |  |                    | 141,579,431 |                   |   | 102,017,512
|Consumer                        |  |                    | 2,383,517   |                   |   | 2,374,536  
|                                |  |                    |             |                   |   |            
|Total loans                     |  |                    | 665,150,743 |                   |   | 502,590,157
|Less: Allowance for loan losses |  |                    | 9,355,439   |                   |   | 6,646,212  
|Deferred loan fees, net         |  |                    | 2,023,437   |                   |   | 1,130,273  
|                                |  |                    |             |                   |   |            
|Total net loans                 |  | $                  | 653,771,867 |                   | $ | 494,813,672
|                                |  |                    |             |                   |   |            

Changes in the allowance for loan losses are summarized as follows:



|                                             |  |                                     |            |   |                                          |   |           |                                     |  |   |           |  
|-------------------------------------------- |  | ----------------------------------- | ---------- | - | ---------------------------------------- | - | --------- | ----------------------------------- |  | - | --------- | -
|                                             |  | Nine Months EndedSeptember 30, 2007 |            |   | At or for the YearEndedDecember 31, 2006 |   |           | Nine Months EndedSeptember 30, 2006 | 
|Balance at beginning of period               |  | $                                   | 6,646,212  |   |                                          | $ | 4,791,221 |                                     |  | $ | 4,791,221 |  
|Provision for loan losses                    |  |                                     | 4,376,798  |   |                                          |   | 2,583,000 |                                     |  |   | 1,866,000 |  
|Credits charged off                          |  |                                     | (1,743,140 | ) |                                          |   | (787,396  | )                                   |  |   | (468,863  | )
|Recoveries on credits previously charged-off |  |                                     | 75,569     |   |                                          |   | 59,387    |                                     |  |   | 47,496    |  
|                                             |  |                                     |            |   |                                          |   |           |                                     |  |   |           |  
|Balance at end of period                     |  | $                                   | 9,355,439  |   |                                          | $ | 6,646,212 |                                     |  | $ | 6,235,854 |  
|                                             |  |                                     |            |   |                                          |   |           |                                     |  |   |           |  

Information about impaired loans and specific allowances against these loans as of the period end noted is as
follows:



|                    |  |                    |           |                   |   |                    |  |   |          
|------------------- |  | ------------------ | --------- | ----------------- | - | ------------------ |  | - | ---------
|                    |  | September 30, 2007 |           | December 31, 2006 |   | September 30, 2006
|Impaired loans      |  | $                  | 6,381,338 |                   | $ | 2,630,087          |  | $ | 3,005,424
|                    |  |                    |           |                   |   |                    |  |   |          
|Allocated allowance |  | $                  | 730,050   |                   | $ | 274,422            |  | $ | 322,502  
|                    |  |                    |           |                   |   |                    |  |   |          



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##### Table of Contents

(3) - Stock Option Plan

The following table summarizes the Companys stock option plan activity for the nine months ended September 30, 2007:



|                                 |  |         |   |  |                                     |      |                                                      |     |                            |   |        
|-------------------------------- |  | ------- | - |  | ----------------------------------- | ---- | ---------------------------------------------------- | --- | -------------------------- | - | -------
|                                 |  | Options |   |  | Weighted-AverageExercisePrice/Share |      | Weighted-AverageRemaining Contractual Life(in years) |     | AggregateIntrinsicValue(1)
|Outstanding - January 1, 2007    |  | 442,603 |   |  | $                                   | 6.10 |                                                      |     |                            |   |        
|Granted                          |  | 381,266 |   |  |                                     | 9.81 |                                                      |     |                            |   |        
|Exercised                        |  | (30,793 | ) |  |                                     | 5.23 |                                                      |     |                            |   |        
|Forfeited                        |  | (8,499  | ) |  |                                     | 9.03 |                                                      |     |                            |   |        
|                                 |  |         |   |  |                                     |      |                                                      |     |                            |   |        
|Outstanding - September 30, 2007 |  | 784,577 |   |  | $                                   | 7.91 |                                                      | 7.5 |                            | $ | 787,012
|                                 |  |         |   |  |                                     |      |                                                      |     |                            |   |        
|Exercisable - September 30, 2007 |  | 376,561 |   |  | $                                   | 5.82 |                                                      | 7.1 |                            | $ | 787,012
|                                 |  |         |   |  |                                     |      |                                                      |     |                            |   |        

---

|(1) | Based on closing price of $7.91 per share on September 28, 2007 (the last trading day of September).
|--- | ----------------------------------------------------------------------------------------------------

Stock compensation expense for the three months ended September 30, 2007 and 2006 was $52,000 and $74,000, and $102,000 and $79,000 for the nine months ended
September 30, 2007 and 2006 respectively. The Company adopted SFAS No. 123(R) ,Share Based Payments, on January 1, 2006, and subsequent to its adoption, is only required to apply the provisions for estimating the
fair value of options prospectively to new options awarded or existing options modified.

Unrecognized stock based compensation expense related to stock
options for 2007 and beyond is estimated as follows:



|                    |  |   |        
|------------------- |  | - | -------
|2007                |  | $ | 153,384
|2008                |  |   | 206,487
|2009                |  |   | 206,487
|2010 and thereafter |  |   | 461,215

The cost is expected to be recognized over a weighted-average period of 4.6 years.

(4) - Commitments

The Company is a party to financial instruments
with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the balance sheet. The contractual amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Companys exposure to credit loss, in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby
letters of credit, is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. In most cases, the Company
requires collateral to support financial instruments with credit risk. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

At September 30, 2007 and December 31, 2006, the Company had commitments to extend credit of approximately $117,343,000 and $53,984,000, respectively. At
September 30, 2007 and December 31, 2006, the Company had standby letters of credit outstanding of approximately $1.9 million and $35,000, respectively.

At September 30, 2007 we had approximately $2.5 million in fixed rate commitments with interest rates that ranged from 6.36% to 18.00% with maturities ranging from one month to ten years. We had approximately $114.8 million



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##### Table of Contents

in variable rate commitments that had not expired as of September 30, 2007. The loans underlying the commitments ranged in interest rates from 5.20% to
15.00% and one loan commitment with a rate of 50%. The loans have maturities of one month to fifteen years.

(5) - Taxes

With the consent of its shareholders, prior to January 1, 2006, the Company elected to be taxed under the Internal Revenue Code as an S Corporation. The
Companys shareholders terminated the S Corporation election effective January 1, 2006, and the Company now pays corporate income taxes. On January 1, 2006, in connection with the terminated election, a deferred tax asset was
established which resulted in an income tax benefit of $3,691,407 on the consolidated statement of earnings for the nine month period ended September 30, 2006.

Income tax expense was as follows:



|                             |  |                                      |           |   |                                      |   |            |  
|---------------------------- |  | ------------------------------------ | --------- | - | ------------------------------------ | - | ---------- | -
|                             |  | Nine Months Ended September 30, 2007 |           |   | Nine Months Ended September 30, 2006 |  
|Current expense:             |  |                                      |           |   |                                      |   |            |  
|Federal                      |  | $                                    | 2,997,052 |   |                                      | $ | 1,836,872  |  
|State                        |  |                                      | 418,926   |   |                                      |   | 213,942    |  
|                             |  |                                      |           |   |                                      |   |            |  
|                             |  |                                      | 3,415,978 |   |                                      |   | 2,050,814  |  
|                             |  |                                     
|Deferred expense (benefit) : |  |                                      |           |   |                                      |   |            |  
|Federal                      |  |                                      | (817,079  | ) |                                      |   | (3,107,693 | )
|State                        |  |                                      | (155,404  | ) |                                      |   | (583,714   | )
|                             |  |                                      |           |   |                                      |   |            |  
|                             |  |                                      | (972,483  | ) |                                      |   | (3,691,407 | )
|                             |  |                                      |           |   |                                      |   |            |  
|Total expense (benefit)      |  | $                                    | 2,443,495 |   |                                      | $ | (1,640,593 | )
|                             |  |                                      |           |   |                                      |   |            |  

Effective tax rate differs from federal statutory rate of 34% applied to income before income
taxes due to the following:



|                                                        |  |                                     |           |   |                                     |   |            |  
|------------------------------------------------------- |  | ----------------------------------- | --------- | - | ----------------------------------- | - | ---------- | -
|                                                        |  | Nine Months EndedSeptember 30, 2007 |           |   | Nine Months EndedSeptember 30, 2006 |  
|Federal statutory rate times financial statement income |  | $                                   | 2,474,102 |   |                                     | $ | 2,112,139  |  
|Effect of:                                              |  |                                     |           |   |                                     |   |            |  
|Tax-exempt income                                       |  |                                     | (270,067  | ) |                                     |   | (350,200   | )
|State taxes, net of federal benefit                     |  |                                     | 173,264   |   |                                     |   | 141,201    |  
|Change in the tax status-conversion to a C Corporation  |  |                                     |          |   |                                     |   | (3,691,407 | )
|Other                                                   |  |                                     | 66,196    |   |                                     |   | 147,674    |  
|                                                        |  |                                     |           |   |                                     |   |            |  
|Total expense                                           |  | $                                   | 2,443,495 |   |                                     | $ | (1,640,593 | )
|                                                        |  |                                     |           |   |                                     |   |            |  

At September 30, 2007, the Company had net operating loss carry forwards for federal and state tax purposes
of approximately $5,072,000 which expire at various dates from 2014 to 2024.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Application of Critical Accounting Policies

We have adopted various accounting policies that govern the application
of accounting principles generally accepted in the United States of America and with general practices within the banking industry in the preparation of our financial statements. Our significant accounting policies are described in footnote 1 to our
audited consolidated financial statements as of December 31, 2006.

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

Allowance for Loan Losses. The allowance for loan losses is a valuation allowance for
probable losses incurred in the loan portfolio. Our allowance for loan loss methodology incorporates a variety of risk considerations in establishing an allowance for loan loss that we believe is adequate to absorb losses in the existing portfolio.
Such analysis addresses our historical loss experience, delinquency and charge-off trends, collateral values, changes in nonperforming loans, and other considerations. Management monitors local trends to anticipate future delinquency potential on a
quarterly basis. In addition to ongoing internal loan reviews and risk assessment, management utilizes an independent loan review firm to provide advice on the appropriateness of the allowance for loan losses.

The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. Provisions for loan
losses are provided on both a specific and general basis. Specific allowances typically relate to criticized and classified loans where the expected/anticipated loss may be measurable. General valuation allowances are based on portfolio segmentation
by loan type and collateral type, with a further evaluation of various factors noted above. We incorporate our internal loss history into the allowance calculation.

At least annually, we review the assumptions and formulae by which additions are made to the specific and general valuation allowances for loan losses in an effort to refine such allowance in light of the current
status of the factors described above. The total loan portfolio is thoroughly reviewed at least quarterly for satisfactory levels of general and specific reserves.

Although we believe the levels of the allowances as of September 30, 2007 and December 31, 2006 were adequate to absorb probable incurred losses in the loan portfolio, a decline in local or national economic or other factors could
result in increasing losses that cannot be reasonably estimated at this time.

Income Taxes. For years prior to January 1, 2006, the Company, with the
consent of its shareholders, elected to be taxed under the Internal Revenue Code as an S Corporation. As an S Corporation we did not record a provision for income taxes. Instead, our shareholders separately accounted for their pro rata share of the
Companys taxable income. The Companys shareholders terminated the S Corporation election effective January 1, 2006, and we now pay corporate income taxes. We use assumptions and estimates in determining income taxes payable or
refundable for the current year, deferred income tax liabilities and assets for events recognized differently in our financial statements and income tax returns, and income tax benefit or expense. Determining these amounts requires analysis of
certain transactions and interpretation of tax laws and regulations. Management exercises judgment in evaluating the amount and timing of recognition of resulting tax liabilities and assets. These judgments and estimates are reevaluated on a
continual basis as regulatory and business factors change. No assurance can be given that either the tax returns submitted by us or the income tax reported on the financial statements will not be adjusted by either adverse rulings by the United
States Tax Court, changes in the tax code, or assessments made by the Internal Revenue Service. We are subject to potential adverse adjustments, including, but not limited to, an increase in the statutory federal or state income tax rates, the
permanent non-deductibility of amounts currently considered deductible either now or in future periods, and the dependency on the generation of future taxable income, including capital gains, in order to ultimately realize deferred income tax
assets.



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##### Table of Contents

Management Overview

This overview presents an analysis of changes in our net interest margins and yields, a tabular presentation of unaudited selected financial data, a discussion of the primary factors that management analyzes in evaluating our results of
operations and financial condition, and a discussion of recent economic trends that are relevant to our operations and prospects.

Net Interest
Margins and Yields

The Companys net interest margin on a fully tax equivalent basis for the three month period ended September 30, 2007
was 4.74% as compared to 4.69% for the same time period in 2006. The increase in the net interest margin is due to the increase in average earning assets by $228.2 million, compared to an increase in average interest-bearing liabilities of $201.7
million. This equates to average interest-earning assets growth of 40.4% compared to average interest-bearing liabilities growth of 37.3%. Offsetting the positive volume differential was an increase in the cost of interest bearing liabilities of 30
basis points, higher than the increase in the yield on interest-earning assets of 26 basis points. The efficiency in the use of interest-bearing liabilities was primarily made possible by the stock offering cash infusion in the fourth quarter of
2006. Additionally the increase of $7.5 million or 26.0% over the prior year quarter-end in noninterest-bearing deposits further reduced our reliance on interest-bearing liabilities.

The main driver of the increase in interest-earning assets was the 42.7% growth in average loans from $444.4 million for the third quarter 2006 to $634.2 for the third quarter 2007. The overall loan yield increased 16
basis points from 10.47% for the third quarter 2006 to 10.63% for the third quarter 2007. Adding to the increase in margin was growth of $37.6 million in the investment portfolio, the yield for which increased 23 basis points from 5.26% for the
quarter ended September 30, 2006 to 5.49% for the same time period in 2007. See Results of Operations for the Three Months Ended September 30, 2007 and 2006Net Interest Income and Net Interest Margin.

On a linked-quarter basis for the quarter ended September 30, 2007 compared to the quarter ended June 30, 2007, the yield on earning assets decreased by 22
basis points from 9.77% to 9.55%, while the cost of interest-bearing liabilities remained constant at 5.22%. Net interest margin decreased 28 basis points to 4.74% for the quarter ended September 30, 2007 compared to 5.02% for the quarter ended
June 30, 2007. The primary reason for the reduction in yield on earning assets is an increase in the reversal of interest income for additional nonaccrual loans. Future nonaccrual loans will have a negative impact on the net loan yield and
therefore the net interest margin. The Company continues to focus on asset and liability management to increase net interest margin by pursuing lower cost funding sources and by increasing loan yield by further changing the mix of loan products to
higher yielding loans, as well as maximizing loan performance and interest collections by focusing additional resources on credit and collections management.



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##### Table of Contents

The following table sets forth unaudited selected financial data as of or for the current period and the previous five
quarters, including the three month period ended September 30, 2006. This data should be read in conjunction with the consolidated financial statements and the notes thereto and the information contained herein (Dollars in thousands, except
share data).



|                                                                |  |                                 |            |   |      |   |           |               |  |   |               |   |  |               |            |   |               |   |            |              |  |   |            |   |  |   |           |  
|--------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- | - | --------- | ------------- |  | - | ------------- | - |  | ------------- | ---------- | - | ------------- | - | ---------- | ------------ |  | - | ---------- | - |  | - | --------- | -
|                                                                |  | Nine Months Ended September 30, |            |   | 2007 |   |           | 2006          | 
|                                                                |  | 2007                            |            |   | 2006 |   |           | Third Quarter |  |   | SecondQuarter |   |  | First Quarter |            |   | FourthQuarter |   |            | ThirdQuarter | 
|Share Data                                                      |  |                                 |            |   |      |   |           |               |  |   |               |   |  |               |            |   |               |   |            |              |  |   |            |   |  |   |           |  
|Weighted average shares outstanding - basic                     |  |                                 | 11,256,739 |   |      |   | 7,419,287 |               |  |   | 11,157,659    |   |  |               | 11,280,687 |   |               |   | 11,333,807 |              |  |   | 11,301,437 |   |  |   | 7,549,192 |  
|Weighted average shares outstanding - diluted                   |  |                                 | 11,390,051 |   |      |   | 7,583,706 |               |  |   | 11,252,629    |   |  |               | 11,413,877 |   |               |   | 11,496,696 |              |  |   | 11,472,870 |   |  |   | 7,713,775 |  
|Book value at quarter end                                       |  | $                               | 6.63       |   |      | $ | 5.07      |               |  | $ | 6.63          |   |  | $             | 6.41       |   |               | $ | 6.48       |              |  | $ | 6.38       |   |  | $ | 5.07      |  
|Tangible book value at quarter end                              |  | $                               | 6.08       |   |      | $ | 4.30      |               |  | $ | 6.08          |   |  | $             | 5.89       |   |               | $ | 5.97       |              |  | $ | 5.87       |   |  | $ | 4.30      |  
|Basic earnings per share/Pro Forma(1)                           |  | $                               | 0.43       |   |      | $ | 0.56      |               |  | $ | 0.15          |   |  | $             | 0.15       |   |               | $ | 0.13       |              |  | $ | 0.13       |   |  | $ | 0.19      |  
|Diluted earnings per share/Pro Forma(1)                         |  | $                               | 0.42       |   |      | $ | 0.55      |               |  | $ | 0.15          |   |  | $             | 0.15       |   |               | $ | 0.13       |              |  | $ | 0.13       |   |  | $ | 0.19      |  
|Basic earnings per share/GAAP                                   |  | $                               | 0.43       |   |      | $ | 1.06      |               |  | $ | 0.15          |   |  | $             | 0.15       |   |               | $ | 0.13       |              |  | $ | 0.13       |   |  | $ | 0.19      |  
|Diluted earnings per share/GAAP                                 |  | $                               | 0.42       |   |      | $ | 1.04      |               |  | $ | 0.15          |   |  | $             | 0.15       |   |               | $ | 0.13       |              |  | $ | 0.13       |   |  | $ | 0.19      |  
|Cash dividends declared (2)                                     |  | $                               | 0.15       |   |      | $ | 0.21      |               |  | $ | 0.05          |   |  | $             | 0.05       |   |               | $ | 0.05       |              |  | $ | 0.04       |   |  | $ | 0.04      |  
|Performance Ratios:                                             |  |                                 |            |   |      |   |           |               |  |   |               |   |  |               |            |   |               |   |            |              |  |   |            |   |  |   |           |  
|Return on average assets/Pro Forma (1) (3)                      |  |                                 | 0.81       | % |      |   | 0.99      | %             |  |   | 0.77          | % |  |               | 0.85       | % |               |   | 0.79       | %            |  |   | 0.88       | % |  |   | 0.93      | %
|Return on average equity/Pro Forma (1) (3)                      |  |                                 | 8.81       | % |      |   | 15.43     | %             |  |   | 9.11          | % |  |               | 9.25       | % |               |   | 7.94       | %            |  |   | 8.20       | % |  |   | 15.46     | %
|Return on average tangible equity/Pro Forma (1) (3)             |  |                                 | 9.58       | % |      |   | 18.37     | %             |  |   | 9.93          | % |  |               | 10.04      | % |               |   | 8.63       | %            |  |   | 8.93       | % |  |   | 18.32     | %
|Yield on earning assets (3)                                     |  |                                 | 9.62       | % |      |   | 9.16      | %             |  |   | 9.55          | % |  |               | 9.77       | % |               |   | 9.56       | %            |  |   | 9.42       | % |  |   | 9.29      | %
|Cost of interest-bearing liabilities (3)                        |  |                                 | 5.18       | % |      |   | 4.57      | %             |  |   | 5.22          | % |  |               | 5.22       | % |               |   | 5.11       | %            |  |   | 4.99       | % |  |   | 4.92      | %
|Net interest Margin (3)                                         |  |                                 | 4.91       | % |      |   | 4.90      | %             |  |   | 4.74          | % |  |               | 5.02       | % |               |   | 5.00       | %            |  |   | 5.00       | % |  |   | 4.69      | %
|Efficiency ratio                                                |  |                                 | 60.53      | % |      |   | 60.63     | %             |  |   | 56.48         | % |  |               | 60.22      | % |               |   | 65.30      | %            |  |   | 66.87      | % |  |   | 56.74     | %
|Return on average assets/GAAP (3)                               |  |                                 | 0.81       | % |      |   | 1.87      | %             |  |   | 0.77          | % |  |               | 0.85       | % |               |   | 0.79       | %            |  |   | 0.88       | % |  |   | 0.91      | %
|Return on average equity/GAAP (3)                               |  |                                 | 8.81       | % |      |   | 29.12     | %             |  |   | 9.11          | % |  |               | 9.25       | % |               |   | 7.94       | %            |  |   | 8.20       | % |  |   | 15.46     | %
|Return on average tangible equity/GAAP (3)                      |  |                                 | 9.58       | % |      |   | 34.67     | %             |  |   | 9.93          | % |  |               | 10.04      | % |               |   | 8.63       | %            |  |   | 8.93       | % |  |   | 18.32     | %
|Credit Quality Ratios:                                          |  |                                 |            |   |      |   |           |               |  |   |               |   |  |               |            |   |               |   |            |              |  |   |            |   |  |   |           |  
|Allowance for loan losses                                       |  | $                               | 9,335      |   |      | $ | 6,236     |               |  | $ | 9,335         |   |  | $             | 8,561      |   |               | $ | 7,576      |              |  | $ | 6,646      |   |  | $ | 6,236     |  
|Other real estate owned                                         |  | $                               | 7,995      |   |      | $ | 2,250     |               |  | $ | 7,995         |   |  | $             | 5,306      |   |               | $ | 5,238      |              |  | $ | 3,378      |   |  | $ | 2,250     |  
|Nonperforming loans                                             |  | $                               | 15,291     |   |      | $ | 4,900     |               |  | $ | 15,291        |   |  | $             | 9,645      |   |               | $ | 6,453      |              |  | $ | 5,171      |   |  | $ | 4,900     |  
|Nonperforming assets                                            |  | $                               | 23,286     |   |      | $ | 7,150     |               |  | $ | 23,286        |   |  | $             | 14,951     |   |               | $ | 11,681     |              |  | $ | 8,549      |   |  | $ | 7,150     |  
|Allowance for loan losses to loans                              |  |                                 | 1.41       | % |      |   | 1.33      | %             |  |   | 1.41          | % |  |               | 1.40       | % |               |   | 1.33       | %            |  |   | 1.33       | % |  |   | 1.33      | %
|Nonperforming loans to gross loans                              |  |                                 | 2.31       | % |      |   | 1.02      | %             |  |   | 2.31          | % |  |               | 1.58       | % |               |   | 1.13       | %            |  |   | 1.03       | % |  |   | 1.02      | %
|Nonperforming assets to gross loans and other real estate owned |  |                                 | 3.47       | % |      |   | 1.52      | %             |  |   | 3.47          | % |  |               | 2.42       | % |               |   | 2.02       | %            |  |   | 1.69       | % |  |   | 1.52      | %
|Nonperforming assets to total assets                            |  |                                 | 2.63       | % |      |   | 1.11      | %             |  |   | 2.63          | % |  |               | 1.74       | % |               |   | 1.51       | %            |  |   | 1.22       | % |  |   | 1.11      | %
|Net charge-offs                                                 |  | $                               | 1,668      |   |      | $ | 421       |               |  | $ | 1,156         |   |  | $             | 456        |   |               | $ | 56         |              |  | $ | 307        |   |  | $ | 224       |  
|Net charge-offs to average loans (3)                            |  |                                 | 0.32       | % |      |   | 0.14      | %             |  |   | 0.72          | % |  |               | 0.31       | % |               |   | 0.04       | %            |  |   | 0.25       | % |  |   | 0.20      | %
|Average Balances:                                               |  |                                 |            |   |      |   |           |               |  |   |               |   |  |               |            |   |               |   |            |              |  |   |            |   |  |   |           |  
|Loans outstanding                                               |  | $                               | 582,997    |   |      | $ | 390,665   |               |  | $ | 634,212       |   |  | $             | 581,177    |   |               | $ | 532,484    |              |  | $ | 478,135    |   |  | $ | 444,412   |  
|Total assets                                                    |  | $                               | 800,128    |   |      | $ | 558,457   |               |  | $ | 863,048       |   |  | $             | 802,535    |   |               | $ | 733,377    |              |  | $ | 664,093    |   |  | $ | 614,764   |  
|Interest-earning assets                                         |  | $                               | 748,671    |   |      | $ | 522,943   |               |  | $ | 807,203       |   |  | $             | 748,416    |   |               | $ | 689,098    |              |  | $ | 625,543    |   |  | $ | 578,964   |  
|Deposits                                                        |  | $                               | 619,489    |   |      | $ | 408,272   |               |  | $ | 670,258       |   |  | $             | 620,400    |   |               | $ | 566,671    |              |  | $ | 506,586    |   |  | $ | 463,323   |  
|Tangible shareholders equity                                    |  | $                               | 67,483     |   |      | $ | 29,928    |               |  | $ | 66,897        |   |  | $             | 68,217     |   |               | $ | 67,324     |              |  | $ | 65,105     |   |  | $ | 31,350    |  
|Shareholders equity                                            |  | $                               | 73,345     |   |      | $ | 35,741    |               |  | $ | 72,902        |   |  | $             | 74,005     |   |               | $ | 73,113     |              |  | $ | 70,901     |   |  | $ | 37,153    |  

---

|(1) | Adjusted for the nine months ended September 30, 2006 to reflect the $3.69 million tax credit related to our conversion from an S Corporation to a C Corporation, recognized on
January 1, 2006.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Cash dividends for the first three quarters of 2006 do not include the tax portion distributed to stockholders to cover potential tax liabilities as an S Corporation.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Annualized.
|--- | -----------



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##### Table of Contents

Primary Factors in Evaluating Financial Condition and Results of Operations

As a bank holding company, we focus on several factors in evaluating our financial condition and results of operations, including:



| |  |  | Return on Average Equity, or ROAE;
| | - |  | ----------------------------------



| |  |  | Asset Quality;
| | - |  | --------------



| |  |  | Asset and Deposit Growth; and
| | - |  | -----------------------------



| |  |  | Operating Efficiency.
| | - |  | ---------------------

In the calculation of the
ratios below, current period results and historical results are reflected. Net income for the nine month comparative period ended September 30, 2006 has been reduced by the $3.69 million tax credit benefit recorded to derive proforma net income
for the nine months ended September 30, 2006.

Return on Average Equity. Net income for the three months ended September 30, 2007 was $1.7
million compared to net income of $1.4 million for the three months ended September 30, 2006, an increase of 16.5%. On a proforma basis, net income for the nine months ended September 30, 2007 was $4.8 million, an increase of $0.7 million
or 16.1% over the $4.2 million for the nine months ended September 30, 2006. GAAP net income for the nine months ended September 30, 2006 was $7.9 million and had included the $3.69 million tax credit. ROAE was 9.11% for the three months
ended September 30, 2007 compared to 15.34% for the three months ended September 30, 2006. ROAE was 8.81% for the nine months ended September 30, 2007 compared to pro forma ROAE of 15.57% for the nine months ended September 30,
2006. The decrease in ROAE is directly related to the $37.6 million increase in average equity of which $33.0 million was from the public offering which closed in October 2006. The increase in equity resulted in the denominators used in calculating
certain ratios to increase which has resulted in reduced ratios for the three and nine month periods ended September 30, 2007. As the proceeds of the offering are utilized in the growth of the business it is expected that the ratios will, over
time, increase and return to historical levels.

Asset Quality. For all banks and bank holding companies, asset quality plays a significant role in the
overall financial condition of the institution and results of operations. We measure asset quality in terms of nonperforming loans and assets as a percentage of gross loans and assets, and net charge-offs as a percentage of average loans.
Nonperforming assets include loans past due 90 days or more and still accruing, non-accrual loans and other real estate owned (OREO). Net charge-offs are calculated as the difference between charged-off loans and recovery payments received on
previously charged-off loans.

As of September 30, 2007, nonperforming loans were $15.3 million compared to $5.2 million at December 31, 2006.
Nonperforming loans as a percentage of total loans were 2.31% as of September 30, 2007 compared to 1.03% as of December 31, 2006, an increase of 128 basis points. As of September 30, 2007, OREO was $8.0 million compared to $3.4
million at December 31, 2006. Non-performing assets (non-performing loans and OREO) of $23.3 million as a percentage of gross loans and OREO was 3.47% as of September 30, 2007, compared to $8.5 million or 1.69% as of December 31,
2006.

The increase in non-performing assets is the result of several factors. During the first quarter of 2007 the Company had noted that an accelerated
economic downturn in two Georgia markets, Macon and Griffin, led to increased non-performing assets. In the second quarter, weakness was detected in the Atlanta real estate market which led to an increase in nonperforming assets principally related
to credit deterioration of 5 metro Atlanta residential construction relationships for which the Bank initiated the active resale of the underlying real estate as part of the foreclosure process. The third quarter was largely impacted by an
increasing weakness in the Atlanta and Tampa markets and this has translated to an increase in nonperforming assets in the community redevelopment portfolio. The Company sees the overall weakness as part of the current liquidity crisis where
investors are encountering difficulties selling their properties since end-buyer financing has become more difficult to obtain. See Financial Condition-Nonaccrual, Past Due and Restructured Loans and Part II-Item 1A, Risk
Factors for additional information.



19



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##### Table of Contents

Asset and Deposit Growth. The ability to produce loans and generate deposits is fundamental to our asset growth. Our
assets and liabilities are comprised primarily of loans and deposits, respectively. Total assets increased $184.3 million or 26.2% to $887.0 million as of September 30, 2007 from $702.8 million as of December 31, 2006. Gross loans grew
$161.7 million or 32.2% to $663.1 million as of September 30, 2007 from $501.5 million as of December 31, 2006. Total deposits increased $131.7 million or 24.2% to $676.4 million as of September 30, 2007 from $544.7 million as of
December 31, 2006.

Operating Efficiency. Operating efficiency is measured in terms of how efficiently income before income taxes is generated as a
percentage of revenue. Our efficiency ratio (noninterest expenses divided by the sum of net interest income and noninterest income) was 56.48% for the three months ended September 30, 2007 compared to 56.93% for the three months ended
September 30, 2006. For the nine month periods ended September 30, 2007 and 2006, the efficiency ratio was comparable at 60.53% and 60.87%, respectively. The increase in net interest income for the three and nine month periods ended
September 30, 2007 as compared to the same periods in 2006 has been offset to some degree by expenses associated with the growth of the Company and the cost of being a public company.

Effects of Economic Trends

Since the beginning of the year,
several subprime lenders and hedge funds which had invested in loans supported by real estate collateral have declared bankruptcy and discontinued operations, while other lenders have continued to put in place more stringent underwriting criteria.
Recent losses on mortgage-backed investment securities recorded by some larger financial institutions have further reduced the valuation and liquidity of, and demand for these securities. These challenges have affected the residential loan
marketplace by increasing the borrowers cost of funds for loans supported by real estate. More stringent loan underwriting standards continue to reduce the number of real estate borrowers who can find financing in the marketplace and this
continues to reduce the number of properties sold and refinanced. The number of residential properties on the market has continued to increase, and in certain markets, there has been increasing downward pressure on the selling prices of new and
existing homes and also in the sales market values of existing properties, which are utilized as comparisons in valuing real estate collateral.

Although
we are not a provider of long-term financing to the residential marketplace, the circumstances described above have affected the ability of some of our community redevelopment borrowers to sell or refinance investment real estate that they have
renovated using short-term construction loans we have provided. This has led to a longer holding period of individual properties for our investors which has put stress on our borrowers to manage the scheduled repayments on their portfolio and has
led to an increase in non-performing loans and in OREO through foreclosures of properties collateralizing underlying loans.

The impact of the described
changes in the economy as a whole and the real estate marketplace specifically, might negatively affect our ability to maintain or grow our loan levels and the values of the collateral underlying our loans. These changes could limit growth in
interest income and also could cause an increase in expenses associated with collecting on loans, foreclosing on real estate collateral, and selling properties which have already been foreclosed. The potential impact on the Company would be
dependent on the duration and depth of the real estate market downturn which will also be affected by the financial markets response to correcting the problems that have affected the market, including providing accommodations to borrowers in
default or who are experiencing financial difficulty.



20



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##### Table of Contents

Results of Operations

Three Months Ended September 30, 2007 Compared to Three Months ended September 30, 2006



|                                                    |  |                                  |            |                                |   |            |  |       |   
|--------------------------------------------------- |  | -------------------------------- | ---------- | ------------------------------ | - | ---------- |  | ----- | --
|                                                    |  | Three Months Ended September 30, |            | Percentage Increase/(Decrease) |  
|                                                    |  | 2007                             |            | 2006                           |  
|Consolidated Statement of Earnings Data:            |  |                                  |            |                                |   |            |  |       |   
|Interest income                                     |  | $                                | 19,179,670 |                                | $ | 13,324,947 |  | 43.9  | % 
|Interest expense                                    |  |                                  | 9,802,864  |                                |   | 6,705,793  |  | 46.2  | % 
|                                                    |  |                                  |            |                                |   |            |  |       |   
|Net interest income                                 |  |                                  | 9,376,806  |                                |   | 6,619,154  |  | 41.7  | % 
|Provision for loan losses                           |  |                                  | 1,950,000  |                                |   | 916,000    |  | 112.9 | % 
|                                                    |  |                                  |            |                                |   |            |  |       |   
|Net interest income after provision for loan losses |  |                                  | 7,426,806  |                                |   | 5,703,154  |  | 30.2  | % 
|Noninterest income                                  |  |                                  | 981,641    |                                |   | 489,038    |  | 100.7 | % 
|Noninterest expense                                 |  |                                  | 5,850,877  |                                |   | 4,033,284  |  | 45.1  | % 
|                                                    |  |                                  |            |                                |   |            |  |       |   
|Income before income taxes                          |  |                                  | 2,557,570  |                                |   | 2,158,908  |  | 18.5  | % 
|Income tax expense                                  |  |                                  | 883,621    |                                |   | 722,280    |  | 22.3  | % 
|                                                    |  |                                  |            |                                |   |            |  |       |   
|Net income                                          |  | $                                | 1,673,949  |                                | $ | 1,436,628  |  | 16.5  | % 
|                                                    |  |                                  |            |                                |   |            |  |       |   
|Earnings per share - basic                          |  | $                                | 0.15       |                                | $ | 0.19       |  | (21.1 | )%
|                                                    |  |                                  |            |                                |   |            |  |       |   
|Earnings per share - diluted                        |  | $                                | 0.15       |                                | $ | 0.19       |  | (21.1 | )%
|                                                    |  |                                  |            |                                |   |            |  |       |   

Net income after taxes for the three months ended September 30, 2007 increased 16.5% to $1.7 million from
$1.4 million for the three months ended September 30, 2006. Basic and diluted earnings per share decreased from $0.19 per share at September 30, 2006 to $0.15 per share for the three months ended September 30, 2007 representing a
decrease of 21.1%. The decline was due to the higher denominator of the average number of shares outstanding for the quarter ended September 30, 2007 over the comparable period in 2006 resulting from the public offering.

Net Interest Income and Net Interest Margin.

Interest income for the three
months ended September 30, 2007 increased $5.9 million, or 43.9% to $19.2 million compared to $13.3 million for the three months ended September 30, 2006. Interest expense for the three months ended September 30, 2007 increased $3.1
million, or 46.2% to $9.8 million compared to $6.7 million for the three months ended September 30, 2006. The increase in interest income was partially offset by the increase in interest expense caused by a higher LIBOR rate environment.
Changes in the LIBOR rate impact deposit and borrowing rates but not our loan rates which are generally tied to a base prime rate or a fixed rate.

Average
Balances and Average Interest Rates. The 41.7% increase in net interest income for the three months ended September 30, 2007 compared to the same period in 2006 was due to an increase in interest income of $5.9 million, reflective of an
increase of $228.2 million in average interest-earning assets which was funded primarily through an increase of $199.4 million or 45.9% in average interest-bearing deposits. The $35.7 million average increase in capital primarily related to the 2006
stock offering.

The average yield on interest-earning assets was 9.55% for the three months ended September 30, 2007, compared to 9.29% for the same
period in 2006, an increase of 26 basis points or 2.8%. The increase is primarily due to 9 basis points related to one loan at an interest rate of 50% made in 2007, and a 7 basis point increase in loan fees recognized in 2007 compared to the same
period in the prior year. In 2007, the average Prime rate was stable year-to-date while in 2006, the market was in a rising rate environment with the last Prime rate increase in late June of 2006. In mid-September of 2007, the Federal Reserve
adjusted the Prime rate with a 50 basis point decrease; however, the impact of the decline was minimal for the quarter.

The cost of our average
interest-bearing liabilities increased 30 basis points to 5.22% for the three months ended September 30, 2007, from 4.92% for the three months ended September 30, 2006, as a result of higher rates paid on deposit accounts, offset by lower
rates on Federal funds purchased, junior subordinated debt, and FHLB borrowings



21



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##### Table of Contents

due to the lower market rates on these debt instruments. The average rate on our interest-bearing deposits increased 45 basis points or 9.5%, to 5.21% for
the three months ended September 30, 2007 from 4.76% for the three months ended September 30, 2006, reflecting a more competitive interest rate environment for consumer and brokered deposits balances. Our average rate on total deposits
(including noninterest bearing deposits) increased 47 basis points or 10.5% to 4.93% for the three months ended September 30, 2007 from 4.46% for the same period in 2006. The average rate on FHLB borrowings decreased 33 basis points or 6.6% to
4.76% for the three months ended September 30, 2007 from 4.99% for the three months ended September 30, 2006.

The following table sets forth
balance sheet items on a daily average basis for the three months ended September 30, 2007 and 2006 and presents the daily average interest rates earned on assets and the daily average interest rates paid on liabilities for such periods.
Non-accrual loans are included in the average loan balances. Securities are all classified as available for sale and are carried at amortized cost for purposes of calculating the average rate received on securities. Yields on tax-exempt securities
have been computed on a tax equivalent basis.



|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|---------------------------------------- |  | -------------------------------- | ----------- | - | -------- | - | ----------- |  | ----- | -------------- |  | - | ----------- | - | ----------- | - | ---------- |  | ----- | -
|                                         |  | Three Months Ended September 30, |            
|                                         |  | 2007                             |             |   | 2006     |  
|                                         |  | AverageBalance                   |             |   | Interest |   | AverageRate |  |       | AverageBalance |  |   | Interest    |   | AverageRate |  
|Earning Assets                           |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Securities                               |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Taxable                                  |  | $                                | 117,149,116 |   |          | $ | 1,572,007   |  | 5.37  | %              |  | $ | 93,828,722  |   |             | $ | 1,167,157  |  | 4.98  | %
|Tax-exempt                               |  |                                  | 32,110,075  |   |          |   | 490,674     |  | 6.11  | %              |  |   | 33,962,219  |   |             |   | 514,641    |  | 6.06  | %
|Interest-bearing deposits                |  |                                  | 1,624,401   |   |          |   | 22,089      |  | 5.39  | %              |  |   | 973,375     |   |             |   | 12,929     |  | 5.27  | %
|Fed Funds sold                           |  |                                  | 17,003,391  |   |          |   | 222,914     |  | 5.20  | %              |  |   | 1,523,543   |   |             |   | 20,437     |  | 5.32  | %
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total securities                         |  |                                  | 167,886,983 |   |          |   | 2,307,684   |  | 5.49  | %              |  |   | 130,287,859 |   |             |   | 1,715,164  |  | 5.26  | %
|Loans                                    |  |                                  | 634,212,035 |   |          |   | 16,922,040  |  | 10.63 | %              |  |   | 444,411,454 |   |             |   | 11,680,439 |  | 10.47 | %
|Loans held for sale                      |  |                                  | 5,103,670   |   |          |   | 116,775     |  | 9.08  | %              |  |   | 4,264,875   |   |             |   | 104,321    |  | 9.70  | %
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total earning assets                     |  |                                  | 807,202,688 |   |          |   | 19,346,499  |  | 9.55  | %              |  |   | 578,964,188 |   |             |   | 13,499,924 |  | 9.29  | %
|Non-earning Assets                       |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Cash and due from banks                  |  |                                  | 4,619,992   |   |          |   |             |  |       |                |  |   | 4,896,278   |   |             |   |            |  |       |  
|Allowance for loan losses                |  |                                  | (8,773,846  | ) |          |   |             |  |       |                |  |   | (5,780,453  | ) |             |   |            |  |       |  
|Bank-owned life insurance                |  |                                  | 1,229,758   |   |          |   |             |  |       |                |  |   | 1,181,686   |   |             |   |            |  |       |  
|Other assets, including loans in process |  |                                  | 58,769,252  |   |          |   |             |  |       |                |  |   | 35,501,954  |   |             |   |            |  |       |  
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total assets                             |  | $                                | 863,047,844 |   |          |   |             |  |       |                |  | $ | 614,763,653 |   |             |   |            |  |       |  
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Interest Bearing Liabilities             |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Interest-bearing demand deposits         |  | $                                | 6,434,789   |   |          | $ | 4,190       |  | 0.26  | %              |  | $ | 6,933,031   |   |             | $ | 3,240      |  | 0.19  | %
|Money market accounts                    |  |                                  | 48,641,328  |   |          |   | 606,215     |  | 4.94  | %              |  |   | 11,917,958  |   |             |   | 112,348    |  | 3.74  | %
|Savings accounts                         |  |                                  | 2,205,341   |   |          |   | 2,775       |  | 0.50  | %              |  |   | 2,933,930   |   |             |   | 3,787      |  | 0.51  | %
|Time Deposits                            |  |                                  | 576,497,563 |   |          |   | 7,710,820   |  | 5.31  | %              |  |   | 412,593,004 |   |             |   | 5,090,801  |  | 4.90  | %
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total interest-bearing deposits          |  |                                  | 633,779,021 |   |          |   | 8,324,000   |  | 5.21  | %              |  |   | 434,377,923 |   |             |   | 5,210,176  |  | 4.76  | %
|Fed funds purchased and other borrowings |  |                                  | 169,141     |   |          |   | 2,205       |  | 5.21  | %              |  |   | 3,886,238   |   |             |   | 54,648     |  | 5.62  | %
|Junior subordinated debt                 |  |                                  | 20,620,000  |   |          |   | 397,204     |  | 7.70  | %              |  |   | 20,620,000  |   |             |   | 402,063    |  | 7.80  | %
|FHLB borrowings                          |  |                                  | 88,695,652  |   |          |   | 1,079,455   |  | 4.76  | %              |  |   | 82,646,739  |   |             |   | 1,038,907  |  | 4.99  | %
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total interest-bearing liabilities       |  |                                  | 743,263,814 |   |          |   | 9,802,864   |  | 5.22  | %              |  |   | 541,530,900 |   |             |   | 6,705,794  |  | 4.92  | %
|Non-interest Bearing Liabilities         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Noninterest demand deposits              |  |                                  | 36,478,775  |   |          |   |             |  |       |                |  |   | 28,945,214  |   |             |   |            |  |       |  
|Other liabilities                        |  |                                  | 10,402,934  |   |          |   |             |  |       |                |  |   | 7,134,866   |   |             |   |            |  |       |  
|Shareholders equity                     |  |                                  | 72,902,321  |   |          |   |             |  |       |                |  |   | 37,152,673  |   |             |   |            |  |       |  
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total liabilities & shareholders equity |  | $                                | 863,047,844 |   |          |   |             |  |       |                |  | $ | 614,763,653 |   |             |   |            |  |       |  
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Net interest income and margin           |  |                                  |             |   |          | $ | 9,543,635   |  | 4.74  | %              |  |   |             |   |             | $ | 6,794,130  |  | 4.69  | %
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Net interest spread                      |  |                                  |             |   |          |   |             |  | 4.33  | %              |  |   |             |   |             |   |            |  | 4.37  | %
|                                         |  |                                  |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  



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##### Table of Contents

Net Interest Income. Net interest income can be analyzed in terms of changing interest rates and changing volume. The
table below demonstrates the relative impact on net interest income of changes in the volume of earning assets and interest-bearing liabilities and changes in rates earned and paid by us on such assets and liabilities. For purposes of this table,
non-accrual loans have been included in the average loan balances.



|                                         |  |                                                                            |          |   |        |   |           |       |  |   |           |  
|---------------------------------------- |  | -------------------------------------------------------------------------- | -------- | - | ------ | - | --------- | ----- |  | - | --------- | -
|                                         |  | Three Months Ended September 30, 2007Increase (Decrease) Due to changes in |         
|                                         |  | Rate                                                                       |          |   | Volume |   |           | Total | 
|Interest on securities:                  |  |                                                                            |          |   |        |   |           |       |  |   |           |  
|Taxable securities                       |  | $                                                                          | 97,414   |   |        | $ | 307,436   |       |  | $ | 404,850   |  
|Tax-exempt securities                    |  |                                                                            | 4,379    |   |        |   | (28,346   | )     |  |   | (23,967   | )
|Interest-bearing deposits                |  |                                                                            | 314      |   |        |   | 8,846     |       |  |   | 9,160     |  
|Fed Funds sold                           |  |                                                                            | (453     | ) |        |   | 202,930   |       |  |   | 202,477   |  
|Loans, including loan fees               |  |                                                                            | 555      |   |        |   | 5,241,046 |       |  |   | 5,241,601 |  
|Loans held for sale                      |  |                                                                            | (6,090   | ) |        |   | 18,544    |       |  |   | 12,454    |  
|                                         |  |                                                                            |          |   |        |   |           |       |  |   |           |  
|Total interest income                    |  |                                                                            | 96,119   |   |        |   | 5,750,456 |       |  |   | 5,846,575 |  
|Interest Expense:                        |  |                                                                            |          |   |        |   |           |       |  |   |           |  
|Interest bearing demand deposits         |  |                                                                            | 1,162    |   |        |   | (212      | )     |  |   | 950       |  
|Money market accounts                    |  |                                                                            | 46,737   |   |        |   | 447,130   |       |  |   | 493,867   |  
|Savings accounts                         |  |                                                                            | (93      | ) |        |   | (919      | )     |  |   | (1,012    | )
|Time deposits                            |  |                                                                            | 457,415  |   |        |   | 2,162,604 |       |  |   | 2,620,019 |  
|Fed funds purchased and other borrowings |  |                                                                            | (3,723   | ) |        |   | (48,720   | )     |  |   | (52,443   | )
|FHLB borrowings                          |  |                                                                            | (36,333  | ) |        |   | 76,881    |       |  |   | 40,548    |  
|Junior subordinated debt                 |  |                                                                            | (4,859   | ) |        |   |          |       |  |   | (4,859    | )
|                                         |  |                                                                            |          |   |        |   |           |       |  |   |           |  
|Total interest expense                   |  |                                                                            | 460,306  |   |        |   | 2,636,764 |       |  |   | 3,097,070 |  
|                                         |  |                                                                            |          |   |        |   |           |       |  |   |           |  
|Net increase (decrease)                  |  | $                                                                          | (364,187 | ) |        | $ | 3,113,692 |       |  | $ | 2,749,505 |  
|                                         |  |                                                                            |          |   |        |   |           |       |  |   |           |  

Net Interest Margin. The net interest margin increased 5 basis points to 4.74% for the three months ended
September 30, 2007 from 4.69% for the same period in 2006. While the increase in market rates on liabilities was greater than the increased rates on assets, the increased average balances on assets provided a benefit that exceeded the cost of
both the increased rate on liabilities and the increased balances of average interest earning liabilities.

The results reflected a 42.7%, or $189.8
million, growth in average loans to $634.2 million for the three months ended September 30, 2007 from $444.4 million for the three months ended September 30, 2006, with an overall loan yield increase of 16 basis points to 10.63% for the
three months ended September 30, 2007 from 10.47% for the three months ended September 30, 2006. We also experienced growth of $37.6 million in the investment portfolio, the yield for which increased 23 basis points to 5.49% for the
quarter ended September 30, 2007 from 5.26% for the same time period in 2006. Interest income increased $5.9 million for the period ended September 30, 2007 compared to September 30, 2006, while interest expense increased $3.1 million
due to the $201.7 million increase in average interest bearing liabilities. The efficiency in the use of interest-bearing liabilities was primarily made possible by the stock offering cash infusion in the fourth quarter of 2006 as well as the
increase of $7.5 million or 26.0% in noninterest-bearing deposits.



23



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##### Table of Contents

Provision for Loan Losses

We have established an allowance for loan losses through a provision for loan losses charged as an expense on our statement of income. We review our loan portfolio periodically to evaluate our outstanding loans and to measure both the
performance of the portfolio and the adequacy of the allowance for loan losses. Please see the discussion below under Financial ConditionAllowance for Loan Losses for a description of the factors we consider in determining the
amount of the provision we expense each period to maintain this allowance. The table below describes the detail of the provision. The provision for the third quarter 2007 increased by $1million, or 113%, from $916,000 for the same quarter in 2006.
The higher provision was required to replace charge-offs during the third quarter of 2007.



|                                                |  |                                          |            |   |      |   |           |  
|----------------------------------------------- |  | ---------------------------------------- | ---------- | - | ---- | - | --------- | -
|                                                |  | For the Three Months Ended September 30, |           
|                                                |  | 2007                                     |            |   | 2006 |  
|Allowance for loan losses:                      |  |                                          |            |   |      |   |           |  
|Balance at June 30                              |  | $                                        | 8,561,083  |   |      | $ | 5,544,038 |  
|Provisions charged to operating expenses        |  |                                          | 1,950,000  |   |      |   | 916,000   |  
|Total recoveries                                |  |                                          | 21,735     |   |      |   | 7,409     |  
|Total charged-off                               |  |                                          | (1,177,379 | ) |      |   | (231,592  | )
|                                                |  |                                          |            |   |      |   |           |  
|Net charge-offs                                 |  |                                          | (1,155,644 | ) |      |   | (224,183  | )
|                                                |  |                                          |            |   |      |   |           |  
|Balance at end of period                        |  | $                                        | 9,355,439  |   |      | $ | 6,235,855 |  
|                                                |  |                                          |            |   |      |   |           |  
|Net charge-offs to average loans outstanding(1) |  |                                          | 0.72       | % |      |   | 0.20      | %
|Allowance for loan losses to gross loans        |  |                                          | 1.41       | % |      |   | 1.33      | %

---

|(1) | Annualized
|--- | ----------

Noninterest Income

The following table sets forth information related to our noninterest income.



|                                    |  |                                 |         |        |   |         |  |   |         |   |  |       |   
|----------------------------------- |  | ------------------------------- | ------- | ------ | - | ------- |  | - | ------- | - |  | ----- | --
|                                    |  | Three Months EndedSeptember 30, |         | Change |  
|                                    |  | 2007                            |         | 2006   |   | $       |  |   | %       |  
|Gain on sale of loans               |  | $                               | 274,544 |        | $ | 199,281 |  | $ | 75,263  |   |  | 37.8  | % 
|Service charges on deposit accounts |  |                                 | 154,766 |        |   | 193,793 |  |   | (39,027 | ) |  | (20.1 | )%
|Investment securities gains, net    |  |                                 | 6,326   |        |   | 14,661  |  |   | (8,335  | ) |  | (56.9 | )%
|Other income                        |  |                                 | 546,005 |        |   | 81,303  |  |   | 464,702 |   |  | 571.6 | % 
|                                    |  |                                 |         |        |   |         |  |   |         |   |  |       |   
|Total noninterest income            |  | $                               | 981,641 |        | $ | 489,038 |  | $ | 492,603 |   |  | 100.7 | % 
|                                    |  |                                 |         |        |   |         |  |   |         |   |  |       |   

The increase in noninterest income for the three months ended September 30, 2007 is primarily due to
increases in other noninterest income of $465,000 which resulted from an increase of $157,000 on gain on sale of OREO, a $56,000 increase in loan fee income and a $243,000 increase in leased asset rental income. In May 2007 the Company purchased a
building in Chicago, Illinois, a portion of which is leased to third parties. There was also an increase in equipment leased to others under operating leases. Additionally, there was a $75,000 increase in gain on loans sold due to an increase in the
volume of loans sold in 2007 compared to the same quarter in 2006. These increases were partially offset by a $39,000 decrease in deposit and service fees and $8,000 decrease in gains recognized on investments.

Noninterest Expense



24



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##### Table of Contents

The following table sets forth information related to our noninterest expense.



|                                |  |                                  |           |        |   |           |  |   |           |  |       |  
|------------------------------- |  | -------------------------------- | --------- | ------ | - | --------- |  | - | --------- |  | ----- | -
|                                |  | Three Months Ended September 30, |           | Change |  
|                                |  | 2007                             |           | 2006   |   | $         |  | % |          
|Salaries and employee benefits  |  | $                                | 2,788,406 |        | $ | 2,081,464 |  | $ | 706,942   |  | 34.0  | %
|Occupancy and equipment         |  |                                  | 997,338   |        |   | 738,564   |  |   | 258,774   |  | 35.0  | %
|Professional fees               |  |                                  | 281,991   |        |   | 179,737   |  |   | 102,254   |  | 56.9  | %
|Other real estate owned expense |  |                                  | 108,636   |        |   | 90,731    |  |   | 17,905    |  | 19.7  | %
|Telecommunications              |  |                                  | 167,484   |        |   | 124,544   |  |   | 42,940    |  | 34.5  | %
|Advertising and marketing       |  |                                  | 180,780   |        |   | 51,589    |  |   | 129,191   |  | 250.4 | %
|Office suppplies                |  |                                  | 114,983   |        |   | 78,188    |  |   | 36,795    |  | 47.1  | %
|Travel expenses                 |  |                                  | 233,829   |        |   | 161,878   |  |   | 71,951    |  | 44.4  | %
|Other                           |  |                                  | 977,430   |        |   | 526,589   |  |   | 450,841   |  | 85.6  | %
|                                |  |                                  |           |        |   |           |  |   |           |  |       |  
|Total noninterest expense       |  | $                                | 5,850,877 |        | $ | 4,033,284 |  | $ | 1,817,593 |  | 45.1  | %
|                                |  |                                  |           |        |   |           |  |   |           |  |       |  

Noninterest expense increased by $1.8 million or 45.1% for the three months ended September 30, 2007 as
compared to the three months ended September 30, 2006 due to growth of the infrastructure to support the growth of the business, including our expansion into additional locations. The salaries and benefits expense reflected a full-time employee
head count increase of 33 or 18.9% to 208 at the end of September 30, 2007 from 175 at the end of September 30, 2006. The increase of $259,000 in occupancy and equipment expense related to new offices in Philadelphia, PA, Dallas, TX, and
Houston, TX, as well as increased office space in Chicago, IL, Tampa, FL, and Seekonk, MA.

Adding to the increase in noninterest expense was an increase
of $129,000 in advertising and marketing related to the growth and expansion of the business, an increase of $102,000 or 56.9% in professional fees primarily related to a $63,000 or 246.8% increase in legal fees related to SEC matters, an increase
of $14,000 in consulting fees, $12,000 in accounting fees, and $24,000 in other professional services related primarily to training and business recovery planning. Other noninterest expense increased $451,000 driven primarily by the growth of the
business and the increased cost of being a publicly traded company. This expense included an increase of $143,000 in regulatory assessment fees due to a higher FDIC assessment rate and the higher assessment factors on insured deposits and higher
deposit balances, $53,000 in expenses associated with the filing of SEC reports and annual reports and materials, $58,000 in ATM deconversion expenses and $24,000 in postage and courier expenses.

Provision for Income Taxes

Income tax expense can be analyzed as a
percentage of net income before income taxes. The following discussion sets forth information related to our income tax expense for the three-month periods ended September 30, 2007 and 2006.

The following table sets forth information related to our income tax expense for the three months ended September 30, 2007 and 2006.



|                               |  |                                          |           |   |      |   |           |  
|------------------------------ |  | ---------------------------------------- | --------- | - | ---- | - | --------- | -
|                               |  | For the Three Months Ended September 30, |          
|                               |  | 2007                                     |           |   | 2006 |  
|Net income before income taxes |  | $                                        | 2,557,570 |   |      | $ | 2,158,908 |  
|Provision for income taxes     |  |                                          | 883,632   |   |      |   | 722,280   |  
|Effective income tax rate      |  |                                          | 34.55     | % |      |   | 33.46     | %

The increase in the effective income tax rate for the quarter ended September 30, 2007 over the same period
in 2006, reflects the declining amount of tax-exempt income as a percentage of taxable income due to lower average balances of tax-exempt securities held in 2007 compared to 2006.

Nine Months Ended September 30, 2007 Compared to Nine Months ended September 30, 2006



25



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##### Table of Contents

|                                                    |  |                                |            |      |                               |            |   |  |        |   
|--------------------------------------------------- |  | ------------------------------ | ---------- | ---- | ----------------------------- | ---------- | - |  | ------ | --
|                                                    |  | Nine Months EndedSeptember 30, |            |      | PercentageIncrease/(Decrease) |           
|                                                    |  | 2007                           |            | 2006 |                               |           
|Consolidated Statement of Earnings Data:            |  |                                |            |      |                               |            |   |  |        |   
|Interest income                                     |  | $                              | 53,454,609 |      | $                             | 35,345,405 |   |  | 51.2   | % 
|Interest expense                                    |  |                                | 26,408,393 |      |                               | 16,712,011 |   |  | 58.0   | % 
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Net interest income                                 |  |                                | 27,046,216 |      |                               | 18,633,394 |   |  | 45.1   | % 
|Provision for loan losses                           |  |                                | 4,376,798  |      |                               | 1,866,000  |   |  | 134.6  | % 
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Net interest income after provision for loan losses |  |                                | 22,669,418 |      |                               | 16,767,394 |   |  | 35.2   | % 
|Noninterest income                                  |  |                                | 2,479,569  |      |                               | 1,887,634  |   |  | 31.4   | % 
|Noninterest expense                                 |  |                                | 17,872,217 |      |                               | 12,442,855 |   |  | 43.6   | % 
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Income before income taxes                          |  |                                | 7,276,770  |      |                               | 6,212,173  |   |  | 17.1   | % 
|Income tax expense (benefit)                        |  |                                | 2,443,495  |      |                               | (1,640,593 | ) |  | (248.9 | )%
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Net income                                          |  | $                              | 4,833,275  |      | $                             | 7,852,766  |   |  | (38.5  | )%
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Earnings per share - basic                          |  | $                              | 0.43       |      | $                             | 1.06       |   |  | (59.4  | )%
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Earnings per share - diluted                        |  | $                              | 0.42       |      | $                             | 1.04       |   |  | (59.6  | )%
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Proforma Data:                                      |  |                                |            |      |                               |            |   |  |        |   
|Net income:                                         |  |                                |            |      |                               |            |   |  |        |   
|As reported                                         |  | $                              | 4,833,275  |      | $                             | 7,852,766  |   |  | (38.5  | )%
|Adjustment for S Corp conversion                    |  |                                |           |      |                               | (3,691,407 | ) |  | (100.0 | )%
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Proforma net income                                 |  | $                              | 4,833,275  |      | $                             | 4,161,359  |   |  | 16.1   | % 
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Basic earnings per share                            |  | $                              | 0.43       |      | $                             | 0.56       |   |  | (23.2  | )%
|                                                    |  |                                |            |      |                               |            |   |  |        |   
|Diluted earnings per share                          |  | $                              | 0.42       |      | $                             | 0.55       |   |  | (23.6  | )%
|                                                    |  |                                |            |      |                               |            |   |  |        |   

Net income after taxes for the nine months ended September 30, 2007 decreased 38.5% to $4.8 million from $7.9
million for the nine months ended September 30, 2006. The prior year included a tax credit of $3.7 million that was recognized in January of 2006 for the conversion from an S Corp to a C Corp. Proforma net income increased $672,000 or 16.1% due
primarily to an increase in net interest income of $8.4 million and an increase in noninterest income of $410,000, offset by an increase in the provision for loan losses of $2.5 million and an increase in noninterest expense of $5.2 million. The
increase in noninterest expenses was primarily driven by the growth of the infrastructure to support our growth with increases of $2.5 million in salary and benefits, $508,000 in premises and equipment, $192,000 in professional fees, $614,000 in
loan and OREO expense and $1.0 million in other noninterest expense. Basic and diluted earnings per share decreased from $1.06 and $1.04 per share at September 30, 2006 to $0.43 and $0.42 per share for the nine months ended September 30,
2007. On a proforma basis, basic and diluted earnings per share were $0.56 and $0.55 for the same period in 2006, representing a decrease of 23.2%, and 23.6%, respectively, resulting from the higher average stock balances outstanding for 2007 over
2006 as a result of the public stock offering in September of 2006.

Net Interest Income and Net Interest Margin.

Interest income for the nine months ended September 30, 2007 increased $18.1 million, or 51.2% to $53.5 million compared to $35.3 million for the nine months ended
September 30, 2006. Interest expense for the nine months ended September 30, 2007 increased $8.4 million, or 45.1% to $22.7 million compared to $16.8 million for the nine months ended September 30, 2006.

Average Balances and Average Interest Rates. The 51.2% increase in net interest income for the nine months ended September 30, 2007 compared to the same period in
2006 was due to an increase in interest income of $18.1 million, reflective of the effect of an increase of $225.7 million or 43.2% in average interest-earning assets which was funded primarily through an increase of $202.4 million or 53.0% in
average interest-bearing deposits.



26



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##### Table of Contents

The average yield on our interest-earning assets was 9.62% for the nine months ended September 30, 2007, compared to
9.16% for the same period in 2006, an increase of 46 basis points or 5.0%. In 2006, the Prime rate increased from 7.25% at January 1, 2006 to 8.25% on June 29, 2006, which increased the yield on our variable rate loans. Interest income for
the nine months ended September 30, 2007 reflects the full impact of these increases, whereas interest income for the nine months ended September 30, 2006 was only partially impacted.

The cost of our average interest-bearing liabilities increased 62 basis points to 5.18% for the nine months ended September 30, 2007, from 4.57% for the nine months
ended September 30, 2006, which is a result of higher rates paid on deposit accounts, Federal funds purchased, and junior subordinated debt. The average rate on our interest-bearing deposits increased 80 basis points or 18.2% from 4.39% for the
nine months ended September 30, 2006, to 5.19% for the nine months ended September 30, 2007, reflecting increases in general market rates and also a more competitive interest rate environment for consumer and brokered deposits. We
continued to increase interest rates on our deposits through the third quarter of 2007 in view of the more volatile and competitive deposit market, however, we have more recently been able to reduce rates on these deposits in line with market rates.

The following table sets forth balance sheet items on a daily average basis for the nine months ended September 30, 2007 and 2006 and presents the
daily average interest rates earned on assets and the daily average interest rates paid on liabilities for such periods. Non-accrual loans have been included in the average loan balances. The securities are all classified as available for sale and
are carried at amortized cost for purposes of calculating the average rate received on securities. Yields on tax-exempt securities have been computed on a tax equivalent basis.



|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|---------------------------------------- |  | ------------------------------- | ----------- | - | -------- | - | ----------- |  | ----- | -------------- |  | - | ----------- | - | ----------- | - | ---------- |  | ----- | -
|                                         |  | Nine Months Ended September 30, |            
|                                         |  | 2007                            |             |   | 2006     |  
|                                         |  | AverageBalance                  |             |   | Interest |   | AverageRate |  |       | AverageBalance |  |   | Interest    |   | AverageRate |  
|Earning Assets                           |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Securities                               |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Taxable                                  |  | $                               | 111,080,987 |   |          | $ | 4,420,969   |  | 5.31  | %              |  | $ | 90,373,643  |   |             | $ | 3,274,501  |  | 4.83  | %
|Tax-exempt                               |  |                                 | 33,945,452  |   |          |   | 1,536,285   |  | 6.03  | %              |  |   | 34,317,732  |   |             |   | 1,560,744  |  | 6.06  | %
|Interest-bearing deposits                |  |                                 | 1,895,973   |   |          |   | 78,224      |  | 5.52  | %              |  |   | 680,015     |   |             |   | 24,924     |  | 4.90  | %
|Fed Funds sold                           |  |                                 | 11,627,417  |   |          |   | 453,802     |  | 5.15  | %              |  |   | 1,090,524   |   |             |   | 40,813     |  | 4.94  | %
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total securities                         |  |                                 | 158,549,829 |   |          |   | 6,489,280   |  | 5.45  | %              |  |   | 126,461,914 |   |             |   | 4,900,982  |  | 5.17  | %
|Loans                                    |  |                                 | 582,996,816 |   |          |   | 46,983,466  |  | 10.76 | %              |  |   | 390,664,608 |   |             |   | 30,581,319 |  | 10.45 | %
|Loans held for sale                      |  |                                 | 7,124,848   |   |          |   | 504,200     |  | 9.46  | %              |  |   | 5,816,668   |   |             |   | 393,759    |  | 9.05  | %
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total earning assets                     |  |                                 | 748,671,493 |   |          |   | 53,976,946  |  | 9.62  | %              |  |   | 522,943,190 |   |             |   | 35,876,060 |  | 9.16  | %
|Non-earning Assets                       |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Cash and due from banks                  |  |                                 | 4,988,466   |   |          |   |             |  |       |                |  |   | 5,125,618   |   |             |   |            |  |       |  
|Allowance for loan losses                |  |                                 | (7,828,300  | ) |          |   |             |  |       |                |  |   | (5,267,010  | ) |             |   |            |  |       |  
|Bank-owned life insurance                |  |                                 | 1,217,681   |   |          |   |             |  |       |                |  |   | 1,170,540   |   |             |   |            |  |       |  
|Other assets, including loans in process |  |                                 | 53,078,908  |   |          |   |             |  |       |                |  |   | 34,484,173  |   |             |   |            |  |       |  
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total assets                             |  | $                               | 800,128,248 |   |          |   |             |  |       |                |  | $ | 558,456,511 |   |             |   |            |  |       |  
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Interest Bearing Liabilities             |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Interest-bearing demand deposits         |  | $                               | 6,897,346   |   |          | $ | 11,628      |  | 0.23  | %              |  | $ | 7,358,182   |   |             | $ | 10,212     |  | 0.19  | %
|Money market accounts                    |  |                                 | 42,790,270  |   |          |   | 1,586,507   |  | 4.96  | %              |  |   | 10,127,247  |   |             |   | 250,421    |  | 3.31  | %
|Savings accounts                         |  |                                 | 2,419,455   |   |          |   | 9,283       |  | 0.51  | %              |  |   | 2,876,515   |   |             |   | 11,278     |  | 0.52  | %
|Time Deposits                            |  |                                 | 531,911,381 |   |          |   | 21,060,165  |  | 5.29  | %              |  |   | 361,294,316 |   |             |   | 12,265,114 |  | 4.54  | %
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total interest-bearing deposits          |  |                                 | 584,018,452 |   |          |   | 22,667,583  |  | 5.19  | %              |  |   | 381,656,260 |   |             |   | 12,537,025 |  | 4.39  | %
|Fed funds purchased and other borrowings |  |                                 | 1,618,271   |   |          |   | 67,921      |  | 5.61  | %              |  |   | 5,297,707   |   |             |   | 209,064    |  | 5.28  | %
|FHLB borrowings                          |  |                                 | 74,326,007  |   |          |   | 2,523,343   |  | 4.48  | %              |  |   | 81,230,769  |   |             |   | 2,834,356  |  | 4.67  | %
|Junior subordinated debt                 |  |                                 | 20,620,000  |   |          |   | 1,149,546   |  | 7.43  | %              |  |   | 20,620,000  |   |             |   | 1,131,566  |  | 7.32  | %
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total interest-bearing liabilities       |  |                                 | 680,582,730 |   |          |   | 26,408,393  |  | 5.18  | %              |  |   | 488,804,736 |   |             |   | 16,712,011 |  | 4.57  | %
|Non-interest Bearing Liabilities         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Noninterest demand deposits              |  |                                 | 35,470,468  |   |          |   |             |  |       |                |  |   | 26,615,405  |   |             |   |            |  |       |  
|Other liabilities                        |  |                                 | 10,730,262  |   |          |   |             |  |       |                |  |   | 7,294,879   |   |             |   |            |  |       |  
|Shareholders' equity                     |  |                                 | 73,344,788  |   |          |   |             |  |       |                |  |   | 35,741,491  |   |             |   |            |  |       |  
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Total liabilities & shareholders equity |  | $                               | 800,128,248 |   |          |   |             |  |       |                |  | $ | 558,456,511 |   |             |   |            |  |       |  
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Net interest income and margin           |  |                                 |             |   |          | $ | 27,568,553  |  | 4.91  | %              |  |   |             |   |             | $ | 19,164,049 |  | 4.90  | %
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  
|Net interest spread                      |  |                                 |             |   |          |   |             |  | 4.44  | %              |  |   |             |   |             |   |            |  | 4.59  | %
|                                         |  |                                 |             |   |          |   |             |  |       |                |  |   |             |   |             |   |            |  |       |  

Net Interest Income. Net interest income can be analyzed in terms of changing interest rates and changing volume.
The table below demonstrates the relative impact on net interest income of changes in the volume of earning assets and interest-bearing liabilities and changes in rates earned and paid by us on such assets and liabilities. For purposes of this
table, non-accrual loans have been included in the average loan balances.



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|                                         |  |                                       |            |   |        |   |            |       |  |   |            |  
|---------------------------------------- |  | ------------------------------------- | ---------- | - | ------ | - | ---------- | ----- |  | - | ---------- | -
|                                         |  | Nine Months Ended September 30, 2007  |           
|                                         |  | Increase (Decrease) Due to changes in |           
|                                         |  | Rate                                  |            |   | Volume |   |            | Total | 
|Interest on securities:                  |  |                                       |            |   |        |   |            |       |  |   |            |  
|Taxable securities                       |  | $                                     | 344,519    |   |        | $ | 801,948    |       |  | $ | 1,146,467  |  
|Tax-exempt securities                    |  |                                       | (7,585     | ) |        |   | (16,874    | )     |  |   | (24,459    | )
|Interest-bearing deposits                |  |                                       | 3,500      |   |        |   | 49,800     |       |  |   | 53,300     |  
|Fed funds sold                           |  |                                       | 1,824      |   |        |   | 411,166    |       |  |   | 412,990    |  
|Loans                                    |  |                                       | 918,540    |   |        |   | 15,483,606 |       |  |   | 16,402,146 |  
|Loans held for sale                      |  |                                       | 18,541     |   |        |   | 91,901     |       |  |   | 110,442    |  
|                                         |  |                                       |            |   |        |   |            |       |  |   |            |  
|Total interest income                    |  |                                       | 1,279,339  |   |        |   | 16,821,547 |       |  |   | 18,100,886 |  
|Interest Expense:                        |  |                                       |            |   |        |   |            |       |  |   |            |  
|Interest-bearing demand deposits         |  |                                       | 1,999      |   |        |   | (583       | )     |  |   | 1,416      |  
|Money market accounts                    |  |                                       | 179,141    |   |        |   | 1,156,945  |       |  |   | 1,336,086  |  
|Savings accounts                         |  |                                       | (237       | ) |        |   | (1,758     | )     |  |   | (1,995     | )
|Time deposits                            |  |                                       | 2,290,618  |   |        |   | 6,504,433  |       |  |   | 8,795,051  |  
|Fed funds purchased and other borrowings |  |                                       | 14,218     |   |        |   | (155,361   | )     |  |   | (141,143   | )
|FHLB borrowings                          |  |                                       | (75,028    | ) |        |   | (235,985   | )     |  |   | (311,013   | )
|Junior subordinated debt                 |  |                                       | 17,980     |   |        |   |           |       |  |   | 17,980     |  
|                                         |  |                                       |            |   |        |   |            |       |  |   |            |  
|Total interest expense                   |  |                                       | 2,428,691  |   |        |   | 7,267,691  |       |  |   | 9,696,382  |  
|                                         |  |                                       |            |   |        |   |            |       |  |   |            |  
|Net increase (decrease)                  |  | $                                     | (1,149,352 | ) |        | $ | 9,553,856  |       |  | $ | 8,404,504  |  
|                                         |  |                                       |            |   |        |   |            |       |  |   |            |  

Net Interest Margin. The net interest margin for the nine months ended September 30, 2007 of 4.91% was
similar to the 4.90% for the nine months ended September 30, 2006.

Provision for Loan Losses

We have established an allowance for loan losses through a provision for loan losses charged as an expense on our statement of income. We review our loan portfolio
periodically to evaluate our outstanding loans and to measure both the performance of the portfolio and the adequacy of the allowance for loan losses. Please see the discussion below under Financial ConditionAllowance for Loan
Losses for a description of the factors we consider in determining the amount of the provision we expense each period to maintain this allowance. The table below describes the detail of the provision. The provision for loan losses for the nine
months ended September 30, 2007 of $4.4 million was a $2.5 million, or 133%, increase over the nine months ended September 30, 2006. The increase reflected $1.25 million to cover an increase in loan charge-offs, $525,000 to cover specific
reserves on commercial loans and $725,000 to cover overall portfolio growth.



|                                                |  |                                |            |   |      |   |           |  
|----------------------------------------------- |  | ------------------------------ | ---------- | - | ---- | - | --------- | -
|                                                |  | Nine Months EndedSeptember 30, |           
|                                                |  | 2007                           |            |   | 2006 |  
|Allowance for loan losses:                      |  |                                |            |   |      |   |           |  
|Balance at beginning of year                    |  | $                              | 6,646,212  |   |      | $ | 4,791,221 |  
|Provisions charged to operating expenses        |  |                                | 4,376,798  |   |      |   | 1,866,000 |  
|Total Recoveries                                |  |                                | 75,569     |   |      |   | 47,496    |  
|Total Charged-off                               |  |                                | (1,743,140 | ) |      |   | (468,863  | )
|                                                |  |                                |            |   |      |   |           |  
|Net charge-offs                                 |  |                                | (1,667,571 | ) |      |   | (421,367  | )
|                                                |  |                                |            |   |      |   |           |  
|Balance at end of period                        |  | $                              | 9,355,439  |   |      | $ | 6,235,854 |  
|                                                |  |                                |            |   |      |   |           |  
|Net charge-offs to average loans outstanding(1) |  |                                | 0.32       | % |      |   | 0.14      | %
|Allowance for loan losses to gross loans        |  |                                | 1.41       | % |      |   | 1.33      | %

---

|(1) | Annualized
|--- | ----------



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Noninterest Income

The following table sets forth information related to our noninterest income.



|                                    |  |                                 |           |        |   |           |  |   |          |   |  |       |   
|----------------------------------- |  | ------------------------------- | --------- | ------ | - | --------- |  | - | -------- | - |  | ----- | --
|                                    |  | Nine Months Ended September 30, |           | Change |  
|                                    |  | 2007                            |           | 2006   |   | $         |  |   | %        |  
|Gain on sale of loans               |  | $                               | 577,311   |        | $ | 916,072   |  | $ | (338,761 | ) |  | (37.0 | )%
|Service charges on deposit accounts |  |                                 | 477,418   |        |   | 535,438   |  |   | (58,020  | ) |  | (10.8 | )%
|Investment securities gains, net    |  |                                 | 15,000    |        |   | 12,403    |  |   | 2,597    |   |  | 20.9  | % 
|Other income                        |  |                                 | 1,409,840 |        |   | 423,721   |  |   | 986,119  |   |  | 232.7 | % 
|                                    |  |                                 |           |        |   |           |  |   |          |   |  |       |   
|Total noninterest income            |  | $                               | 2,479,569 |        | $ | 1,887,634 |  | $ | 591,935  |   |  | 31.4  | % 
|                                    |  |                                 |           |        |   |           |  |   |          |   |  |       |   

The increase in noninterest income for the nine months ended September 30, 2007 is primarily due to the
recovery of $357,000 relating to the $1.0 million fraud loss recorded in December 2006 in the warehouse lending line of business, a $429,000 increase in income from leased assets associated with the lease of the Chicago building and assets leased to
third parties, a $76,000 increase in income from loan fees, and a $73,000 increase in gain on sale of OREO in the Atlanta community redevelopment segment and a $95,000 gain on sale on a North Carolina multi-family property. Offsetting the increase
was a decrease of $339,000 or 37.0% in gains on the sale of loans due to a reduction of $3.0 million in amount of SBA guaranteed principal sold (resulting from lower originations of SBA loans) to $2.3 million at September 30, 2007 from $5.3
million at September 30, 2006, and a $58,000 reduction in deposit and service fees.

Noninterest Expense

The following table sets forth information related to our noninterest expense.



|                                |  |                                 |            |        |   |            |  |   |           |  |       |  
|------------------------------- |  | ------------------------------- | ---------- | ------ | - | ---------- |  | - | --------- |  | ----- | -
|                                |  | Nine Months Ended September 30, |            | Change |  
|                                |  | 2007                            |            | 2006   |   | $          |  | % |          
|Salaries and employee benefits  |  | $                               | 8,760,976  |        | $ | 6,241,784  |  | $ | 2,519,192 |  | 40.4  | %
|Occupancy and equipment         |  |                                 | 2,726,565  |        |   | 2,103,851  |  |   | 622,714   |  | 29.6  | %
|Professional fees               |  |                                 | 987,442    |        |   | 795,747    |  |   | 191,695   |  | 24.1  | %
|Other real estate owned expense |  |                                 | 930,678    |        |   | 316,670    |  |   | 614,008   |  | 193.9 | %
|Telecommunications              |  |                                 | 517,051    |        |   | 409,519    |  |   | 107,532   |  | 26.3  | %
|Advertising and marketing       |  |                                 | 507,281    |        |   | 299,361    |  |   | 207,920   |  | 69.5  | %
|Office suppplies                |  |                                 | 293,131    |        |   | 220,128    |  |   | 73,003    |  | 33.2  | %
|Travel expense                  |  |                                 | 611,561    |        |   | 413,184    |  |   | 198,377   |  | 48.0  | %
|Other                           |  |                                 | 2,537,532  |        |   | 1,642,611  |  |   | 894,921   |  | 54.5  | %
|                                |  |                                 |            |        |   |            |  |   |           |  |       |  
|Total noninterest expense       |  | $                               | 17,872,217 |        | $ | 12,442,855 |  | $ | 5,429,362 |  | 43.6  | %
|                                |  |                                 |            |        |   |            |  |   |           |  |       |  

Noninterest expense increased by $5.4 million or 43.6% to $17.9 million for the nine months ended
September 30, 2007 as compared to $12.4 million for the nine months ended September 30, 2006 due to growth of the infrastructure to support the growth of the business. Contributing to the $5.2 million growth was an increase of $2.5 million
or 40.4%, in salaries and benefits due to the 18.9% increase in employees to 208 at September 30, 2007 from 175 at September 30, 2006. Additionally there was an increase of $623,000 in occupancy and equipment expense related to the new
offices in Philadelphia, PA, Dallas, TX, and Houston, TX, as well as new office space in Chicago, IL, Tampa FL, and Seekonk, MA as well as an increase in depreciation expense associated with business assets.

Adding to the increase in noninterest expense was an increase of $614,000 in OREO expense, including a write-down of $352,000 in OREO from further impairment of real
estate of which $149,000 related to OREO located in the Griffin and Macon Georgia markets, a $208,000 increase in advertising and marketing fees, and an increase in travel expenses of $198,000, both primarily resulting from the expansion of the
business, including additional locations. Also, professional fees increased by $192,000, with much of the increase being attributed to training and business recovery planning. Furthermore, other noninterest expense increased by $895,000 which
consisted of increases of $166,000 in investor relations expenses as a result of becoming a public company, $60,000 in other



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miscellaneous charges, $70,000 in insurance costs, $296,000 in FDIC and OCC regulatory assessments due to a higher FDIC assessment rate and the higher
assessment factors on insured deposits and higher deposit balances, $89,000 in ATM deconversion expense, and $100,000 in postage and courier expenses.

Provision for Income Taxes

Income tax expense can be analyzed as a percentage of net income before income taxes. The following
discussion sets forth information related to our income tax expense for the nine month periods ended September 30, 2007 and 2006.

The following table
sets forth information related to our income tax expense for the nine months ended September 30, 2007 and 2006.(2006 is shown adjusted for the $3.7 million tax benefit associated with the conversion to a C Corporation)



|                               |  |                                        |           |   |      |   |           |  
|------------------------------ |  | -------------------------------------- | --------- | - | ---- | - | --------- | -
|                               |  | For the Nine Months EndedSeptember 30, |          
|                               |  | 2007                                   |           |   | 2006 |  
|Net income before income taxes |  | $                                      | 7,276,770 |   |      | $ | 6,212,173 |  
|Provision for income taxes     |  |                                        | 2,443,495 |   |      |   | 2,050,814 |  
|Effective income tax rate      |  |                                        | 33.58     | % |      |   | 33.01     | %

The increase in the effective income tax rate from the quarter ended September 30, 2007 over the same period
in 2006, reflects the decreased percentage of tax-exempt income to taxable income.

Financial Condition

Investments

On September 30, 2007, and December 31, 2006,
the investment securities portfolio of $147.9 million and $134.5 million, respectively, represented approximately 16.7% and 19.1%, respectively, of total assets. As of September 30, 2007, and December 31, 2006, investments included
U.S. Treasuries, U.S. Government agency securities, mortgage-backed securities, municipal securities, and other securities which include state bonds, an unrelated third-party bank stock and a preferred debt security (Dollars in thousands).



|                            |  |                    |         |                   |   |               |  |            |         |  |   |        
|--------------------------- |  | ------------------ | ------- | ----------------- | - | ------------- |  | ---------- | ------- |  | - | -------
|                            |  | September 30, 2007 |         | December 31, 2006
|                            |  | AmortizedCost      |         | Fair Value        |   | AmortizedCost |  | Fair Value
|U.S. Treasuries             |  | $                  | 4,966   |                   | $ | 4,920         |  | $          | 6,950   |  | $ | 6,811  
|U.S. Government agencies    |  |                    | 70,343  |                   |   | 70,328        |  |            | 53,299  |  |   | 52,933 
|Mortgage-backed securities  |  |                    | 30,834  |                   |   | 30,505        |  |            | 32,863  |  |   | 32,331 
|Municipal obligations       |  |                    | 32,327  |                   |   | 32,573        |  |            | 39,507  |  |   | 39,944 
|Other                       |  |                    | 9,861   |                   |   | 9,558         |  |            | 2,535   |  |   | 2,535  
|                            |  |                    |         |                   |   |               |  |            |         |  |   |        
|Total investment securities |  | $                  | 148,331 |                   | $ | 147,884       |  | $          | 135,154 |  | $ | 134,554
|                            |  |                    |         |                   |   |               |  |            |         |  |   |        



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We also maintain certain required equity investments that are included in the consolidated balance sheets as other
investments. The carrying amounts of these investments as of September 30, 2007, and December 31, 2006, consisted of the following (Dollars in thousands).



|                             |  |                   |       |                  |   |      
|---------------------------- |  | ----------------- | ----- | ---------------- | - | -----
|                             |  | September 30,2007 |       | December 31,2006
|Federal Reserve Bank stock   |  | $                 | 1,169 |                  | $ | 1,295
|Federal Home Loan Bank stock |  |                   | 6,108 |                  |   | 3,541
|                             |  |                   |       |                  |   |      
|Total other investments      |  | $                 | 7,277 |                  | $ | 4,836
|                             |  |                   |       |                  |   |      

No ready market exists for these stocks and they have no quoted market value. However, the issuer has
historically redeemed these stocks at par value. Accordingly, we believe the carrying amounts are a reasonable estimate of fair value. Dividends are paid on these stocks on a quarterly basis.

Loans

Gross loans on a consolidated basis as of September 30,
2007 and December 31, 2006 were $665.2 million and $502.6 million, respectively. Our commercial real estate portfolio experienced the largest volume increase, with a $67.2 million, or 36.5%, increase for the nine months ended September 30,
2007. Overall growth in loans is consistent with our focus and strategy to grow the loan portfolio by focusing on geographic markets which we believe have attractive growth prospects.

The following table sets forth the amount of loans outstanding by type of loan at the end of each of the periods indicated.



|                                |  |                   |             |                  |   |             |  |   |             |   |  |       |   
|------------------------------- |  | ----------------- | ----------- | ---------------- | - | ----------- |  | - | ----------- | - |  | ----- | --
|                                |  | September 30,2007 |             | December 31,2006 |   | Change      | 
|                                |  |                   | Dollars     |                  |   | Percentage  | 
|Real estate  construction      |  | $                 | 69,660,036  |                  | $ | 61,767,736  |  | $ | 7,892,300   |   |  | 12.8  | % 
|Community redevelopment         |  |                   | 182,242,110 |                  |   | 132,161,743 |  |   | 50,080,367  |   |  | 37.9  | % 
|Commercial real estate          |  |                   | 251,198,538 |                  |   | 184,014,559 |  |   | 67,183,979  |   |  | 36.5  | % 
|Residential real estate         |  |                   | 18,087,111  |                  |   | 20,254,071  |  |   | (2,166,960  | ) |  | (10.7 | )%
|Commercial and industrial       |  |                   | 141,579,431 |                  |   | 102,017,512 |  |   | 39,561,919  |   |  | 38.8  | % 
|Consumer                        |  |                   | 2,383,517   |                  |   | 2,374,536   |  |   | 8,981       |   |  | 0.4   | % 
|                                |  |                   |             |                  |   |             |  |   |             |   |  |       |   
|Total loans                     |  |                   | 665,150,743 |                  |   | 502,590,157 |  |   | 162,560,586 |   |  | 32.3  | % 
|Less: Allowance for loan losses |  |                   | 9,355,439   |                  |   | 6,646,212   |  |   | 2,709,227   |   |  | 40.8  | % 
|Deferred loan fees, net         |  |                   | 2,023,437   |                  |   | 1,130,273   |  |   | 893,164     |   |  | 79.0  | % 
|                                |  |                   |             |                  |   |             |  |   |             |   |  |       |   
|Total net loans                 |  | $                 | 653,771,867 |                  | $ | 494,813,672 |  | $ | 158,958,195 |   |  | 32.1  | % 
|                                |  |                   |             |                  |   |             |  |   |             |   |  |       |   

The table below presents the balance of the community redevelopment loan portfolio by location at
September 30, 2007, June 30, 2007 and December 31, 2006 (Dollars in thousands).



|             |  |                   |         |              |   |                   |  |      |                  |  |                  |         |  |        |  
|------------ |  | ----------------- | ------- | ------------ | - | ----------------- |  | ---- | ---------------- |  | ---------------- | ------- |  | ------ | -
|             |  | September 30,2007 |         | June 30,2007 |   | Three monthChange |  |      | December 31,2006 |  | Nine monthChange |        
|Atlanta      |  | $                 | 103,630 |              | $ | 99,845            |  | 3.8  | %                |  | $                | 79,887  |  | 29.7   | %
|Charlotte    |  |                   | 7,814   |              |   | 6,546             |  | 19.4 | %                |  |                  | 7,031   |  | 11.1   | %
|Birmingham   |  |                   | 11,874  |              |   | 11,088            |  | 7.1  | %                |  |                  | 8,947   |  | 32.7   | %
|Tampa        |  |                   | 19,348  |              |   | 18,771            |  | 3.1  | %                |  |                  | 14,465  |  | 33.8   | %
|Chicago      |  |                   | 28,208  |              |   | 29,175            |  | (3.3 | )%               |  |                  | 21,457  |  | 31.5   | %
|Philadelphia |  |                   | 8,673   |              |   | 7,989             |  | 8.6  | %                |  |                  | 375     |  | 2212.8 | %
|Dallas       |  |                   | 2,695   |              |   | 1,400             |  | 92.6 | %                |  |                  |        |  | 100.0  | %
|             |  |                   |         |              |   |                   |  |      |                  |  |                  |         |  |        |  
|Total        |  | $                 | 182,242 |              | $ | 174,814           |  | 4.2  | %                |  | $                | 132,162 |  | 37.9   | %
|             |  |                   |         |              |   |                   |  |      |                  |  |                  |         |  |        |  



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The following table presents the volume of originations in our community redevelopment portfolio by location. The dollar
amount and number of loans originated are presented for the three month periods ending September 30, 2007, June 31, 2007, March 31, 2007 and December 31, 2006 (Dollars in thousands).



|             |  |                    |        |               |     |                |   |                   |  |        |  |        |        |        |     |        |   |        |  |    
|------------ |  | ------------------ | ------ | ------------- | --- | -------------- | - | ----------------- |  | ------ |  | ------ | ------ | ------ | --- | ------ | - | ------ |  | ---
|             |  | September 30, 2007 |        | June 30, 2007 |     | March 31, 2007 |   | December 31, 2006
|             |  | Amount             |        | Number        |     | Amount         |   | Number            |  | Amount |  | Number |        | Amount |     | Number
|Atlanta      |  | $                  | 25,729 |               | 199 |                | $ | 31,285            |  | 248    |  | $      | 34,911 |        | 283 |        | $ | 31,612 |  | 251
|Birmingham   |  |                    | 3,251  |               | 62  |                |   | 3,346             |  | 70     |  |        | 3,643  |        | 68  |        |   | 3,267  |  | 63 
|Charlotte    |  |                    | 2,920  |               | 30  |                |   | 2,143             |  | 23     |  |        | 2,086  |        | 16  |        |   | 2,997  |  | 25 
|Chicago      |  |                    | 6,408  |               | 42  |                |   | 9,047             |  | 69     |  |        | 9,648  |        | 67  |        |   | 8,612  |  | 56 
|Dallas       |  |                    | 1,297  |               | 13  |                |   | 1,399             |  | 13     |  |        |       |        |    |        |   |       |  |   
|Philadelphia |  |                    | 2,639  |               | 22  |                |   | 4,144             |  | 26     |  |        | 4,096  |        | 25  |        |   | 374    |  | 4  
|Tampa        |  |                    | 3,247  |               | 23  |                |   | 5,979             |  | 48     |  |        | 6,056  |        | 46  |        |   | 3,536  |  | 32 
|             |  |                    |        |               |     |                |   |                   |  |        |  |        |        |        |     |        |   |        |  |    
|Total        |  | $                  | 45,491 |               | 391 |                | $ | 57,343            |  | 497    |  | $      | 60,440 |        | 505 |        | $ | 50,398 |  | 431
|             |  |                    |        |               |     |                |   |                   |  |        |  |        |        |        |     |        |   |        |  |    

Nonaccrual, Past Due and Restructured Loans

Loans are placed on nonaccrual status when (a) the loan is in default of principal or interest for a period in excess of 90 days, unless the loan is both well secured and in the process of collection;
(b) the prospects for payment in full of principal or interest is in doubt; or (c) the borrower is in bankruptcy or receivership. Management may elect to continue accrual of interest when the estimated net realizable value of collateral is
sufficient to cover the principal balances and accrued interest and the loan is in the process of collection. Amounts received on nonaccrual loans generally are applied against principal prior to the recognition of any interest income.

At September 30, 2007 the level of nonaccrual loans increased $10.1 million or 195.7% over December 31, 2006 from $5.2 million to $15.3 million.
The increase is also attributable to weaknesses in the leasing and commercial real estate loan portfolios which showed an increase of $1.1 million or 96.7% and $1.1 million or 204.3%, respectively, in nonaccrual loans. From December 31, 2006 to
September 30, 2007, a net of 41 loans migrated to the nonaccrual category. Management believes the increase is driven principally by general market and economic conditions as described in Non-Performing Assets below. The table set
forth under Non-Performing Assets below provides information regarding our nonaccrual loans at September 30, 2007.

Other Real Estate
Owned Properties. Other real estate owned as of September 30, 2007 and December 31, 2006, was $8.0 million and $3.4 million, respectively. The $4.6 million or 136.7% increase in OREO was primarily attributable to the increased
foreclosures in several of our community redevelopment markets, with $3.8 million or 48.0% of total OREO in Atlanta, Griffin and Macon, Georgia, another $559,000 or 7.0% in Chicago, Illinois and $331,000 or 4.1% in Tampa, Florida. Additionally, the
Atlanta commercial real estate OREO portfolio increased to $2.9 million or 35.8% of total OREO at September 30, 2007, reflecting loans collateralized by an aggregate of 58 residential units and lots.

Non-Performing Assets. Non-performing assets increased $14.8 million, or 172.4%, to $23.3 million at September 30, 2007 from $8.5 million at December 31,
2006. The increase is associated with the $4.6 million increase in other real estate owned and the $10.1 million increase in nonaccrual loans. Non-performing assets as a percentage of total assets increased 141 basis points to 2.63% at
September 30, 2007 from 1.22% at December 31, 2006. The increase in nonperforming assets is primarily attributable to the impact on the redevelopment product due to an accelerated economic downturn in the Atlanta, Griffin, and Macon,
Georgia markets, along with the Tampa, Florida and Chicago, Illinois markets.



32



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##### Table of Contents

The following table provides detail of our September 30, 2007 and June 30, 2007 non-performing assets including
loan type, location, and underlying collateral. There were no loans 90 days past due and still accruing at either September 30, 2007 or June 30, 2007. The rise in the commercial non-performing real estate loans shown below is attributable
principally to the purchase of a senior mortgage position on property to protect the Companys junior position since the Company believes that the propertys collateral is adequate to support the aggregate carrying value of the loans.

Omni Financial Services

OREO and non-performing
loans

Analysis of Collateral by location as of September 30, 2007 and June 30, 2007



|                                                                 |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|---------------------------------------------------------------- |  | ----------------- |  | ----- | ---------- | ----- | --- | ----- | - | --------- |  | ----- |  | - | ----------
|                                                                 |  | Non accrual loans |  | OREO  |            | Total
|                                                                 |  | Units             |  | Value |            | Units |     | Value |   | Units     |  | Value
|Commercial loans collateralized by single family real estate     |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Redevelopment                                                    |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Atlanta                                                          |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 25                |  | $     | 3,525,647  |       | 21  |       | $ | 2,505,918 |  | 46    |  | $ | 6,031,565 
|June 30, 2007                                                    |  | 7                 |  |       | 766,140    |       | 10  |       |   | 1,094,515 |  | 17    |  |   | 1,860,655 
|Macon                                                            |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  |                  |  |       |           |       | 22  |       |   | 1,061,423 |  | 22    |  |   | 1,061,423 
|June 30, 2007                                                    |  |                  |  |       |           |       | 24  |       |   | 1,128,223 |  | 24    |  |   | 1,128,223 
|Griffin                                                          |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  |                  |  |       |           |       | 5   |       |   | 271,310   |  | 5     |  |   | 271,310   
|June 30, 2007                                                    |  |                  |  |       |           |       | 10  |       |   | 426,930   |  | 10    |  |   | 426,930   
|Charlotte                                                        |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 2                 |  |       | 78,427     |       | 3   |       |   | 152,967   |  | 5     |  |   | 231,394   
|June 30, 2007                                                    |  |                   |  |       |            |       | 3   |       |   | 152,967   |  | 3     |  |   | 152,967   
|Birmingham                                                       |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 7                 |  |       | 586,752    |       | 2   |       |   | 87,086    |  | 9     |  |   | 673,838   
|June 30, 2007                                                    |  | 2                 |  |       | 68,613     |       | 2   |       |   | 84,696    |  | 4     |  |   | 153,309   
|Tampa                                                            |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 15                |  |       | 1,985,688  |       | 3   |       |   | 331,390   |  | 18    |  |   | 2,317,078 
|June 30, 2007                                                    |  | 4                 |  |       | 454,606    |       | 2   |       |   | 255,998   |  | 6     |  |   | 710,604   
|Dallas                                                           |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 1                 |  |       | 153,575    |       |    |       |   |          |  | 1     |  |   | 153,575   
|June 30, 2007                                                    |  |                  |  |       |           |       |    |       |   |          |  |      |  |   |          
|Philadelphia                                                     |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 1                 |  |       | 163,548    |       |    |       |   |          |  | 1     |  |   | 163,548   
|June 30, 2007                                                    |  |                  |  |       |           |       |    |       |   |          |  |      |  |   |          
|Chicago                                                          |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 9                 |  |       | 1,333,850  |       | 4   |       |   | 558,644   |  | 13    |  |   | 1,892,494 
|June 30, 2007                                                    |  | 7                 |  |       | 1,279,656  |       |    |       |   |          |  | 7     |  |   | 1,279,656 
|                                                                 |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Totals as of September 30, 2007                                  |  | 60                |  |       | 7,827,487  |       | 60  |       |   | 4,968,738 |  | 120   |  |   | 12,796,225
|Totals as of June 30, 2007                                       |  | 20                |  |       | 2,569,015  |       | 51  |       |   | 3,143,329 |  | 71    |  |   | 5,712,344 
|Commercial                                                       |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Atlanta Commercial                                               |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 4                 |  |       | 653,237    |       | 7   |       |   | 1,459,367 |  | 11    |  |   | 2,112,604 
|June 30, 2007                                                    |  | 4                 |  |       | 730,083    |       | 7   |       |   | 1,268,193 |  | 11    |  |   | 1,998,276 
|North Carolina Commercial                                        |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 6                 |  |       | 239,276    |       | 4   |       |   | 131,513   |  | 10    |  |   | 370,789   
|June 30, 2007                                                    |  | 5                 |  |       | 470,206    |       | 4   |       |   | 131,513   |  | 9     |  |   | 601,719   
|                                                                 |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Totals as of September 30, 2007                                  |  | 10                |  |       | 892,513    |       | 11  |       |   | 1,590,880 |  | 21    |  |   | 2,483,393 
|Totals as of June 30, 2007                                       |  | 9                 |  |       | 1,200,289  |       | 11  |       |   | 1,399,706 |  | 20    |  |   | 2,599,995 
|                                                                 |  |                   |  |       |            |      
|Commercial loans collateralized by multifamily property          |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Atlanta Commercial                                               |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  |                  |  |       |           |       | 26  |       |   | 509,600   |  | 26    |  |   | 509,600   
|June 30, 2007                                                    |  | 26                |  |       | 1,272,348  |       |    |       |   |          |  | 26    |  |   | 1,272,348 
|                                                                 |  |                   |  |       |            |      
|Commercial loans collateralized by residential lots              |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Atlanta Commercial                                               |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 34                |  |       | 1,402,326  |       | 25  |       |   | 893,523   |  | 59    |  |   | 2,295,849 
|June 30, 2007                                                    |  | 39                |  |       | 1,659,423  |       | 21  |       |   | 731,248   |  | 60    |  |   | 2,390,671 
|                                                                 |  |                   |  |       |            |      
|Commercial real estate loans and consumer loans                  |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|SBA                                                              |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 5                 |  |       | 898,609    |       |    |       |   |          |  | 5     |  |   | 898,609   
|June 30, 2007                                                    |  | 5                 |  |       | 905,453    |       |    |       |   |          |  | 5     |  |   | 905,453   
|Leasing, equipment and other                                     |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 15                |  |       | 2,210,295  |       | 1   |       |   | 32,000    |  | 16    |  |   | 2,242,295 
|June 30, 2007                                                    |  | 11                |  |       | 1,123,801  |       | 1   |       |   | 32,000    |  | 12    |  |   | 1,155,801 
|Commercial real estate                                           |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 3                 |  |       | 1,712,045  |       |    |       |   |          |  | 3     |  |   | 1,712,045 
|June 30, 2007                                                    |  | 1                 |  |       | 562,606    |       |    |       |   |          |  | 1     |  |   | 562,606   
|Atlanta Consumer                                                 |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 2                 |  |       | 306,512    |       |    |       |   |          |  | 2     |  |   | 306,512   
|June 30, 2007                                                    |  | 2                 |  |       | 309,311    |       |    |       |   |          |  | 2     |  |   | 309,311   
|North Carolina consumer                                          |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|September 30, 2007                                               |  | 1                 |  |       | 40,723     |       |    |       |   |          |  | 1     |  |   | 40,723    
|June 30, 2007                                                    |  | 1                 |  |       | 42,753     |       |    |       |   |          |  | 1     |  |   | 42,753    
|                                                                 |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Aggregate non-performing loans and OREO as of September 30, 2007 |  | 130               |  | $     | 15,290,510 |       | 123 |       | $ | 7,994,741 |  | 253   |  | $ | 23,285,251
|                                                                 |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           
|Aggregate non-performing loans and OREO as of June 30, 2007      |  | 114               |  | $     | 9,644,999  |       | 84  |       | $ | 5,306,283 |  | 198   |  | $ | 14,951,282
|                                                                 |  |                   |  |       |            |       |     |       |   |           |  |       |  |   |           



33



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##### Table of Contents

The following table summarizes nonaccrual loans, accruing loans contractually past due 90 days or more, and restructured
loans as defined by Statement of Financial Accounting Standards No. 15. (Dollars in thousands).



|                                                  |  |                  |        |   |             |   |        |              |  |   |                 |   |  |      |        |   |      |   |       |      |  |   |        |   |  |   |        |  
|------------------------------------------------- |  | ---------------- | ------ | - | ----------- | - | ------ | ------------ |  | - | --------------- | - |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                  |  | At September 30, |        |   | At June 30, |   |        | At March 31, |  |   | At December 31, |  
|                                                  |  | 2007             |        |   | 2007        |   |        | 2007         |  |   | 2006            |   |  | 2005 |        |   | 2004 |   |       | 2003 | 
|Total nonaccrual loans                            |  | $                | 15,290 |   |             | $ | 9,645  |              |  | $ | 6,355           |   |  | $    | 4,992  |   |      | $ | 4,832 |      |  | $ | 1,795  |   |  | $ | 1,194  |  
|Loans past due 90 days or more and still accruing |  |                  |       |   |             |   |       |              |  |   | 98              |   |  |      | 179    |   |      |   | 152   |      |  |   | 1      |   |  |   | 263    |  
|                                                  |  |                  |        |   |             |   |        |              |  |   |                 |   |  |      |        |   |      |   |       |      |  |   |        |   |  |   |        |  
|Total non-performing loans                        |  |                  | 15,290 |   |             |   | 9,645  |              |  |   | 6,453           |   |  |      | 5,171  |   |      |   | 4,984 |      |  |   | 1,796  |   |  |   | 1,457  |  
|Other real estate owned (OREO)                    |  |                  | 7,995  |   |             |   | 5,306  |              |  |   | 5,228           |   |  |      | 3,378  |   |      |   | 1,179 |      |  |   | 660    |   |  |   | 440    |  
|                                                  |  |                  |        |   |             |   |        |              |  |   |                 |   |  |      |        |   |      |   |       |      |  |   |        |   |  |   |        |  
|Total non-performing assets                       |  | $                | 23,285 |   |             | $ | 14,951 |              |  | $ | 11,681          |   |  | $    | 8,549  |   |      | $ | 6,163 |      |  | $ | 2,456  |   |  | $ | 1,897  |  
|                                                  |  |                  |        |   |             |   |        |              |  |   |                 |   |  |      |        |   |      |   |       |      |  |   |        |   |  |   |        |  
|Non-performing loans to gross loans               |  |                  | 2.31   | % |             |   | 1.58   | %            |  |   | 1.13            | % |  |      | 1.03   | % |      |   | 1.52  | %    |  |   | 0.79   | % |  |   | 0.94   | %
|Non-performing assets to gross loans and OREO     |  |                  | 3.47   | % |             |   | 2.42   | %            |  |   | 2.02            | % |  |      | 1.69   | % |      |   | 1.87  | %    |  |   | 1.08   | % |  |   | 1.22   | %
|Non-performing assets to total assets             |  |                  | 2.63   | % |             |   | 1.74   | %            |  |   | 1.51            | % |  |      | 1.22   | % |      |   | 1.29  | %    |  |   | 0.77   | % |  |   | 0.89   | %
|Allowance for loan losses to gross loans          |  |                  | 1.41   | % |             |   | 1.40   | %            |  |   | 1.33            | % |  |      | 1.33   | % |      |   | 1.46  | %    |  |   | 1.53   | % |  |   | 1.42   | %
|Allowance for loan losses to non-performing loans |  |                  | 61.18  | % |             |   | 88.76  | %            |  |   | 117.40          | % |  |      | 128.50 | % |      |   | 96.13 | %    |  |   | 192.80 | % |  |   | 151.30 | %

The following table summarizes nonperforming assets by product. (Dollars in thousands).



|                                |  |                    |         |                      |   |                |  |                   |       |                      |   |         |  |       |       |                      |   |       |  |       |         |                      |   |       |  |   |       |  |   |         |  |   |       |  |   |      
|------------------------------- |  | ------------------ | ------- | -------------------- | - | -------------- |  | ----------------- | ----- | -------------------- | - | ------- |  | ----- | ----- | -------------------- | - | ----- |  | ----- | ------- | -------------------- | - | ----- |  | - | ----- |  | - | ------- |  | - | ----- |  | - | -----
|                                |  | September 30, 2007 |         | June 30, 2007        |   | March 31, 2007 |  | December 31, 2006
|                                |  | Loans              |         | Non- performingLoans |   | OREO           |  | Loans             |       | Non- performingLoans |   | OREO    |  | Loans |       | Non- performingLoans |   | OREO  |  | Loans |         | Non- performingLoans |   | OREO 
|Real estate  construction      |  | $                  | 69,660  |                      | $ | 2,055          |  | $                 | 2,353 |                      | $ | 70,840  |  | $     | 2,390 |                      | $ | 1,999 |  | $     | 74,532  |                      | $ | 261   |  | $ |      |  | $ | 61,768  |  | $ |      |  | $ |     
|Community redevelopment         |  |                    | 182,242 |                      |   | 7,828          |  |                   | 4,969 |                      |   | 174,814 |  |       | 2,569 |                      |   | 3,143 |  |       | 156,863 |                      |   | 3,566 |  |   | 4,402 |  |   | 132,162 |  |   | 1,918 |  |   | 2,508
|Commercial real estate          |  |                    | 251,199 |                      |   | 3,697          |  |                   | 32    |                      |   | 222,585 |  |       | 2,942 |                      |   | 32    |  |       | 199,595 |                      |   | 1,621 |  |   | 132   |  |   | 184,014 |  |   | 1,961 |  |   |     
|Residential real estate         |  |                    | 18,087  |                      |   | 346            |  |                   | 132   |                      |   | 18,386  |  |       | 400   |                      |   | 132   |  |       | 19,226  |                      |   | 425   |  |   | 704   |  |   | 20,254  |  |   | 411   |  |   | 870  
|Commercial and industrial       |  |                    | 141,579 |                      |   | 1,364          |  |                   | 509   |                      |   | 123,256 |  |       | 1,344 |                      |   |      |  |       | 119,188 |                      |   | 544   |  |   |      |  |   | 102,017 |  |   | 874   |  |   |     
|Consumer                        |  |                    | 2,383   |                      |   |               |  |                   |      |                      |   | 2,614   |  |       |      |                      |   |      |  |       | 2,346   |                      |   | 35    |  |   |      |  |   | 2,375   |  |   | 7     |  |   |     
|                                |  |                    |         |                      |   |                |  |                   |       |                      |   |         |  |       |       |                      |   |       |  |       |         |                      |   |       |  |   |       |  |   |         |  |   |       |  |   |      
|Total loans and Oreo            |  |                    | 665,150 |                      |   | 15,290         |  |                   | 7,995 |                      |   | 612,495 |  |       | 9,645 |                      |   | 5,306 |  |       | 571,750 |                      |   | 6,452 |  |   | 5,238 |  |   | 502,590 |  |   | 5,171 |  |   | 3,378
|Less: Allowance for loan losses |  |                    | 9,355   |                      |   |               |  |                   |      |                      |   | 8,561   |  |       |      |                      |   |      |  |       | 7,576   |                      |   |      |  |   |      |  |   | 6,646   |  |   |      |  |   |     
|Deferred loan fees, net         |  |                    | 2,023   |                      |   |               |  |                   |      |                      |   | 1,964   |  |       |      |                      |   |      |  |       | 1,795   |                      |   |      |  |   |      |  |   | 1,130   |  |   |      |  |   |     
|                                |  |                    |         |                      |   |                |  |                   |       |                      |   |         |  |       |       |                      |   |       |  |       |         |                      |   |       |  |   |       |  |   |         |  |   |       |  |   |      
|Total net loans and Oreo        |  | $                  | 653,772 |                      | $ | 15,290         |  | $                 | 7,995 |                      | $ | 601,970 |  | $     | 9,645 |                      | $ | 5,306 |  | $     | 562,379 |                      | $ | 6,452 |  | $ | 5,238 |  | $ | 494,814 |  | $ | 5,171 |  | $ | 3,378
|                                |  |                    |         |                      |   |                |  |                   |       |                      |   |         |  |       |       |                      |   |       |  |       |         |                      |   |       |  |   |       |  |   |         |  |   |       |  |   |      



34



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##### Table of Contents

The following table summarizes nonperforming assets as a percentage of loan type.



|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  
|-------------------------- |  | --------------------- | - |  | ---- | - |  | --------------------- | - |  | ------------------------------------ | -
|                           |  | September 30, 2007    |  
|                           |  | Non- performing loans |   |  | OREO |   |  | Total as % of Product |   |  | Total as a % of Gross Loans and OREO |  
|Real estate  construction |  | 2.85                  | % |  | 3.27 | % |  | 6.12                  | % |  | 0.66                                 | %
|Community redevelopment    |  | 4.13                  | % |  | 2.65 | % |  | 6.78                  | % |  | 1.89                                 | %
|Commercial real estate     |  | 1.47                  | % |  | 0.01 | % |  | 1.48                  | % |  | 0.56                                 | %
|Residential real estate    |  | 2.70                  | % |  | 0.72 | % |  | 3.42                  | % |  | 0.09                                 | %
|Commercial and industrial  |  | 0.93                  | % |  | 0.36 | % |  | 1.29                  | % |  | 0.27                                 | %
|Consumer                   |  |                      |   |  |     |   |  |                      |   |  |                                     |  
|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  
|Total Non-Performers       |  | 2.28                  | % |  | 1.19 | % |  |                       |   |  | 3.47                                 | %
|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  
|                           | 
|                           |  | June 30, 2007         |  
|                           |  | Non- performing loans |   |  | OREO |   |  | Total as % of Product |   |  | Total as a % of Gross Loans and OREO |  
|Real estate  construction |  | 3.28                  | % |  | 2.74 | % |  | 6.03                  | % |  | 0.71                                 | %
|Community redevelopment    |  | 1.44                  | % |  | 1.77 | % |  | 3.21                  | % |  | 0.92                                 | %
|Commercial real estate     |  | 1.32                  | % |  | 0.01 | % |  | 1.34                  | % |  | 0.48                                 | %
|Residential real estate    |  | 2.16                  | % |  | 0.71 | % |  | 2.87                  | % |  | 0.09                                 | %
|Commercial and industrial  |  | 1.09                  | % |  |     |   |  | 1.09                  | % |  | 0.22                                 | %
|Consumer                   |  |                      |   |  |     |   |  |                      |   |  |                                     |  
|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  
|Total Non-Performers       |  | 1.56                  | % |  | 1.19 | % |  |                       |   |  | 2.42                                 | %
|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  
|                           | 
|                           |  | March 31, 2007        |  
|                           |  | Non- performing loans |   |  | OREO |   |  | Total as % of Product |   |  | Total as a % of Gross Loans and OREO |  
|Real estate  construction |  | 0.35                  | % |  |     |   |  | 0.35                  | % |  | 0.05                                 | %
|Community redevelopment    |  | 2.21                  | % |  | 2.73 | % |  | 4.94                  | % |  | 1.38                                 | %
|Commercial real estate     |  | 0.81                  | % |  | 0.07 | % |  | 0.88                  | % |  | 0.30                                 | %
|Residential real estate    |  | 2.13                  | % |  | 3.53 | % |  | 5.67                  | % |  | 0.20                                 | %
|Commercial and industrial  |  | 0.46                  | % |  |     |   |  | 0.46                  | % |  | 0.09                                 | %
|Consumer                   |  | 1.49                  | % |  |     |   |  | 1.49                  | % |  | 0.01                                 | %
|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  
|Total Non-Performers       |  | 1.12                  | % |  | 0.91 | % |  |                       |   |  | 2.03                                 | %
|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  
|                           | 
|                           |  | December 31, 2006     |  
|                           |  | Non- performing loans |   |  | OREO |   |  | Total as % of Product |   |  | Total as a % of Gross Loans and OREO |  
|Real estate  construction |  |                      |   |  |     |   |  |                      |   |  | 0.00                                 | %
|Community redevelopment    |  | 1.42                  | % |  | 1.86 | % |  | 3.29                  | % |  | 0.87                                 | %
|Commercial real estate     |  | 1.07                  | % |  |     |   |  | 1.07                  | % |  | 0.39                                 | %
|Residential real estate    |  | 1.94                  | % |  | 4.12 | % |  | 6.06                  | % |  | 0.25                                 | %
|Commercial and industrial  |  | 0.86                  | % |  |     |   |  | 0.86                  | % |  | 0.18                                 | %
|Consumer                   |  | 0.30                  | % |  |     |   |  | 0.30                  | % |  | 0.00                                 | %
|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  
|Total Non-Performers       |  | 1.02                  | % |  | 0.67 | % |  |                       |   |  | 1.69                                 | %
|                           |  |                       |   |  |      |   |  |                       |   |  |                                      |  

Non-performing loans include non-accrual loans and accruing loans past due greater than 90 days



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Allowance for Loan Losses

Like all financial institutions, we must maintain an adequate allowance for loan losses. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan
losses when we believe that collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that we believe will be adequate to absorb probable incurred losses on existing loans
that may become uncollectible based on evaluation of the collectibility of loans and prior credit loss experience, together with the other factors noted above.

Our allowance for loan loss methodology incorporates several quantitative and qualitative risk factors used to establish the appropriate allowance for loan loss at each reporting date. Quantitative factors include our historical loss
experience, delinquency and charge-off trends, collateral values, changes in non-performing loans, and other factors. Qualitative factors include the economic conditions of our operating markets and the state of certain industries. Specific changes
in the qualitative factors are based on perceived risk of similar groups of loans classified by collateral type, purpose and terms. An internal four-year loss history is also incorporated into the allowance.

While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in
economic or other conditions. Management periodically reviews the assumptions and formulae used in determining the allowance and makes adjustments if required to reflect the current risk profile of the portfolio. During the quarter ended
September 30, 2007, we noted increasing deterioration in the community redevelopment and residential real estate portfolios as the implosion of the mortgage industry has limited the ability of borrowers to secure the permanent financing needed
to repay our loans resulting in increased delinquencies and non-performing loans. Management is in the process of evaluating the impact of these events on our ability to collect loans and liquidate collateral in the event of foreclosure. Although
management has determined that no qualitative adjustment to the risk factors used to establish the allowance is required at this time, the results of this analysis or further market deterioration may require an adjustment to the factors prior to
December 31, 2007. The allowance consists of specific and general components. In most cases the specific allowance relates to criticized and classified loans. The general allowance covers non-classified loans and is based on historical loss
experience adjusted for the various qualitative and quantitative factors listed above.



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The following table summarizes the activity in our allowance for loan losses for the periods indicated (Dollars in
thousands).



|                                                             |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|------------------------------------------------------------ |  | -------------------------------------- | ----- | - | -------------------------------------- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - | ---- | - | ----- | - |  | - | ----- | -
|                                                             |  | For the Nine MonthsEnded September 30, |       |   | At or For the Years Ended December 31, |  
|                                                             |  | 2007                                   |       |   | 2006                                   |   |       | 2006 |  |   | 2005  |   |  | 2004 |       |   | 2003 |  
|Allowance for loan losses:                                   |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Balance at beginning of year                                 |  | $                                      | 6,646 |   |                                        | $ | 4,791 |      |  | $ | 4,791 |   |  | $    | 3,463 |   |      | $ | 2,204 |   |  | $ | 1,737 |  
|Provisions charged to operating expenses                     |  |                                        | 4,377 |   |                                        |   | 1,866 |      |  |   | 2,583 |   |  |      | 1,264 |   |      |   | 1,451 |   |  |   | 705   |  
|Recoveries of loans previously charged-off:                  |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Real estateconstruction                                     |  |                                        |      |   |                                        |   |      |      |  |   |      |   |  |      | 6     |   |      |   |      |   |  |   |      |  
|Community redevelopment                                      |  |                                        |      |   |                                        |   |      |      |  |   |      |   |  |      | 21    |   |      |   |      |   |  |   |      |  
|Commercial real estate                                       |  |                                        |      |   |                                        |   |      |      |  |   |      |   |  |      | 12    |   |      |   | 13    |   |  |   | 5     |  
|Residential real estate                                      |  |                                        |      |   |                                        |   | 1     |      |  |   | 3     |   |  |      |      |   |      |   |      |   |  |   |      |  
|Commercial and industrial                                    |  |                                        | 64    |   |                                        |   | 32    |      |  |   | 40    |   |  |      | 3     |   |      |   | 3     |   |  |   | 3     |  
|Consumer                                                     |  |                                        | 11    |   |                                        |   | 15    |      |  |   | 16    |   |  |      | 4     |   |      |   | 30    |   |  |   | 7     |  
|                                                             |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Total Recoveries                                             |  |                                        | 75    |   |                                        |   | 48    |      |  |   | 59    |   |  |      | 46    |   |      |   | 46    |   |  |   | 15    |  
|Loans charged-off:                                           |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Real estateconstruction                                     |  |                                        | 78    |   |                                        |   |      |      |  |   |      |   |  |      | 97    |   |      |   |      |   |  |   | 1     |  
|Community redevelopment                                      |  |                                        | 642   |   |                                        |   | 232   |      |  |   | 309   |   |  |      | 166   |   |      |   | 117   |   |  |   | 75    |  
|Commercial real estate                                       |  |                                        | 829   |   |                                        |   | 69    |      |  |   | 251   |   |  |      | 120   |   |      |   | 5     |   |  |   |      |  
|Residential real estate                                      |  |                                        |      |   |                                        |   |      |      |  |   | 2     |   |  |      |      |   |      |   |      |   |  |   |      |  
|Commercial and industrial                                    |  |                                        | 194   |   |                                        |   | 163   |      |  |   | 163   |   |  |      | 271   |   |      |   | 102   |   |  |   |      |  
|Consumer                                                     |  |                                        |       |   |                                        |   | 5     |      |  |   | 62    |   |  |      | 46    |   |      |   | 14    |   |  |   | 177   |  
|                                                             |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Total Charged-off                                            |  |                                        | 1,743 |   |                                        |   | 469   |      |  |   | 787   |   |  |      | 700   |   |      |   | 238   |   |  |   | 253   |  
|Net charge-offs                                              |  |                                        | 1,668 |   |                                        |   | 421   |      |  |   | 728   |   |  |      | 654   |   |      |   | 192   |   |  |   | 238   |  
|                                                             |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Allowance for loan losses acquired in a business combination |  |                                        |       |   |                                        |   |       |      |  |   |      |   |  |      | 718   |   |      |   |      |   |  |   |      |  
|                                                             |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Balance at end of period                                     |  | $                                      | 9,355 |   |                                        | $ | 6,236 |      |  | $ | 6,646 |   |  | $    | 4,791 |   |      | $ | 3,463 |   |  | $ | 2,204 |  
|                                                             |  |                                        |       |   |                                        |   |       |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Net charge-offs to average loans outstanding (1)             |  |                                        | 0.32  | % |                                        |   | 0.14  | %    |  |   | 0.17  | % |  |      | 0.23  | % |      |   | 0.10  | % |  |   | 0.18  | %
|Allowance for loan losses to gross loans                     |  |                                        | 1.41  | % |                                        |   | 1.33  | %    |  |   | 1.33  | % |  |      | 1.46  | % |      |   | 1.53  | % |  |   | 1.42  | %

---

|(1) | Annualized
|--- | ----------

Deposits

Deposits have historically been the primary source of funding our asset growth. As of September 30, 2007, total deposits were $676.4 million, compared to $544.7
million as of December 31, 2006. The increase in total deposits was driven by our growth in certificates of deposit, which includes both retail and brokered time deposits. As of September 30, 2007, certificates of deposit were $579.7
million, compared to $458.3 million as of December 31, 2006. As of the same dates, brokered time deposits, which are included in the total certificates of deposit balance, represent $394.1 million (58.3% of deposits) and $296.0 million (54.3%
of deposits), respectively. Noninterest bearing deposits were $37.0 million on September 30, 2007 and $42.7 million on December 31, 2006.

Major
classifications of deposits at September 30, 2007 and December 31, 2006 are summarized as follows:



|                                     |  |                   |             |                  |   |                   |  |       |   
|------------------------------------ |  | ----------------- | ----------- | ---------------- | - | ----------------- |  | ----- | --
|                                     |  | September 30,2007 |             | December 31,2006 |   | Percentage Change | 
|Interest checking                    |  | $                 | 7,662,336   |                  | $ | 6,653,617         |  | 15.2  | % 
|Savings and money market             |  |                   | 52,044,980  |                  |   | 36,993,065        |  | 40.7  | % 
|Time                                 |  |                   | 185,559,820 |                  |   | 162,293,149       |  | 14.3  | % 
|Brokered time                        |  |                   | 394,131,914 |                  |   | 296,003,247       |  | 33.2  | % 
|                                     |  |                   |             |                  |   |                   |  |       |   
|Total interest-bearing deposits      |  |                   | 639,399,050 |                  |   | 501,943,078       |  | 27.4  | % 
|Non-interest bearing demand deposits |  |                   | 36,992,378  |                  |   | 42,726,594        |  | (13.4 | )%
|                                     |  |                   |             |                  |   |                   |  |       |   
|Total deposits                       |  | $                 | 676,391,428 |                  | $ | 544,669,672       |  | 24.2  | % 
|                                     |  |                   |             |                  |   |                   |  |       |   



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Borrowings

At
September 30, 2007 and December 31, 2006, the Company had outstanding advances of approximately $107.5 million and $57.5 million, respectively, with the Federal Home Loan Bank under a secured line of credit, collateralized by a blanket
lien on assets pledged. Each advance is payable at maturity date, with a prepayment penalty for fixed rate advances. The $50 million increase in these advances from December 31, 2006 to September 30, 2007 reflected the more advantageous
pricing of these borrowings compared to brokered certificates of deposit.

Junior Subordinated Debentures

In order to manage our capital position more efficiently, we have relied on trust preferred securities issued by our wholly-owned subsidiaries, Omni Statutory Trust II,
Omni Statutory Trust III, and Omni Statutory Trust IV. In 2003, 2004 and 2005 we issued, through these subsidiaries, trust preferred securities representing a preferred beneficial interest in our unsecured junior subordinated debentures. The trust
preferred securities qualify as Tier I capital under Federal Reserve guidelines within certain limitations. In each case, the proceeds from the issuance of the trust preferred securities and the common securities of the trust were used to purchase
our junior subordinated debentures, which carry a floating rate of interest adjusted every three months to the 3-Month LIBOR. At September 30, 2007, the 3-Month LIBOR rate was 5.23%. The junior subordinated debentures mature on the 30-year
anniversary of their issuance and cannot generally be called prior to the five-year anniversary of the date of issuance. The following table sets forth the principal terms of the junior subordinated debentures as of the date indicated.



|                         |  |                |  |                               |            |                        |       |   |                        |      |  
|------------------------ |  | -------------- |  | ----------------------------- | ---------- | ---------------------- | ----- | - | ---------------------- | ---- | -
|Trust Name               |  | Issuance Date  |  | Principal Amount of Debenture |            | Spread to 3-monthLIBOR |       |   | 9/30/2007Interest Rate |     
|Omni Statutory Trust II  |  | March 26, 2003 |  | $                             | 5,155,000  |                        | +3.15 | % |                        | 8.35 | %
|                         |  |                |  |                              
|Omni Statutory Trust III |  | June 17, 2004  |  | $                             | 5,155,000  |                        | +2.70 | % |                        | 8.39 | %
|                         |  |                |  |                              
|Omni Statutory Trust IV  |  | March 17, 2005 |  | $                             | 10,310,000 |                        | +1.90 | % |                        | 7.59 | %

In accordance with FASB Interpretation No. 46, Omni Statutory Trust II, Omni Statutory Trust III and Omni
Statutory Trust IV (the Trusts) are not consolidated with the Company. Accordingly, the Company does not report the securities issued by the Trusts as liabilities, and instead reports as liabilities the junior subordinated debentures
issued by the Company and held by the Trusts. Junior subordinated debentures are subject to certain limitations to qualify for Tier 1 capital for regulatory capital purposes.

Capital Resources

Current risk-based regulatory capital standards generally require banks and bank holding companies
to maintain three minimum capital ratios. Tier 1 risk-based capital ratio compares Tier 1 or core capital, which consists principally of common equity, and risk-weighted assets for a minimum ratio of at least 4%. Tier 1
leverage ratio compares Tier 1 capital to adjusted total assets for a minimum ratio of at least 4%. Total risk-based capital ratio compares total capital, which consists of Tier 1 capital, certain forms of subordinated debt, and a portion of the
allowance for loan losses, to risk-weighted assets for a minimum ratio of at least 8%. Risk-weighted assets are calculated by multiplying the balance in each category of assets by a risk factor, which ranges from zero for cash assets and certain
government obligations to 100% for some types of loans, and adding the products together.

The following table provides a comparison of our risk-based
capital ratios and leverage ratios to the minimum regulatory requirements for the periods indicated.



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|                                       |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|-------------------------------------- |  | ------ | ------ | ----- | ------------------------------------ | - | ------ | ---------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                       |  | Actual |        |       | For Capital AdequacyPurposes Minimum |   |        | To Be Well Capitalized Under Prompt Corrective ActionProvision Minimum |       
|                                       |  | Amount |        | Ratio |                                      |   | Amount |                                                                        | Ratio  |  |      | Amount |  | Ratio |       
|As of September 30, 2007               |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|Tier 1 Capital to average assets       |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|Bank                                   |  | $      | 65,308 |       | 7.71                                 | % |        | $                                                                      | 33,882 |  | 4.00 | %      |  | $     | 42,353 |  | 5.00  | %
|Consolidated                           |  | $      | 86,448 |       | 10.21                                | % |        | $                                                                      | 33,868 |  | 4.00 | %      |  |       | N/A    |  | N/A   |  
|Tier 1 Capital to risk weighted assets |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|Bank                                   |  | $      | 65,308 |       | 8.90                                 | % |        | $                                                                      | 29,352 |  | 4.00 | %      |  | $     | 44,028 |  | 6.00  | %
|Consolidated                           |  | $      | 86,448 |       | 11.75                                | % |        | $                                                                      | 29,429 |  | 4.00 | %      |  |       | N/A    |  | N/A   |  
|Total Capital to risk weighted assets  |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|Bank                                   |  | $      | 76,488 |       | 10.42                                | % |        | $                                                                      | 58,724 |  | 8.00 | %      |  | $     | 73,405 |  | 10.00 | %
|Consolidated                           |  | $      | 95,584 |       | 12.99                                | % |        | $                                                                      | 58,866 |  | 8.00 | %      |  |       | N/A    |  | N/A   |  
|As of December 31, 2006                |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|Tier 1 Capital to average assets       |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|Bank                                   |  | $      | 50,406 |       | 7.71                                 | % |        | $                                                                      | 26,150 |  | 4.00 | %      |  | $     | 32,689 |  | 5.00  | %
|Consolidated                           |  | $      | 86,038 |       | 13.11                                | % |        | $                                                                      | 26,256 |  | 4.00 | %      |  |       | N/A    |  | N/A   |  
|Tier 1 Capital to risk weighted assets |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|Bank                                   |  | $      | 50,406 |       | 8.95                                 | % |        | $                                                                      | 22,522 |  | 4.00 | %      |  | $     | 33,784 |  | 6.00  | %
|Consolidated                           |  | $      | 86,038 |       | 15.62                                | % |        | $                                                                      | 22,036 |  | 4.00 | %      |  |       | N/A    |  | N/A   |  
|Total Capital to risk weighted assets  |  |        |        |       |                                      |   |        |                                                                        |        |  |      |        |  |       |        |  |       |  
|Bank                                   |  | $      | 59,052 |       | 10.49                                | % |        | $                                                                      | 45,046 |  | 8.00 | %      |  | $     | 56,307 |  | 10.00 | %
|Consolidated                           |  | $      | 92,684 |       | 16.82                                | % |        | $                                                                      | 44,071 |  | 8.00 | %      |  |       | N/A    |  | N/A   |  

The Bank and the Company met all capital adequacy requirements to which we are subject as of September 30,
2007 and December 31, 2006. The Bank is also considered well capitalized as of the same dates (the well capitalized category does not apply to holding companies).

Contractual Obligations and Off-Balance Sheet Arrangements

We
routinely enter into contracts for services in the conduct of ordinary business operations which may require payment for services to be provided in the future and may contain penalty clauses for early termination of the contracts. To meet the
financing needs of our customers, we are also parties to financial instruments with off-balance sheet risk including commitments to extend credit and standby letters of credit. We have also committed to irrevocably and unconditionally guarantee the
following payments or distributions with respect to the holders of preferred securities to the extent that Omni Statutory Trust II, Omni Statutory Trust III, and Omni Statutory Trust IV have not made such payments or distributions: (1) accrued
and unpaid distributions, (2) the redemption price, and (3) upon a dissolution or termination of the trust, the lesser of the liquidation amount and all accrued and unpaid distributions and the amount of assets of the trust remaining
available for distribution.

We do not believe that these off-balance sheet arrangements have or are reasonably likely to have a material effect on our
financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. However, there can be no assurance that such arrangements will not have a future effect.

Liquidity and Interest Rate Sensitivity

Liquidity
represents the ability of a company to convert assets into cash or cash equivalents without significant loss, and the ability to raise additional funds by increasing liabilities. Liquidity management involves monitoring our



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sources and uses of funds in order to meet our day-to-day cash flow requirements while maximizing profits. Liquidity management is made more complicated
because different balance sheet components are subject to varying degrees of management control. For example, the timing of maturities of our investment portfolio is fairly predictable and subject to a high degree of control at the time
investment decisions are made. However, net deposit inflows and outflows are far less predictable and are not subject to the same degree of control.

At September 30, 2007, our liquid assets which include cash and due from banks and federal funds sold, amounted to $10.3 million, or 1.2% of total assets, respectively. Our investment securities at September 30, 2007 amounted
to $147.9 million, or 16.7% of total assets. Investment securities traditionally provide a secondary source of liquidity since they can be converted into cash in a timely manner. However, most of these securities are pledged against outstanding
debt. Therefore, the related debt would need to be repaid prior to the securities being sold in order for these securities to be converted to cash.

Our ability to maintain and expand our deposit base and borrowing capabilities serves as our primary source of liquidity. We plan to meet our future cash needs through the liquidation of temporary investments and the generation of
deposits. In addition, we will receive cash upon the maturity and sale of loans and the maturity of investment securities. In addition, we maintain federal funds purchased lines of credit with correspondent banks totaling $51.4
million. We are also a member of the Federal Home Loan Bank of Atlanta, from which applications for borrowings can be made for leverage purposes. The FHLB requires that securities, qualifying mortgage loans, and stock of the FHLB owned by
the bank be pledged to secure any advances from the FHLB. The unused borrowing capacity currently available from the FHLB at September 30, 2007 was $17.3 million, based on the Banks $6.1 million investment in FHLB stock, as well as
qualifying mortgages and pledged securities available to secure any future borrowings.

We believe that our existing stable base of core deposits,
borrowings from the FHLB, short-term repurchase agreements, and proceeds we received from our initial public offering will enable us to successfully meet our long-term liquidity needs.



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|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Market
risk is the risk of loss from adverse changes in market prices and rates, which principally arises from interest rate risk inherent in our lending, investing, deposit gathering, and borrowing activities. Other types of market risks, such as
foreign currency exchange rate risk and commodity price risk, do not generally arise in the normal course of our business.

We actively monitor and manage
our interest rate risk exposure principally by measuring our interest sensitivity gap, which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given period
of time. Interest rate sensitivity can be managed by repricing assets or liabilities, selling securities available for sale, replacing an asset or liability at maturity, or adjusting the interest rate during the life of an asset or
liability. Managing the amount of assets and liabilities repricing in this same time interval helps to hedge the risk and minimize the impact on net interest income of rising or falling interest rates. We generally would benefit from
increasing market rates of interest when we have an asset-sensitive gap position and generally would benefit from decreasing market rates of interest when we are liability-sensitive.

Approximately 45.3% of our loans were variable rate loans at September 30, 2007 and we were asset sensitive during the nine months ended September 30, 2007. As of September 30, 2007, we expect to remain
asset sensitive for 2007. The ratio of cumulative gap to total earning assets after 12 months was 21.7% because $177.4 million more assets will reprice in a 12 month period than liabilities. However, our gap analysis is not a precise
indicator of our interest sensitivity position. The analysis presents only a static view of the timing of maturities and repricing opportunities, without taking into consideration that changes in interest rates do not affect all assets and
liabilities equally. For example, rates paid on a substantial portion of core deposits may change contractually within a relatively short time frame, but those rates are viewed by us as significantly less interest-sensitive than market- based
rates such as those paid on noncore deposits. Net interest income may be affected by other significant factors in a given interest rate environment, including changes in the volume and mix of interest-earning assets and interest-bearing
liabilities.

Interest rate risk is addressed by our Asset Liability Management Committee, or ALCO, which is comprised of senior management. The ALCO
monitors interest rate risk by analyzing the potential impact on the net economic value of equity and net interest income from potential changes in interest rates, and consider the impact of alternative strategies or changes in balance sheet
structure. We manage our balance sheet in part to maintain the potential impact on economic value of equity and net interest income within acceptable ranges despite changes in interest rates.

Our exposure to interest rate risk is reviewed on at least a quarterly basis by the ALCO and our board of directors. Interest rate risk exposure is measured using
interest rate sensitivity analysis to determine our change in economic value of equity in the event of hypothetical changes in interest rates. If potential changes to net economic value of equity and net interest income resulting from hypothetical
interest rate changes are not within the limits established by our board of directors, the board of directors may direct management to adjust the asset and liability mix to bring interest rate risk within board-approved limits.

Net Interest Income Simulation

In order to measure interest rate
risk at September 30, 2007, we used a simulation model to project changes in net interest income that result from forecasted changes in interest rates. This analysis calculates the difference between net interest income forecasted using a
rising and a falling interest rate scenario and net interest income using a base market interest rate. The income simulation model includes various assumptions regarding the re-pricing relationships for each of our products. Many of our assets are
floating rate loans, which are assumed to re-price immediately, and proportional to the change in market rates, depending on their contracted index. Our non-term deposit products re-price more slowly, usually changing less than the change in market
rates and at our discretion. This analysis indicates the impact of changes in net interest income for the given set of rate changes and assumptions. It assumes the balance sheet remains static and that its structure does not change over the course
of the year. It does not account for all factors that impact this analysis, including changes by management to mitigate the impact of interest rate changes or secondary impacts such as changes to our credit risk profile as interest rates change.



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Furthermore, loan prepayment rate estimates and spread relationships change regularly. Interest rate changes create
changes in actual loan prepayment rates that will differ from the market estimates incorporated in this analysis. Changes that vary significantly from the assumptions may have significant effects on our net interest income. For the rising and
falling interest rate scenarios, the base market interest rate forecast was increased and decreased over twelve months by 200 and 100 basis points, respectively. At September 30, 2007, our net interest margin exposure related to these
hypothetical changes in market interest rates was within the current guidelines we have established. The results of our analysis are set forth below: (Dollars in thousands)



|                       |  |                              |        |                             |      |  
|---------------------- |  | ---------------------------- | ------ | --------------------------- | ---- | -
|Interest Rate Scenario |  | Adjusted Net Interest Income |        | Percentage Change from Base |     
|Up 200 basis points    |  | $                            | 43,426 |                             | 5.8  | %
|Up 100 basis points    |  | $                            | 42,246 |                             | 3.0  | %
|Base                   |  | $                            | 41,032 |                             |     | %
|Down 100 basis points  |  | $                            | 39,772 |                             | -3.1 | %
|Down 200 basis points  |  | $                            | 38,342 |                             | -6.6 | %

Economic Value of Equity

We measure the impact of market interest rate changes on the net present value of estimated cash flows from our assets, liabilities and off-balance sheet items, defined as economic value of equity, using a simulation
model. This simulation model assesses the changes in the market value of interest rate sensitive financial instruments that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates. At
September 30, 2007, our economic value of equity exposure related to these hypothetical changes in market interest rates was within the current guidelines we have established. The following table sets forth our projected change in economic
value of equity as a result of certain immediate increases or decreases in interest rates at September 30, 2007.



|                       |  |                |        |                             |       |   |                            |     |  
|---------------------- |  | -------------- | ------ | --------------------------- | ----- | - | -------------------------- | --- | -
|Interest Rate Scenario |  | Economic Value |        | Percentage Change from Base |       |   | Percentage of Total Assets |    
|Up 200 basis points    |  | $              | 65,611 |                             | -1.3  | % |                            | 7.7 | %
|Up 100 basis points    |  | $              | 66,974 |                             | 0.7   | % |                            | 7.8 | %
|Base                   |  | $              | 66,494 |                             |      | % |                            | 7.6 | %
|Down 100 basis points  |  | $              | 62,072 |                             | -6.7  | % |                            | 7.5 | %
|Down 200 basis points  |  | $              | 56,293 |                             | -15.3 | % |                            | 6.4 | %

The computation of prospective effects of hypothetical interest rate changes are based on numerous assumptions,
including relative levels of market interest rates, asset prepayments and deposit decay, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions we may undertake in response to changes
in interest rates. Actual amounts may differ from the projections set forth above in the event that market conditions vary from the underlying assumptions.



|Item 4. | Controls and Procedures.
|------- | ------------------------

Based on their evaluation as of the end
of the period covered by this report, the Company, under the supervision and with the participation of our management, including its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design
and operation of the Companys disclosure controls and procedures as defined in Exchange Act Rule 13a  15(e). The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future
events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.



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Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of
September 30, 2007, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files under the Securities Exchange Act of 1934 is reported within the time periods
specified under Securities and Exchange Commission rules. Additionally, they concluded that the Companys disclosure controls and procedures were effective in ensuring that information required to be disclosed in such reports is accumulated and
communicated to management, including the Chief Executive Officer and Chief Financial Officer, in time to allow timely decisions regarding required disclosures.

There were no changes in internal controls over financial reporting or, to managements knowledge, in other factors during the quarter ended September 30, 2007 that have materially affected or are reasonably likely to materially
affect these controls subsequent to the date of the evaluation.



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Part II. Other Information



|Item 1. | Legal Proceedings
|------- | -----------------

We were named as a defendant in litigation
involving Georgia Community Bank, which we acquired in 2005. While the plaintiffs had initially dismissed us from the litigation in May of 2006, they have since filed a motion seeking leave to add the Bank as a party-defendant.

On October 24, 2005, two shareholders of Georgia Community Bancshares, Inc., the former parent of Georgia Community Bank, filed a proposed class action against,
among others, Georgia Community Bancshares, Georgia Community Bank and ourselves for fraud under the Georgia Securities Act of 1973, as amended and the Georgia Racketeer Influenced and Corrupt Organizations Act, common law fraud, negligence and
breach of fiduciary duty. The action is entitled Gage, et al. v. Georgia Community Bank, Inc., et al., Civil Action No. 2005CV107863, Superior Court of Fulton County, State of Georgia. The complaint alleged that, prior to our acquisition of
Georgia Community Bank, defendants committed fraud in the sale of Georgia Community Bancshares stock to the plaintiffs and to members of the proposed class and committed other wrongful acts and omissions regarding loans to insiders to fund their
purchases of Georgia Community Bancshares stock.

The complaint alleged, incorrectly, that we merged with Georgia Community Bank and assumed all of its
liabilities, including liability for the claims alleged in the complaint. In fact, we purchased all of Georgia Community Banks stock from Georgia Community Bancshares, caused Georgia Community Bank to be converted into a national bank and
merged it into our subsidiary bank, Omni National Bank. We do not believe there is a good faith basis for contending that we assumed Georgia Community Banks liabilities.

After the action was filed, we were not initially served with process. In discussions with plaintiffs counsel, we asserted that neither we nor Omni National Bank has any liability for the claims alleged in the
complaint, that Omni National Bank owns any claims against Georgia Community Banks officers and directors for any breach of their fiduciary duties to Georgia Community Bank and that we will assert ownership of those claims, if the plaintiffs
proceed with the litigation against us.

Our counsel accepted service of the complaint on our behalf on April 3, 2006. On April 18, 2006, our
counsel served the plaintiffs and their counsel with written notice of our intent to file claims for abusive litigation pursuant to O.C.G.A. § 51-7-80 et seq. and for frivolous litigation pursuant to O.C.G.A. § 9-15-14 against the
plaintiffs, their counsel and each counsels firm if they failed to withdraw, abandon, discontinue or dismiss the complaint against us within 30 days of our notice. Subsequently, on May 3, 2006, plaintiffs voluntarily dismissed the action
and all claims therein as to us without prejudice. The action is still pending against the remaining defendants.

On December 4, 2006, plaintiffs
filed a motion seeking leave of court to amend the complaint to add the Bank as a party-defendant, alleging in their proposed amended complaint that the Bank, as the successor in interest to GCB assumed liability in the merger for the
plaintiffs claims against GCB. The court granted the motion on May 18, 2007. The plaintiffs have not, as yet, served a summons and complaint against the Bank, however. The Company and the Bank believe that they have no liability for any
of the claims alleged in the complaint and intend to defend the action vigorously if the plaintiffs proceed with any claims in the action against either or both of them.

Our subsidiary bank through its merger with Georgia Community Bank, which was a federally-chartered savings bank, may have assumed obligations under 12 C.F.R. § 545.121 to indemnify those defendants who were
officers and directors of Georgia Community Bank for their costs of defense if they prevail on the merits as to the claims against them in that capacity. However, if they do not prevail on the merits, any indemnification for judgments, settlements
or defense costs would require affirmative action by the board of directors of Omni National Bank and would require a finding by the board that those former Georgia Community Bank officers and directors were acting for a purpose that they could have
reasonably believed was in the best interest of Georgia Community Bank or its shareholders. Based on our knowledge of the allegations of the complaint, and Georgia Community Banks history, its financial circumstances at the time of our
acquisition, and their causes, there does not appear to be a substantial likelihood that the board of Omni National Bank would be able to reach such a finding.

Georgia Community Bancshares maintained director and officer liability insurance with Federal Insurance Company, with aggregate policy limits of $1,000,000. Omni National Bank may have succeeded to Georgia



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Community Banks rights under the policy and may be entitled to coverage either in its own right or if it were required to indemnify former Georgia
Community Bank officers and directors for the defense costs they incur in the action. Since the coverage limits are low, it is possible that the policy will be depleted and there may not be any coverage remaining under the policy to reimburse Omni
National Bank for any defense costs it incurs or indemnification payments it makes. If the director and officer defendants reach a settlement with the plaintiffs, it is likely that the insurance company and the officers and directors will ask us to
participate. We will consider cooperating in the settlement, but do not intend to contribute to it financially.

Other. We are involved in no other
material legal proceedings, other than ordinary routine litigation incidental to our business. Our management does not believe that such legal proceedings, individually or in the aggregate, are likely to have a material adverse effect on our results
of operations, cash flows or financial condition.



|Item 1A. | Risk Factors
|-------- | ------------

The Companys 2006 Form 10-K, in
Item 1A, summarizes the material risks to the business. The discussion below supplements and adds to the discussion of risk factors in the 2006 Form 10-K, primarily to take into account recent developments in the housing, mortgage and
credit markets. We believe that this discussion and the discussion in our 2006 Form 10-K represent the material risks relevant to us, our business and our industry. Also refer to the discussion in
Part IItem 2Managements Discussion and Analysis of Financial Condition and Results of Operations in this report for additional information that may supplement or update the discussion of risk factors in our
2006 Form 10-K. In addition, new material risks to our business may emerge that we are currently unable to predict.

You should consider the
risks described in our 2006 Form 10-K and in this report carefully in evaluating our business because they could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking
statements contained in this report.

Credit market confidence for residential housing finance has eroded, more especially since the middle of 2007. The
lower confidence level has reduced the available financing from historical levels of the past several years and has limited the ability of buyers to finance new house purchases and of borrowers to refinance properties for which the existing
financing terms may be onerous. This lack of confidence has led to lower demand and more foreclosures and has reduced the absorption rate for new and existing properties. In turn, this has caused market prices to fall as some property owners,
including lenders who acquired property by foreclosure, have accepted lower prices to reduce their exposure to these real estate assets which has reduced the market values for comparable real estate.The declines in values and the increased
level of marketing required to sell properties has reduced or eliminated the potential gains that can be made by the individual investor whom we financed and has reduced their ability to sell the property to repay the loan, which has led to an
increase in past due and non-performing loans. If these housing trends continue or exacerbate, the Company expects that it will continue to experience increased delinquencies and credit losses for the remainder of the year and into 2008. Moreover,
if a recession occurs that negatively impacts economic conditions in the United States as a whole or in specific regions of the country, the Company would experience significantly higher delinquencies and credit losses. An increase in credit losses
would reduce earnings and adversely affect the Companys financial condition. Furthermore, to the extent that real estate collateral is obtained through foreclosure, the costs of holding and marketing the real estate collateral, as well as the
ultimate values obtained from disposition could reduce the Companys earnings and adversely affect the Companys financial condition.

The
Companys business volume and growth is affected by the rate of growth and demand for housing in specific geographic markets. Based on the activity discussed above, the Company expects that its level of historical growth would be significantly
curtailed and its assets may in fact shrink, depending on the duration and extent of the current disruption in the housing and mortgage markets. The current disruption may expand and adversely impact the U.S. economy in general and the housing
and mortgage markets in particular. In addition, a variety of legislative, regulatory and other proposals have been discussed or may be introduced in an effort to address the disruption. Depending on the scope and nature of legislative, regulatory
or other initiatives, if any, that are adopted to respond to this disruption and applied to the Company, its financial condition, results of operations or liquidity could, directly or indirectly, benefit or be adversely affected in a manner that
could be material to its business.



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



|                     |  |                               |  |                             |        |                                                                         |   |                                                                            |  |   |          
|-------------------- |  | ----------------------------- |  | --------------------------- | ------ | ----------------------------------------------------------------------- | - | -------------------------------------------------------------------------- |  | - | ---------
|Period               |  | TotalNumber ofSharesPurchased |  | AveragePrice Paid per Share |        | Total Number of Shares Purchased as Part of
PubliclyAnnounced Plans (1) |   | Approximate Dollar Valueof Shares that May Yet
BePurchased Under the Plans
|April 1-30, 2007     |  |                              |  |                             |       |                                                                         |   |                                                                           |  |   |         
|May 1-31, 2007       |  | 145,300                       |  | $                           | 8.9988 |                                                                         | $ | 1,314,791                                                                  |  |   |         
|June 1-30, 2007      |  | 10,000                        |  | $                           | 8.78   |                                                                         | $ | 87,800                                                                     |  |   |         
|July 1-31, 2007      |  |                              |  |                             |       |                                                                         |   |                                                                           |  |   |         
|August 1-31, 2007    |  | 105,000                       |  | $                           | 8.5467 |                                                                         | $ | 897,414                                                                    |  |   |         
|September 1-30, 2007 |  |                              |  |                             |       |                                                                         |   |                                                                           |  |   |         
|                     |  |                               |  |                             |        |                                                                         |   |                                                                            |  |   |          
|Total                |  | 260,300                       |  |                             |        |                                                                         | $ | 2,300,005                                                                  |  | $ | 7,699,995
|                     |  |                               |  |                             |        |                                                                         |   |                                                                            |  |   |          

---

|(1) | Except for 10,000 shares repurchased in a privately negotiated transaction in June 2007, the transactions described above were open market purchases involving a $0.05 per share
commission that is not reflected in the prices indicated.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The repurchases described above were made pursuant to the Companys stock
repurchase plan for up to $2 million of common stock that was announced on May 1, 2007. On July 24, 2007, the Company expanded the scope of the repurchase plan to provide for the repurchase of up to an aggregate of $10 million of common
stock.



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

None.



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

None.



|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------

(a) Exhibits



|     |  |                                                                                                                                                                      
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Principal Executive Officer Pursuant to 13a-14(a) of the Securities Act of 1934.                                                                    
|     | 
|31.2 |  | Certification of Principal Financial Officer Pursuant to 13a-14(a) of the Securities Act of 1934.                                                                    
|     | 
|32.1 |  | Certification of Principal Executive and Financial Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



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SIGNATURES

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

Date: November 14, 2007



OMNI FINANCIAL SERVICES, INC.By:

/s/ Constance E. PerrineConstance E. PerrineExecutive Vice President and Chief Financial Officer




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