EXHIBIT 10.7 - THE SAVANNAH BANCORP, INC. INCENTIVE STOCK PLAN APPROVED BY
SHAREHOLDERS ON APRIL 18, 1995

                           THE SAVANNAH BANCORP, INC.
                           INCENTIVE STOCK OPTION PLAN

                                    SECTION 1

                                    Purchase

The purpose of the Plan is to advance the  interests  of The  Savannah  Bancorp,
Inc. (the "Company") and its  Subsidiaries  and its shareholders by providing an
incentive to key employees,  upon whom major responsibilities for the successful
operation,  administration  and management of the Company rest and whose present
and  potential  contributions  are  important  to the  continued  success of the
Company and  enabling  the  Company to attract  and retain in its employ  highly
qualified persons for the successful  conduct of its business.  These objectives
are intended to be effected by encouraging these employees to secure or increase
on reasonable terms their stock ownership in the Company through the granting of
Incentive Stock Options as provided in the Plan.

                                    SECTION 2

                                   Definitions

         (a)  The  "Company"  means  the  Savannah  Bancorp,   Inc.,  a  Georgia
              Corporation.
         (b)  "Subsidiary"  shall  have  the  meaning  given it by Section
               425(f) of the Internal  Revenue  Code.
         (c)  "Common  Stock" or "Stock"  means the $1.00 par value  common
              stock of the  Company.
         (d)  "Board" means the Board of Directors of the Company.
         (e)  "Plan" means this Incentive Stock Option Plan  authorizing the
              granting of Incentive Stock Options.
         (f)  "Internal  Revenue Code" means the Internal Revenue Code of 1986,
              as amended.
         (g)  "Fair  Market  Value" of the  Company's common  stock on a
              certain date  means the  average of the bid and ask prices at the
              close of business for such date as reported by NASDAQ (the
              National Association of Securities Dealers Automated Quotation
              System).
         (h)  "Incentive Stock Option" (sometimes hereinafter referred to as
              "Option")  means  a right  granted  pursuant  to this  Plan to
              purchase   Common  Stock  at  a  price  to  be  determined  in
              accordance with Section 6 of the Plan.
         (i)  "Permanent  and  Total  Disability",  as  defined  by  Section
              22(e)(3) of the Internal  Revenue Code, means the inability to
              engage in any  substantial  gainful  activity by reason of any
              medically determinable physical or

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              mental impairment which can
              be  expected  to result in death or which has lasted or can be
              expected to last for a  continuous  period of not less than 12
              months.
         (j)  "Retirement" means termination of service at the conclusion of
              an  employee's  career  with the  Company if such  employee is
              eligible to receive  retirement  benefits  under the Company's
              then  existing and  applicable  retirement  or  profit-sharing
              plan.



                                    SECTION 3

                           Shares Subject to the Plan

Subject  to  adjustments  pursuant  to  Section  8 of this  Plan,  [no more than
Twenty-Nine  Thousand  Seven Hundred  (29,700)  shares in the  aggregate] of the
Company's (the  "Reserved  Shares")  Common Stock may be issued  pursuant to the
Plan to  employees  who are  eligible  to  become  participants.  The  number of
Reserved  Shares  shall be  reduced  by the number of  Incentive  Stock  Options
granted under the Plan.


                                    SECTION 4

                                   Eligibility

Any key employee  regularly  employed on a salaried  basis by the Company or any
Subsidiary shall be eligible to receive options  hereunder;  provided,  however,
that such  individual,  at the time the  option is  granted,  does not own stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the  employer  corporation  or of tits parent or  subsidiary
corporation.  This "10-percent  shareholder rule" shall not apply if at the time
the option is  granted,  the option  price is at least one  hundred  ten percent
(110%) of the Fair  Market  Value of the stock  subject  to the  option and such
option,  by its terms, is not exercisable after the expiration of five (5) years
from the date such option is granted.

                                    SECTION 5

                           Administration of the Plan

The plan shall be  administered  by the Board in accordance with applicable laws
and regulations of governmental agencies.

The Board shall have full authority to:

(a)      (i) determine the key employees to whom Incentive Stock Options under
             the Plan will be granted;

        (ii) determine  the number of Incentive  Stock  Options to be
             granted to each

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             employee;  and (iii)  grant  Incentive  Stock Options  under the
             Plan to such  employee  (the  "employee" or "Optionee");
(b)          interpret,  construe and implement the  provisions of the Plan and
             any  agreements  executed  thereunder;  and (c)  establish,  amend
             and rescind appropriate rules and regulations relating to the Plan.

All  determinations  of the Board  shall be by a majority  of its  members.  Any
interpretation  by the Board of the terms and  conditions  of the Plan  shall be
final.

                                    SECTION 6

                             Incentive Stock Options

Incentive  Stock  Options shall be evidenced by written  Incentive  Stock Option
agreements (the "Agreements") consistent with the terms of this Plan which shall
be executed by the Company and the Optionee. The Agreements, in such form as the
Board shall from time to time approve, shall incorporate the following terms and
conditions:
         (a)      Exercise of Incentive Stock Options.

                  (1)      Time of Exercise.  No Incentive  Stock Option will be
                           exercisable  until the first  anniversary of the date
                           it is granted.  On the first  anniversary of the date
                           of the grant,  an Incentive  Stock Option will become
                           exercisable in full. Each Incentive Stock Option will
                           expire ten (10) years after the date of its grant.

                  (2)      Purchase  Price.  The  purchase  price  per  share of
                           Common  Stock  deliverable  upon the  exercise  of an
                           Incentive Stock Option shall in no event be less than
                           the Fair Market Value of the Common Stock on the date
                           the Option is  granted,  as  determined  by the Board
                           pursuant to Paragraph (g) of Section 2.

                  (3)      Method of Exercise. In order to exercise an Incentive
                           Stock Option in whole or in part,  the Optionee shall
                           give written notice to the Company's  Chief Financial
                           Officer  at  Savannah,  Georgia,  of  such  exercise,
                           stating  the number of shares  with  respect to which
                           the Incentive  Stock Option is being  exercised.  The
                           exercise date of the Incentive  Stock Option shall be
                           the date the Company receives such notice.

                  (4)      Payment  of  Purchase  Price.  Full  payment  of  the
                           purchase  price shall be made by the end of the third
                           (3rd) business day after notice of exercise is given.
                           Payment  shall be in  cash,  or in  whole  shares  of
                           Common  Stock,  valued at Fair  Market  Value on such
                           exercise


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                           date,  equal to the purchase  price of such
                           shares (or in a combination  of cash and whole shares
                           of Common Stock). Upon receipt of payment the Company
                           shall  issue  to  the  Optionee  a   certificate   or
                           certificates for such shares.

                  (5)      Effect of Termination (Including Retirement),
                           Permanent and Total Disability or Death.

                           (i)      In the event that the Optionee's employment
                                    with the Company or one of its Subsidiaries
                                    terminates for any reason other than
                                    Permanent and Total Disability or death dur-
                                    ing the period that any Incentive Stock
                                    Options granted to him under the Plan could
                                    be exercised, all rights to purchase Common
                                    Stock not exercisable (in accordance with
                                    Section 6(a)(1) above) at the date of termi-
                                    nation under the provisions of this Plan
                                    shall be forfeited on the date of termi-
                                    nation.  The Optionee shall have a three-
                                    month period from said termination date
                                    ending on the day numerically corresponding
                                    to the date of termination in the third
                                    month following the month of termination to
                                    exercise any Incentive Stock Option not
                                    theretofore forfeited.  Any rights unexer-
                                    cised on or after such last day are then
                                    forfeited.

                           (ii)     (A) In the event that the Optionee, while an
                                    active employee of the Company or one of its
                                    Subsidiaries, sustains a Permanent and Total
                                    Disability  or  dies,  all  Incentive  Stock
                                    Options theretofore granted to him under the
                                    Plan shall  become 100%  exercisable  on the
                                    date of his Permanent  and Total  Disability
                                    or his death;  such rights may be  exercised
                                    by the  Optionee  or his estate  only before
                                    the   last  day  of  the   one-year   period
                                    beginning on his last day of employment.

                                    (B) In the  event  of the  Optionee's  death
                                    before  the  end  of  the  one-month  period
                                    described in Section 6(a)(5)(i),  his vested
                                    rights  under  any  Incentive  Stock  Option
                                    Agreement  may be exercised  within one year
                                    from said termination date, by his estate.

                           (iii)    Notwithstanding  the periods provided for in
                                    Sections   6(a)(5)(i)  and  (ii)  above,  no
                                    Incentive  Stock Option shall be exercisable
                                    after the date that Option expires by its
                                    terms.

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         (b)      Repurchase of Incentive  Stock  Options.  Upon the approval of
                  the  Board,   the  Company  is   authorized  to  repurchase  a
                  previously  granted Incentive Stock Option from an employee by
                  mutual  agreement  with such  employee  before such Option has
                  been  exercised,  by payment to the  employee of the amount by
                  which the Fair Market  Value of the shares under option at the
                  time of such  repurchase  exceeds the Fair Market Value of the
                  shares at the time the Option was granted.

         (c)      Outstanding  Incentive  Stock  Options.  The Option may not be
                  exercised  while  there is  outstanding  any  incentive  stock
                  option which was granted,  before the granting of such Option,
                  to the  employee  to  purchase  stock in the Company or of any
                  other Corporation  which, at the time of granting such Option,
                  was a parent  (within  the  meaning of  Section  425(e) of the
                  Internal  Revenue Code) or  Subsidiary of the Company,  or any
                  predecessor of any of these corporations.  Any incentive stock
                  option shall be considered outstanding until exercised in full
                  or until it expires by lapse of time.

         (d)      Additional  Terms and  Conditions.  The Agreements may contain
                  such other terms,  provisions and conditions  consistent  with
                  the Plan and  applicable  provisions  of the Internal  Revenue
                  Code as may be  determined  by the Board of  Directors  of the
                  Company.

                                    SECTION 7

                    Non-Transferability of Options and Rights

Incentive  Stock  Options  granted  under  the  Plan  are  not  transferable  or
assignable  by an  employee  other  than  by will or the  laws  of  descent  and
distribution and are exercisable during the employee's lifetime only by him.


                                    SECTION 8

                   Adjustments in the Event of Changes in the
                       Capital Structure or Reorganization

         (a)      Changes in Capital Structure.  In the event of a change in the
                  corporate  structure  or shares of the  Company,  the Board of
                  Directors (subject to any required action by the shareholders)
                  shall  make such  equitable  adjustments  designed  to protect
                  against  dilution as it may deem appropriate in the number and
                  kind of shares  authorized  by the Plan and,  with  respect to
                  outstanding  Options, in the number and kind of shares covered
                  thereby and in the exercise price of such Options on the dates
                  granted.

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         (b)      Reorganization--Termination  of the  Plan.  In the  event of a
                  dissolution,     liquidation,      reorganization,     merger,
                  consolidation,  transfer of assets or  transfer of shares,  in
                  which  the  Company  is not  the  surviving  corporation,  the
                  Optionee  of any  outstanding  option  shall have 30 days from
                  written  notice of such  transaction  in which to exercise any
                  rights to purchase  shares  exercisable  under Section 6(a)(i)
                  and  all  other  rights  under  such  option  are   terminated
                  immediately on the giving of such notice.  If such transaction
                  is not consummated, all rights under such option are restored.

                                    SECTION 9

                              General Restrictions

Each Incentive Stock Option shall be subject to the requirement  that, if at any
time  the  Board of  Directors  shall  determine,  in its  discretion,  that the
listing, registration or qualification of the shares or other securities subject
to such Incentive  Stock Option upon any securities  exchange or under any state
or federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition  of, or in connection  with,  the granting
thereof  or the  issue  or  purchase  of  shares  or  payments  of  any  amounts
thereunder, such Incentive Stock Option may not be exercised in whole or in part
and no amounts may be received  thereunder  unless such  listing,  registration,
qualification,  consent or approval shall have been effected or obtained free of
any conditions unacceptable to the Board of Directors.


                                   SECTION 10

                             Rights as Shareholders

An employee shall have no rights whatsoever as a shareholder of the Company with
respect to any shares covered by an Incentive Stock Option until the date of the
issuance of a stock certificate to him pursuant to the exercise of the Incentive
Stock Option.


                                   SECTION 11

                                   Employment

Nothing in this Plan shall be deemed to grant any right of continued  employment
to a  participating  employee  or to limit or waive any rights of the Company to
terminate such employment at any time, with or without cause.

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                                   SECTION 12

                                    Amendment

The Board of  Directors  of the Company  shall have the power to amend or revise
the  terms  of the  Plan or any  part  thereof  without  further  action  of the
shareholders;   provided,   however,  that  no  such  amendment  shall,  without
shareholder approval:

         (a) impair any Option or deprive  any  employee of shares that may have
             been granted to him under the Plan;
         (b) increase the aggregate  number of Reserved Shares for the purpose
             of the Plan;
         (c) change the class of employees eligible to receive Options under
             the Plan; or
         (d) extend the period during which any Option may be granted or
             exercised.

                                   SECTION 13

                     Effective Date and Termination of Plan

         (a)      Effective Date.  The effective date of the Plan shall be
                  April 18, 1995, upon approval of the Plan by the shareholders
                  of the Company.

         (b)      Termination.  The  Board  of  Directors  of  the  Company  may
                  terminate the Plan at any time with respect to any shares that
                  are not subject to Incentive Stock Options.  Unless terminated
                  earlier by the Board of  Directors,  the Plan shall  terminate
                  ten (10)  years  after  the  earlier  of the date this Plan is
                  adopted and the date this Plan is approved by the shareholders
                  of the Company and no Incentive Stock Options shall be granted
                  under this Plan after it has been  terminated.  Termination of
                  this Plan shall not affect the rights and  obligations  of any
                  employee with respect to Incentive Stock Options granted prior
                  to termination.

                                   SECTION 14

                                  Qualification

This Plan is adopted  pursuant to, and is intended to comply with the applicable
provisions of the Internal Revenue Code and the regulations  thereunder.  To the
extent  permitted by Section 422 (d) of the Internal  Revenue Code,  the options
issued pursuant to this Plan are intended to be an "incentive  stock options" as
that  term is  defined  in  Section  422 of the  Internal  Revenue  Code and the
regulations thereunder. In the event this Plan or any option granted pursuant to
this Plan is in any way inconsistent  with the applicable legal  requirements of
the  Internal  Revenue  Code or the  regulations  thereunder,  this Plan and any
option granted pursuant to this Plan shall be deemed automatically amended as of
the

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date hereof to conform to such legal  requirements,  if such  conformity  can be
achieved by amendment.  To the extent  however,  that the aggregate  fair market
value of stock to which  incentive  stock options are  exercisable for the first
time by any employee  during any calendar  year exceeds  $100,000,  such options
shall be treated,  for federal  income tax  purposes,  as options  which are not
incentive stock options as defined in Section 422 of the Internal Revenue Code.


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                        INCENTIVE STOCK OPTION AGREEMENT


     THIS  AGREEMENT  made this __ day of ________ , 19 __ between THE  SAVANNAH
BANCORP, INC., a Georgia Corporation,  herein called "Company", and _________ an
employee  of the  Company  or one or more  of its  subsidiaries,  herein  called
"Employee".
     WHEREAS,  the Company  desires to afford the  Employee the  opportunity  of
purchasing  its $1.00 par value  common  stock,  herein  called  "Common  Stock"
pursuant to the Incentive Stock Option Plan adopted by its shareholders on April
18, 1995,  herein called the "Plan";

     NOW, THEREFORE, in consideration of the premises and the mutual promises of
the Parties to this Agreement, they do hereby covenant and agree as follows:

         1.  Grant of  Option.  The  Company  hereby  irrevocably  grants to the
Employee the right and option,  herein called the  "Option",  to purchase all or
any part of an aggregate  of __ shares of its Common Stock  subject to the terms
of this Agreement and the Plan.

         2.       Purchase Price.  The purchase price of the Common Stock
covered by the Option has been determined in accordance with the Plan and shall
be $_______ per share.

         3. Terms and Conditions of Plan. All of the terms and conditions of the
Plan, a copy of which has been supplied to Employee,  are hereby incorporated by
reference  and shall have the same force and  effect as if  expressly  set forth
herein.

         IN WITNESS  WHEREOF,  the Parties have signed and sealed this Agreement
the day and year first above written.

                                    THE SAVANNAH BANCORP, INC.


                                      By:-----------------------------------


                                      Attest:-------------------------------
                                                     Secretary


                                      ------------------------------------(L.S.)
                                                      Employee

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