UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC  20549





FORM 10-K





ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended December 31, 2009





The Savannah Bancorp, Inc.(Exact name of registrant as specified in its
      charter)





Georgia
            0-18560
            58-1861820State of Incorporation
            SEC File Number
            Tax I.D.
Number





25 Bull Street, Savannah,
      GA    31401(Address of principal executive
      offices)  (Zip Code)





912-629-6486(Registrant's telephone number, including area
      code)





Securities registered pursuant to Section 12(b) of the
Act:


Common, $1.00 Par Value
            NASDAQ Global MarketSecurities registered pursuant to Section 12(g) of
      the Act: None





Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act.


Yes __ No X


Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or 15(d) of the
Act.


Yes __ No X





Indicate by check mark 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 preceding 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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [
]





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. (Check
one):


Large accelerated filer __
            Accelerated filer X
            Non-accelerated filer
__





Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Act) Yes __ NoX





The aggregate market value of the voting and non-voting
common equity at June 30, 2009 held by non-affiliates, based on the price of the
last trade of $8.10 per share times 4,638,024non-affiliated shares, was $116,414,402.





APPLICABLE ONLY TO CORPORATE REGISTRANTS


As of February 28, 2010, the registrant had outstanding
5,938,632shares of common stock.


SAVB 2009 Form
10-K
 - 1 -


Portions of the 2009 Annual Report to Shareholders of
Registrant are incorporated in Parts I, II and IV of this report. Portions of
the Proxy Statement of Registrant dated March 29, 2010 are
incorporated in Part III of this
report.




REGISTRANT'S DOCUMENTS INCORPORATED BY
REFERENCE





Document Incorporated by
      Reference
            Part Number and Item Number of Form 10-K Into Which
      IncorporatedPages F-32 and
      F-33
              of Registrant's 2009 Annual Report to
      Shareholders
            Part II, Item 5, Market
              for Registrant's Common Equity
              and Related Shareholder MattersPages F-30-32, F-41,
      F-46-47
              of Registrant's 2009 Annual Report to
      Shareholders
            Part II, Item 6,
              Selected Financial DataPages F-30 through
      F-47
              of Registrant's 2009 Annual Report to
      Shareholders
            Part II, Item 7, Management's Discussion
      and
              Analysis of Financial Condition and Results
      of
              OperationsPages F-42, F-43 and
      F-45
              of Registrant's 2009 Annual Report to
      Shareholders
            Part II, Item 7A, Quantitative and
      Qualitative
              Disclosures about Market RiskPages F-3 through
      F-29
              of Registrant's 2009 Annual Report to
      Shareholders
            Part II, Item 8,
              Financial Statements and Supplementary
      DataSee Registrant's Proxy Statement in
              connection with its Annual Shareholders' Meeting to
      be held
              April 21, 2010 (“2010 Proxy
    Statement”)
            Part III, Item 10,
              Directors and Executive OfficersSee Registrant's 2010 Proxy
              Statement
            Part III, Item 11,
              Executive CompensationSeeRegistrant's 2010 Proxy Statement
            Part III, Item 12,
              Security Ownership of Certain Beneficial
              Owners and Management and Related
              Shareholder MattersSee Registrant's 2010 Proxy Statement
            Part III, Item 13,
              Certain Relationships and Related
              TransactionsSee Registrant’s 2010 Proxy Statement
            Part III, Item 14,
              Principal Accountant Fees and
  ServicesPages F-2 through
      F-29
              of Registrant's 2009 Annual Report to
      Shareholders
            Part IV, Item 15,
              Exhibits and Financial Statement
      Schedules





SAVB 2009 Form
10-K
 - 2 -


THE SAVANNAH BANCORP, INC.


2009 ANNUAL REPORT ON FORM 10-K


TABLE OF CONTENTS





PART I
            PageItem 1. Business
            5Item 1A. Risk Factors
            16Item 1B. Unresolved Staff Comments
            24Item 2. Properties
            24Item 3. Legal Proceedings
            25Item 4. Reserved
            25PART IIItem 5. Market for Registrant's Common Equity and
      Related Shareholder Matters
            26Item 6. Selected Financial Data
            26Item 7. Management's Discussion and Analysis of
      Financial Conditionand Results of Operations
            26Item 7A. Quantitative and Qualitative Disclosures
      about Market Risk
            26Item 8. Financial Statements and Supplementary
      Data
            26Item 9. Changes in and Disagreements with Accountants
      on Accountingand Financial Disclosure
            26Item 9A. Controls and Procedures
            26Item 9B. Other Information
            29PART IIIItem 10. Directors, Executive Officers and Corporate
      Governance
            29Item 11. Executive Compensation
            29Item 12. Security Ownership of Certain Beneficial
      Owners and Managementand Related Shareholder Matters
            29Item 13. Certain Relationships and Related
      Transactions
            29Item 14. Principal Accountant Fees and
      Services
            29PART IVItem 15. Exhibits and Financial Statement
      Schedules
            30Signature Page
            32




SAVB 2009 Form
10-K
 - 3 -
 PART I





The Savannah Bancorp, Inc. (the “Company”) may, from time
to time, make written or oral forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995), including statements
contained in the Company’s filings with the United States Securities and
Exchange Commission (“SEC” or “Commission”) (including this Annual Report on
Form 10-K and the exhibits thereto), in its reports to shareholders and in other
communications by the Company.  These forward-looking statements may
include, among others, statements about our beliefs, plans, objectives, goals,
expectations, estimates and intentions that are subject to significant risks and
uncertainties and which may change based on various factors, many of which are
beyond our control.  The words "may," "could," "should," "would,"
"believe," "anticipate," "estimate," "expect," "intend," "plan" and similar
expressions are intended to identify forward-looking statements.  The
following factors, among others, could cause our financial performance to differ
materially from what is contemplated in those forward-looking
statements:





Ø
            The strength of the United States economy in general
      and the strength of the local economies in which the Company conducts
      operations;


Ø
            The effects of and changes in trade, monetary and
      fiscal policies and laws, including interest rate policies of the Board of
      Governors of the Federal Reserve
System;


Ø
            Inflation, interest rate, market and monetary
      fluctuations;


Ø
            Adverse conditions in the stock market and other
      capital markets and the impact of those conditions on our capital markets
      and capital management activities, including our investment and wealth
      management advisory businesses;


Ø
            Changes in the cost and availability of funding due
      to changes in the deposit market and credit market, or the way in which
      the Company is perceived in such
markets;


Ø
            The effects of harsh weather conditions, including
      hurricanes;


Ø
            Changes in United States foreign or military
      policy;


Ø
            The timely development of competitive new products
      and services by the Company and the acceptance of those products and
      services by new existing customers;


Ø
            The willingness of customers to accept third-party
      products marketed by us;


Ø
            The willingness of customers to substitute
      competitors’ products and services for the Company’s products and services
      and vice versa;


Ø
            The impact of changes in financial services’ laws and
      regulations (including laws concerning taxes, banking, securities and
      insurance);


Ø
            Technological
changes;


Ø
            Changes in consumer spending and saving
      habits;


Ø
            The effect of corporate restructuring, acquisitions
      or dispositions, including the actual restructuring and other related
      charges and the failure to achieve the expected gains, revenue growth or
      expense savings from such corporate restructuring, acquisitions or
      dispositions;


Ø
            The growth and profitability of our noninterest or
      fee income being less than
expected;


Ø
            Unanticipated regulatory or judicial
      proceedings;


Ø
            The impact of changes in accounting policies by the
      SEC or the Financial Accounting Standards
Board;


Ø
            The limited trading activity of our common
      stock;


Ø
            The effects of our lack of a diversified loan
      portfolio, including the risks of geographic
    concentrations;


Ø
            Adverse changes in the financial performance and/or
      condition of our borrowers, which could impact the repayment of those
      borrowers' outstanding loans; and


Ø
            The success of the Company at managing the risks
      involved in the foregoing.





The Company cautions that the foregoing list of important
factors is not exclusive.  The Company does not undertake to update
any forward-looking statement, whether written or oral, that may be made from
time to time by or on our behalf except as may be required by our disclosure
obligations in filings we make with the SEC under federal securities
laws.




SAVB 2009 Form
10-K
 - 4 -
 Item 1. Business





(a)           General
Development of Business





The Company was incorporated as a Georgia business
corporation on October 5, 1989, for the purpose of becoming a bank holding
company.  The Company became a bank holding company within the meaning
of the Federal Bank Holding Company Act and the Georgia Bank Holding Company Act
upon the acquisition of 100 percent of the common stock of The Savannah Bank,
National Association ("Savannah") on August 22, 1990.





In February 1998, the Company entered into a plan of merger
to exchange shares of its stock for shares of Bryan Bancorp of Georgia, Inc.
(“Bryan”), the bank holding company for Bryan Bank & Trust (“Bryan
Bank”).  The transaction was valued at approximately $24
million.  The merger, which was accounted for as a pooling of
interests, was a tax-free reorganization for federal income tax
purposes.  The merger was consummated on December 15,
1998.  Bryan was merged into the Company and Bryan Bank became a
wholly-owned subsidiary of the Company on the merger date.





On February 6, 2006, the Company invested $10 million cash,
a portion of the net proceeds from an August 2005 private placement stock
offering, in 100 percent of the common stock of Harbourside Community Bank
(“Harbourside”), a newly-formed federal stock savings bank, located on Hilton
Head Island, South Carolina.  The plans for forming Harbourside began
in October 2003 when Savannah opened a mortgage loan production office on Hilton
Head Island.  Effective September 30, 2009, the Company merged the
charter of Harbourside into Savannah.  The two Harbourside branches
are now Savannah branches.





The Company acquired all of the net assets of Minis &
Co., Inc. (“Minis”) as of August 31, 2007.  The net assets of Minis
were incorporated into a new, wholly-owned subsidiary of the Company which will
continue to operate under the name of Minis & Co., Inc.  The
acquisition was accounted for using the purchase method of accounting, and
accordingly, the results of Minis’ operations have been included in the
consolidated financial statements beginning September 1, 2007.  Minis
is a registered investment advisor based in Savannah, Georgia, offering a full
line of investment management services.





On September 30, 2008, the Company formed a new subsidiary,
SAVB Holdings, LLC (“SAVB Holdings”), to hold previously identified problem
loans (including problem and nonperforming loans) and foreclosed real estate
(“OREO”) primarily from its Harbourside subsidiary.  The Company
funded this subsidiary with an initial $12.5 million loan from a related private
party and purchased loans and OREO at their current value.





Savannah, Bryan Bank, Minis and SAVB Holdings are the four
operating subsidiaries of the Company.  The two bank subsidiaries,
collectively, are referred to as the “Subsidiary Banks” or
“Banks”.  Savannah received its charter from the Office of the
Comptroller of the Currency (“OCC”) to commence business and opened for business
on August 22, 1990.  Bryan Bank received its charter from the Georgia
Department of Banking and Finance (“GDBF”) in December 1989.  The
deposits at the Subsidiary Banks are insured by the Federal Deposit Insurance
Corporation ("FDIC").





As of December 31, 2009, Savannah had eight full service
offices and one loan production office, total assets of $768 million, total
loans of $651 million, total deposits of $668 million, total shareholders’
equity of $61.3 million and $1.4 million in 2009 net income.  As of
December 31, 2009, Bryan Bank had two full service offices, total assets of $260
million, total loans of $218 million, total deposits of $217 million, total
shareholders’ equity of $21.9 million and net income of $2.8 million for the
year then ended.





In September 2005, the Company formed SAVB Properties, LLC
for the primary purpose of owning a 50 percent interest in two real estate
partnerships.  Johnson Square Associates, a Georgia general
partnership, owns a seven-story, 35,000 square foot building at 25 Bull Street
on Johnson Square in downtown Savannah.  The Company currently leases
approximately 40 percent of this space for its corporate headquarters and the
main office of Savannah.  Whitaker Street Associates, a Georgia
Limited Partnership, owns the 80’ x 200’ parking lot directly across Whitaker
Street from 25 Bull Street.  Under an agreement with the City of
Savannah, the parking lot has been re-developed as part of a 3 acre, 1100 space
underground parking garage and now includes the structural foundation adequate
to support a 6-story building, the maximum height allowed on this property by
city ordinances.  This lot adjoins Ellis Square, one of Savannah’s
original squares, which has been restored by the City of Savannah.




SAVB 2009 Form
10-K
 - 5 -


(b)           Information
about Industry Segments





Accounting standards require the disclosure of financial
and descriptive information about an enterprise’s operating segments in annual
and interim financial reports issued to shareholders.  An operating
segment is defined as a component of an enterprise which engages in business
activities that generate revenues and incur expenses, whose operating results
are reviewed by the chief operating decision makers in the determination of
resource allocation and performance, and for which discrete financial
information is available.  The Company has no segments or any
subsidiaries that meet the criteria for segment reporting.





(c)           Narrative
Description of Business





General





The Company is authorized to engage in any corporate
activity permitted by law, subject to applicable federal regulatory restrictions
on the activities of bank holding companies.  The Company was formed
for the primary purpose of becoming a holding company to own 100 percent of the
stock of the Subsidiary Banks.  The holding company structure provides
the Company with greater flexibility than a bank would otherwise have to expand
and diversify its business activities through newly formed subsidiaries or
through acquisitions.





Banking Services





The Company has approximately 201 full time equivalent
employees as of December 31, 2009.  The Subsidiary Banks offer a full
range of deposit services, including checking accounts, savings accounts and
various time deposits ranging from daily money market accounts to long-term
certificates of deposit.  The transaction accounts and time deposits
are tailored to the principal market areas at rates competitive with those
offered in the area.  In addition, retirement accounts such as
Individual Retirement Accounts and Simplified Employee Pension accounts are
offered.  The FDIC insures all deposit accounts up to the maximum
amount of $250,000 through December 31, 2013.  The Subsidiary Banks
solicit these accounts from individuals, businesses, foundations, organizations,
and governmental authorities.  The Subsidiary Banks participate in the
Transaction Account Guarantee Program (“TAGP”), which is part of the FDIC’s
voluntary Temporary Liquidity Guarantee Program established in
November 2008.  Under the TAGP the FDIC will provide full FDIC
deposit insurance coverage for noninterest-bearing transaction deposit accounts,
Negotiable Order of Withdrawal (“NOW”) accounts paying less than 0.50% interest
per annum, and Interest and Lawyers Trust Accounts held at participating FDIC
insured institutions through June 30, 2010.





The Subsidiary Banks offer a full range of short-term and
medium-term commercial, real estate, residential mortgage and personal
loans.  The Subsidiary Banks’ primary lending focus is business, real
estate and consumer lending.  Commercial loans include both secured
loans and a limited volume of unsecured loans.  Consumer loans include
secured loans for financing automobiles, home improvements, real estate and
other personal investments.  Unsecured consumer loans are limited and
generally made to the most creditworthy borrowers. The Subsidiary Banks
originate fixed and variable rate mortgage loans and offer real estate
construction and acquisition loans.





The Subsidiary Banks' lending policies provide each lending
officer with written guidance for lending activities as approved by the Board of
Directors (“Board”) of the Banks.  Real estate loan-to-value
guidelines generally conform to regulatory loan-to-value
limits.  Additionally, the existence of reliable sources of
repayment/cash flow are usually required before making any loan, regardless of
the collateral.  Appraisals are obtained as
required.  Lending officers or contract inspectors make on-site
inspections on construction loans.  Lending authority is delegated to
each lending officer by the Credit Committee of each Subsidiary Banks’
Board.  Loans in excess of the individual officer limits must be
approved by a senior officer with sufficient approval authority delegated by
these committees.  Loans to borrowers whose aggregate combined
companywide exposure exceeds $2,500,000 at Savannah and $1,000,000 at Bryan Bank
require the approval of the Subsidiary Bank’s Credit Committee.





Management and the directors are aware that environmental
liabilities may negatively impact the financial condition of borrowers, the
value of real property and the contingent environmental clean-up liabilities the
Subsidiary Banks could incur by having a lien on environmentally deficient
property.  The Subsidiary Banks generally decline to make loans
secured by property with environmental deficiencies.  Environmental
surveys are required when there is reason for concern about potential
environmental liabilities.




SAVB 2009 Form
10-K
 - 6 -


The Subsidiary Banks operate residential mortgage loan
origination departments.  The Banks take mortgage loan applications,
obtain rate commitments and complete various origination documentation and
follow-up for an origination and service release fee from third-party mortgage
bankers.  In addition to generating fee income, the departments also
generate banking relationships from its customers and real estate-related
contacts.  These loans are funded by other mortgage investors and have
not been warehoused on the Subsidiary Banks’ books.





In 2008, the Company discontinued the origination of
mortgage loans on a correspondent basis and is now exclusively brokering
mortgage loans.  The Company does continue to service previously sold
loans.





Credit Risk Management and Allowance for Loan
Losses





The Subsidiary Banks have a comprehensive program designed
to control and continually monitor the credit risks inherent in the loan
portfolios.  This program includes a structured loan approval process
in which the Board delegates authority for various types and amounts of loans to
loan officers on a basis commensurate with seniority and lending
experience.  There are four risk grades of "criticized" assets:
Special Mention, Substandard, Doubtful and Loss.  Assets designated as
substandard, doubtful or loss are considered "classified".  The
classification of assets is subject to regulatory review and
reclassification.  The Subsidiary Banks include aggregate totals of
criticized assets, and general and specific valuation reserves in quarterly
reports to the Board, which approves the overall allowance for loan losses
evaluation.





The Subsidiary Banks use a risk rating system which is
consistent with the regulatory risk rating system.  This system
applies to all assets of an insured institution and requires each institution to
periodically evaluate the risk rating assigned to its assets.  The
Subsidiary Banks' loan risk rating systems utilize both the account officer and
an independent loan review function to monitor the risk rating of
loans.  Each loan officer is charged with the responsibility of
monitoring changes in loan quality within his or her loan portfolio and
reporting changes directly to loan review and senior management.  The
internal credit administration function monitors loans on a continuing basis for
both documentation and credit related exceptions.  Additionally, the
Subsidiary Banks have contracted with an external loan review service which
performs a review of the Subsidiary Banks' loans to determine that the
appropriate risk grade has been assigned to each borrowing relationship and to
evaluate other credit quality, documentation and compliance
factors.  Delinquencies are monitored on all loans as a basis for
potential credit quality deterioration.  Commercial and mortgage loans
that are delinquent 90 days (four payments) or longer generally are placed on
nonaccrual status unless the credit is well-secured and in process of
collection.  Revolving credit loans and other personal loans are
typically charged-off when payments are 120 days past due.  Loans are
placed on nonaccrual status or charged-off at an earlier date if collection of
principal or interest in full becomes doubtful.  Real estate acquired
through foreclosure is classified as substandard unless there is sufficient
evidence to indicate such classification is not warranted.





The allowance for loan losses is evaluated as described in
the Management’s Discussion and Analysis of Financial Condition and Results of
Operations (“MD&A”) section of the 2009 Annual Report to Shareholders (“2009
Annual Report”) on pages F-34 through
F-36.





Other Banking Services





Savannah was granted trust powers by the OCC in
1996.  The Trust Department of Savannah contracts with Marshall &
Ilsley Trust Company for trust data processing, securities safekeeping and
certain other operational functions. This system provides clients and their
advisors access to trust account information via the
Internet.  Employee benefit administration and certain money
management functions are outsourced to third parties.  Using these
resources, the Trust Department offers a full array of trust services, including
investment management, personal trusts, custodial accounts, estate
administration and retirement plan asset management.





Originally founded in 1932, Minis is a registered
investment advisory firm based in Savannah, Georgia.  Minis provides
fee-only investment services to individuals, families, employee benefit plans,
non-profit organizations and other entities.





The Subsidiary Banks offer cash management services, remote
deposit capture, Internet banking, electronic bill payment, non-cash deposit
courier service, safe deposit boxes, travelers checks, direct deposit of
payroll, U.S. Savings bonds, official bank checks and automatic drafts for
various accounts.





SAVB 2009 Form
10-K
 - 7 -


The Subsidiary Banks have twelve automated teller machines
and are members of the STAR network of automated
teller machines.  The Subsidiary Banks issue ATM and debit
cards.  They also offer Discover, VISA and MasterCard credit cards as
an agent for a correspondent bank.





Location and Service Area





The Subsidiary Banks’ primary service areas include the
city of Savannah and surrounding Chatham County, the city of Richmond Hill
(which is 20 miles southwest of downtown Savannah) and surrounding Bryan County
and Hilton Head Island, Bluffton and southern Beaufort County in South
Carolina.  Their secondary service areas include Effingham and Liberty
Counties, Georgia and Jasper County, South Carolina.  The Subsidiary
Banks’ target customers are individuals and small to medium-sized businesses,
including wholesale, retail and professional service businesses in the
community.  The Subsidiary Banks also target individuals who meet
certain net worth and income requirements as potential customers for private
banking services.





Savannah's main office, known as the Johnson Square Office,
opened in August 1990 and is located in the primary financial district in
downtown Savannah, where most of the commercial banks in the primary service
area have their main Savannah offices.  In recent years, regional
banks with headquarters outside of the state of Georgia have acquired several of
the banks in the primary service area.  Savannah emphasizes that it is
based in Savannah and that its directors and officers are committed to the
economic development of the Savannah area.





Bryan Bank’s main office opened in December 1989 and is
located in the primary commercial area of the city of Richmond
Hill.  Several other community bank branch offices and one grocery
store branch office are located in Richmond Hill.





In October 1992, Savannah opened its second office at 400
Mall Boulevard.  The Mall Boulevard Office is located in the primary
commercial and retail district in Savannah which includes a high concentration
of professional and service-related businesses.





In November 1995, Savannah opened its third office, the
West Chatham Office, at 100 Chatham Parkway.  West Chatham is a full
service office located six miles west of the main office in a commercial and
industrial growth area of Chatham County.





In October 1997, the fourth office at 4741 Highway 80 East
on Whitemarsh Island, six miles east of the main office, opened for
business.  Deposits, mortgage loans and consumer loans are the primary
opportunities for this location which serves a large concentration of higher net
worth individuals.





In October 1998, Savannah opened its fifth location in the
Medical Arts Shopping Center.  This office is strategically located
near two major hospitals and numerous medical, dental and professional
practices.  This location is approximately four miles southeast of the
main office.





In October 2003, Savannah opened a mortgage loan production
office on Hilton Head Island, South Carolina which operated as Harbourside
Mortgage Company, a division of Savannah, through February 28,
2006.  On March 1, 2006, the separately chartered Harbourside opened
for business in its new main office building at 852 William Hilton Parkway, the
primary traffic artery on Hilton Head Island.  This is now a branch of
Savannah.





In September 2006, Savannah opened an office in The Village
on Skidaway Island adjacent to the Landings community in
Savannah.  This office location services the higher income individuals
and higher net worth retiree island communities nearby.





In December 2007, the former Harbourside opened its second
office in Bluffton, South Carolina on Bluffton Parkway.  This is a
rapidly growing area with a concentration of residential homes and small
businesses.  This is now a branch of Savannah.





In August 2008, Bryan opened its second office in Richmond
Hill at 3700 Highway 17, about one-half mile from I-95.  The new
branch is 3,000 square feet.  The Company also relocated its regional
banking operations center from previously leased space in Savannah to the new
facility.





SAVB 2009 Form
10-K
 - 8 -


The imaged item processing, statement rendering,
information technology, deposit operations and branch operations support
functions are located at this center.  The operations center occupies
the remainder of the 11,500 square foot facility.





In October 2008, Savannah opened a loan production office
located at 400 Main Street in St. Simons Island, Georgia.





The Subsidiary Banks' business plans rely principally upon
local advertising and promotional activity and upon personal contacts by their
directors and officers to attract business and to acquaint potential customers
with their personalized services.  The Subsidiary Banks emphasize a
high degree of personalized customer service.  Advertising and
marketing emphasize the advantages of dealing with an independent,
locally-owned, relationship-oriented bank to meet the particular needs of
individuals, professionals and small to medium-size businesses in the
community.





Liquidity and Interest Rate Sensitivity
Management





Quantitative disclosures regarding the Company’s liquidity
management are included on pages F-39 to F-41 in the
2009 Annual Report.





Interest Rate Risk





Quantitative discussion of the Company’s interest rate risk
is included on pages F-40 and F-41 in the
2009 Annual Report.





Federal and State Laws and Regulation of Banks and Bank
Holding Companies





Bank holding companies and commercial banks are extensively
regulated under both federal and state law.  These laws and
regulations delineate the nature and extent of the activities in which
commercial banks may engage.  To the extent that the following
information describes statutory and regulatory provisions, it is qualified in
its entirety by reference to the particular statutory and regulatory
provisions.  Change in applicable laws or regulations may have a
material effect on the business of the Company and its
subsidiaries.





Savannah is subject to extensive supervision and regulation
by the OCC and Bryan Bank is subject to extensive supervision by the GBDF and
the FDIC.  The regulators are responsible for overseeing the affairs
of the Subsidiary Banks and periodically examining the Banks to determine their
compliance with laws and regulations.  The Subsidiary Banks must make
quarterly reports of financial condition and results of operations to the
regulators.  This quarterly financial information is made available to
the public approximately 45 days after each quarter-end.  Regulators
use this data for quarterly offsite monitoring of the financial condition of the
Banks.  Quarterly holding company reports are filed with the Federal
Reserve Bank (“FRB”) of Atlanta (“FRB Atlanta”) within 40 days of each
quarter-end.  This financial information is reviewed by the FRB
Atlanta for accuracy, consistency and reasonableness and is also made available
to holding company database providers within 75 days of the end of each
quarter.  Bank analysts, regulators and consultants regularly use this
information in analyzing historical and expected performance of banks and bank
holding companies.





The regulators have authority to issue cease and desist
orders against banks and bank holding companies which are about to engage, are
engaging or have engaged in unsafe or unsound practices in the conduct of their
business.  The regulators can order affirmative action to correct any
harm resulting from a violation or practice, including, but not limited to,
making restitution and providing reimbursement or guarantees against loss in
certain cases.  Regulators also administer several federal statutes,
such as the Community Reinvestment Act of 1977 (“CRA”) and the Depository
Institution Management Interlocks Act, which apply to banks.  The
Subsidiary Banks are subject to special examination by the FDIC and to certain
FDIC regulations.





Regulators have adopted risk-based capital requirements
that specify the minimum level for which no prompt corrective action is
required.  In addition, the FDIC adopts FDIC insurance assessment
rates based on certain risk-based and equity capital ratios.  The
regulators have authority to establish higher capital requirements if they
determine that the circumstances of a particular institution require it and to
take certain supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution’s degree of
undercapitalization.  The table in Note 14 to the Consolidated
Financial Statements in the 2009 Annual Report shows the capital ratios for the
Company and Subsidiary Banks and the regulatory minimum capital ratios at
December 31, 2009.





SAVB 2009 Form
10-K
 - 9 -


The capital ratios of the Company and each Subsidiary Bank
exceed the ratios required to be considered "well-capitalized" by the
FDIC.





The Subsidiary Banks are subject to applicable provisions
of the Federal Reserve Act (“Act”) which restrict the ability of any bank to
extend credit to its parent holding company.  Additionally, a national
banking association cannot extend credit to any affiliate (including its parent
and non-bank subsidiaries of its parent); issue a guarantee, acceptance or
letter of credit (including an endorsement or standby letter of credit) on
behalf of its affiliates; invest in the stock or securities of affiliates or,
under certain circumstances, take such stock or securities as collateral for
loans to any borrower.





Shareholders of banks (including bank holding companies
which own stock in banks, such as the Company) may be compelled by bank
regulatory authorities to invest additional capital in the event their bank's
capital becomes impaired by losses or otherwise.  Failure to pay such
an assessment could cause a forced sale of the holder's bank
stock.  In addition, the Company may also be required to provide
additional capital to any banks that it acquires as a condition to obtaining the
approvals and consents of regulatory authorities in connection with such
acquisitions.





The earnings of the Subsidiary Banks and, consequently, of
the Company, are affected significantly by the policies of the Board of
Governors of the Federal Reserve System (the “Fed”), which regulates the money
supply in order to mitigate recessionary and inflationary
pressures.  Among the techniques used to implement these objectives
are open market operations in United States Government securities, changes in
the rate paid by banks on bank borrowings, and changes in reserve requirements
against bank deposits.  These techniques are used in varying
combinations to influence overall growth and distribution of bank loans,
investments and deposits, and their use may also affect interest rates charged
on loans or paid for deposits.  The monetary policies of the Fed have
had a significant effect on the operating results of banks in the past and are
expected to continue to do so in the future.





The Company, as a bank holding company, is required to
register as such with the FRB and the GDBF.  It is required to file
with both of these agencies quarterly and annual reports and other information
regarding its business operations and those of its subsidiaries.  It
is also subject to examination by these two agencies and will be required to
obtain their approval before acquiring, directly or indirectly, ownership or
control of any voting shares of a bank or bank subsidiary of a bank holding
company if, after such acquisition, it would own or control, directly or
indirectly, more than five percent of the voting stock of such bank or banking
subsidiary of a bank holding company.  Furthermore, a bank holding
company is prohibited from acquiring direct or indirect ownership or control of
any voting stock of any company which is not a bank or bank holding company,
with limited exceptions.  It must engage only in the business of
banking, managing or controlling banks or furnishing services to or performing
services for its subsidiary banks.  During 1996, the Fed enacted
regulations that are slightly less restrictive regarding the types of businesses
which bank holding companies may own.





Banking organizations are prohibited under the Act from
participating in new financial affiliations unless their depository institution
subsidiaries are well-capitalized and well-managed.  Regulators are
required to address any failure to maintain safety and soundness standards in a
prompt manner.  In addition, regulators must prohibit holding
companies from participating in new financial affiliations if, at the time of
certification, any insured depository affiliate had received a less than
"satisfactory'' CRA rating at its most recent examination.





Affiliation Authority-The Gramm-Leach-Bliley Act
of 1999 (“GLB”) amended section 4 of the Act to provide a framework for engaging
in new financial activities.  Those bank holding companies ("BHCs")
that qualify to engage in the new financial activities are designated as
Financial Holding Companies (“FHCs”).  Provisions of GLB permit BHCs
that qualify as FHCs to engage in activities, and acquire companies engaged in
activities, that are financial in nature or incidental to such financial
activities.  FHCs are also permitted to engage in activities that are
"complementary" to financial activities if the Fed determines that the activity
does not pose a substantial risk to the safety or soundness of the institution
or the financial system in general.





The Fed may act by either regulation or order in
determining what activities are financial in nature, incidental to financial in
nature, or complementary.  In doing so, the Fed must notify the
Treasury Department (“Treasury”) of requests to engage in new financial
activities and may not determine that an activity is financial or incidental to
a financial activity if Treasury objects.  Furthermore, Treasury may
propose that the Fed find a particular activity financial in nature or
incidental to a financial activity.





SAVB 2009 Form
10-K
 - 10 -


GLB establishes a similar procedure with regard to the
Treasury's (acting through the OCC) determination of financial activities and
activities that are incidental to financial activities for subsidiaries of
national banks.  Congress intended for the Fed and Treasury to
establish a consultative process that would negate the need for either agency to
veto a proposal of the other agency.





Federal
Home Loan Bank Reform -GLB reformed the Federal Home Loan Bank (“FHLB”)
System, including expanding the collateral that a community bank can pledge
against FHLB advances, thus giving smaller banks access to a substantial new
liquidity source.





Privacy -GLB imposed a number of new restrictions on the ability of financial
institutions to share nonpublic personal information with nonaffiliated third
parties.  Specifically, the GLB:





·
            requires financial institutions to establish privacy
      policies and disclose them annually to all customers, setting forth how
      the institutions share nonpublic personal financial information with
      affiliates and third parties;


·
            directs regulators to establish regulatory standards
      that ensure the security and confidentiality of customer
      information;


·
            permits customers to prohibit ("opt out" of
      permitting) such institutions from disclosing personal financial
      information to nonaffiliated third
parties;


·
            prohibits transfer of credit card or other account
      numbers to third-party marketers;


·
            prohibits pretext calling (that is, makes it illegal
      for information brokers to call banks to obtain customer information with
      the intent to defraud the bank or
customer);


·
            protects stronger state privacy laws, as well as
      those not "inconsistent" with the federal
rules;


·
            requires the Treasury and other federal regulators to
      study the appropriateness of sharing information with affiliates,
      including considering both negative and positive aspects of such sharing
      for consumers.





GLB also imposes an affirmative obligation on banks to
respect their customers' privacy interests.  Language protects a
community bank's ability to share information with third parties selling
financial products (for example, insurance or securities) to bank
customers.  Community banks can thus continue such sales practices
without being subject to the opt-out provisions contained elsewhere in the
legislation.





The Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the “Riegle-Neal Act”) has introduced a process that enables
nationwide interstate banking through bank subsidiaries and interstate bank
mergers.  Separately, the Riegle-Neal Act also permits bank
subsidiaries to act as agents for each other across state
lines.  Since September 29, 1995, adequately capitalized and managed
bank holding companies have been permitted to acquire control of a bank in any
state.  Acquisitions are subject to concentration
limits.  Beginning June 1, 1997, banks were permitted to merge with
one another across state lines.  The Interstate Banking Act also
permits de novo branching to the extent that a particular state "opts into" the
de novo branching provisions.  The legislation preserves the state
laws which require that a bank must be in existence for a minimum period of time
before being acquired as long as the requirement is five years or
less.  This legislation has relevance for the banking industry due to
increased competitive forces from institutions which may consolidate through
mergers and those which may move into new markets through enhanced opportunities
to branch across state lines.  Georgia and South Carolina do not have
reciprocal provisions for de novo branches or charters.  Holding
companies domiciled in Georgia may not branch or charter banks in South Carolina
and vice versa.  Alternatives for expansion between these states
include acquiring an existing financial institution, chartering a federal
savings bank or moving the charter of a national bank within 35 miles of its
headquarters into the new state.





A bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with the extension of
credit or provision of any property or service.  Thus, a bank may not
extend credit, lease or sell property or furnish any service or fix or vary the
consideration for such on the condition that (i) the customer should obtain or
provide some additional credit, property or service from or to such bank (other
than a loan, discount, deposit or trust service related to and usually provided
in connection with a loan, discount, deposit or trust service), its bank holding
company or any other subsidiary of its bank holding company or (ii) the customer
may not obtain some other credit, property or service from a competitor, except
to the extent reasonable conditions are imposed in a credit transaction to
assure the soundness of the credit extended.





The FRB has cease and desist powers over bank holding
companies and non-banking subsidiaries should their actions constitute a serious
threat to the safety, soundness or stability of a subsidiary
bank.





SAVB 2009 Form
10-K
 - 11 -


The Company is also subject to certain restrictions with
respect to engaging in the business of issuing, underwriting and distributing
securities.





Although the Company is not presently subject to any direct
regulatory restrictions on dividends (other than those of Georgia corporate
law), the Company's long-term ability to pay cash dividends will depend on the
amount of dividends paid by the Subsidiary Banks and any other subsequently
acquired entities.  OCC regulations restrict the amount of dividends
which Savannah may pay without obtaining prior approval.  Based on
such regulatory restrictions without prior approval, Savannah is restricted from
paying dividends in a calendar year which exceeds the current year's net income
combined with the retained net profits of the preceding two
years.  Bryan Bank may pay dividends equal to no more than 50 percent
of prior year net income without prior approval from the GDBF.  The
dividend payout plans of the Subsidiary Banks consider the objective of
maintaining their “well-capitalized” status.





The Subsidiary Banks are members of the FHLB System, which
consists of 12 regional FHLBs subject to supervision and regulation by the
Federal Housing Finance Agency.  The FHLBs maintain central credit
facilities primarily for member institutions.  The Subsidiary Banks,
as members of the FHLB of Atlanta, are required to hold shares of capital stock
in the FHLB of Atlanta in an amount equal to: (i) 18 basis points of the Bank’s
total assets (adjusted annually) and (ii) 4.5 percent of its advances
(borrowings) from the FHLB of Atlanta.  The Subsidiary Banks are in
compliance with this requirement at December 31, 2009.





Each FHLB serves as a reserve or central bank for its
member institutions within its assigned regions.  It is funded
primarily from proceeds derived from the sale of obligations of the FHLB
System.  The FHLB makes advances (i.e., loans) to members in
accordance with policies and procedures established by its Board.  The
Subsidiary Banks are authorized to borrow funds from the FHLB of Atlanta to meet
demands for withdrawals of deposits, to meet seasonal requirements and for the
expansion of its loan portfolio.  Advances may be made on a secured or
unsecured basis depending upon a number of factors, including the purpose for
which the funds are being borrowed and the amount of previously existing
advances.  Interest rates charged for advances vary depending upon
maturity, the cost of funds to the FHLB of Atlanta and the purpose of the
borrowing.





Community
Reinvestment Act





CRA requires the federal bank regulatory agencies to
encourage financial institutions to meet the credit needs of low- and
moderate-income borrowers in their local communities.  In May 1995,
the federal bank regulatory agencies published final amended regulations
promulgated pursuant to the CRA.  The final regulations eliminate the
12 assessment factors under the former regulation and replace them with
performance tests.  Institutions are no longer required to prepare CRA
statements or extensively document director participation, marketing efforts or
the ascertainment of community credit needs.  Under the final rule, an
institution's size and business strategy determines the type of examination that
it will receive.  Large, retail-oriented institutions are examined
using a performance-based lending, investment and service test.  Small
institutions are examined using a streamlined approach.  All
institutions have the option of being evaluated under a strategic plan
formulated with community input and pre-approved by the applicable bank
regulatory agency.





CRA regulations provide for certain disclosure
obligations.  In accordance with the CRA, each institution must post a
CRA notice advising the public of the right to comment to the institution and
its regulator on the institution's CRA performance and to review the CRA public
file.  Each lending institution must maintain for public inspection a
public file that includes a listing of branch locations and services, a summary
of lending activity, a map of its communities, and any written comments from the
public on its performance in meeting community credit needs. Large institutions
also are required to collect certain data, including the amount and location of
originated and purchased small business, small farm, community development, and
home mortgage loans, and to report this data to their regulatory
agencies.





Public disclosure of written CRA evaluations of financial
institutions made by regulatory agencies is required under the
CRA.  This promotes enforcement of CRA requirements by providing the
public with the status of a particular institution's community reinvestment
record.  Savannah and Bryan Bank received a "satisfactory" rating on
the most recent performance evaluations of their CRA efforts by their respective
banking regulatory agencies.





Fair Lending


SAVB 2009 Form
10-K
 - 12 -


Congress and various federal agencies responsible for
implementing fair lending laws have been increasingly concerned with
discriminatory lending practices.  In 1994, those federal agencies
announced a Joint Policy Statement detailing specific discriminatory practices
prohibited under the Equal Opportunity Act and the Fair Housing
Act.  In the Policy Statement, three methods of proving lending
discrimination were identified: (i) overt evidence of discrimination, where a
lender blatantly discriminates on a prohibited basis; (ii) evidence of disparate
treatment, when a lender treats applicants differently based upon a prohibited
factor, even where there is no evidence showing that the treatment was motivated
by intention to discriminate; and (iii) evidence of disparate impact, when a
lender applies a practice uniformly to all applicants, but the practice has a
discriminatory effect, even where such practices are neutral in appearance and
applied equally.





Anti-Money Laundering





The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
("Patriot Act") significantly expands the responsibilities of financial
institutions in preventing the use of the United States financial system to fund
terrorist activities.  Title III of the Patriot Act provides for a
significant overhaul of the United States anti-money laundering
regime.  Among other provisions, it requires financial institutions
operating in the United States to develop new anti-money laundering compliance
programs, due diligence policies and controls to ensure the detection and
reporting of money laundering.  Such required compliance programs are
intended to supplement existing compliance requirements, also applicable to
financial institutions, under the Bank Secrecy Act and the Office of Foreign
Assets Control Regulations. This federal legislation and the resultant bank
regulations require a financial institution to expeditiously search its records
to determine whether it maintains or has maintained accounts, or engaged in
transactions with individuals or entities listed in a database maintained by the
Financial Crimes Enforcement Network (“FinCEN”).  The records search
must cover current accounts, accounts opened in the prior twelve months, and
transactions conducted in the prior six months.  Its purpose is to
identify funds or transactions with individuals associated with terrorist
activities.  Substantial penalties and/or criminal prosecution may
result from non-compliance.  Management has established policies and
procedures to ensure compliance with the Patriot Act.





Rules Adopted by the SEC





The Sarbanes-Oxley Act of 2002 (“Sarbox”) was enacted to
enhance penalties for accounting and auditing improprieties at publicly traded
companies and to protect investors by improving the accuracy and reliability of
corporate disclosures under the federal securities laws.  Sarbox
typically applies to all companies, including the Company, which file or are
required to file periodic reports with the SEC.  Generally, Sarbox (i)
requires chief executive officers and chief financial officers to certify to the
accuracy of periodic reports filed with the SEC; (ii) imposes specific and
enhanced corporate disclosure requirements; (iii) accelerates the time frame for
reporting of insider transactions and periodic disclosures by public companies;
(iv) requires companies to adopt and disclose information about corporate
governance practices, including whether or not they have adopted a code of
ethics for senior financial officers and whether the audit committee includes at
least one “audit committee financial expert;” and (v) requires the SEC, based on
certain enumerated factors, to regularly and systematically review corporate
filings.





Recent Banking Legislation





Bills are presently pending before the United States
Congress and certain state legislatures, and additional bills may be introduced
in the future in the Congress and the state legislatures, which, if enacted, may
alter the structure, regulation and competitive relationships of the nation's
financial institutions.  It cannot be predicted whether or in what
form any of these proposals will be adopted or the extent to which the business
of the Company or the Subsidiary Banks may be affected thereby.





Competition





The banking business is very competitive.  Banks
generally compete with other financial institutions using the mix of banking
products and services offered, the pricing of services, the convenience and
availability of services, and the degree of expertise and the personal manner in
which services are offered.  The Subsidiary Banks compete with other
commercial and savings banks in their primary service areas.  The
Subsidiary Banks also compete with credit unions, consumer finance companies,
insurance companies, money market mutual funds, brokerage firms and other
financial institutions, some of which are not subject to the degree of
regulation and restriction imposed upon the Subsidiary
Banks.





SAVB 2009 Form
10-K
 - 13 -





Many of these competitors have more branch offices in the
Subsidiary Bank’s primary service area.  However, the Company's plan
is to expand into the markets which will best serve its targeted
customers.  Management believes that competitive pricing, local
ownership, local decisions, local control and personalized,
relationship-oriented service provide the Subsidiary Banks with a method to
compete effectively for prospective customers.





The Subsidiary Banks experience the most competition from
new local community bank entrants into the market area.  Numerous
banking offices of community banks and de novo banks have opened in the Savannah
market since January 1, 2002.  Other banks have indicated interest in
the coastal Georgia and South Carolina markets.  These new entrants
have increased and will continue to increase the competition for existing and
new business.





Deposit growth is a continuing challenge facing the banking
industry and the Subsidiary Banks.  It is likely that deposit growth
in competitive markets will require higher deposit interest
rates.  Higher costs of funds without corresponding higher rates on
earning assets will have a long-term negative impact on net interest
income.  Higher growth in lower cost core deposits, higher revenue
growth from fee based services and lower overhead growth rates are the key items
required to accomplish the Company's earnings growth objectives.








SELECTED STATISTICAL INFORMATION FOR THE
COMPANY





Investments





Table 1 - Weighted Average Yields by Maturity





The following table sets forth the amortized cost, fair
value and tax-equivalent yields by investment type and contractual maturity at
December 31, 2009:





Amortized
            
            Fair
            
            Taxable
              EquivalentCost
            
            Value
            
            Yield (a)(Thousands)
            (%)Securities available for
      sale:U.S. government-sponsored enterprises
              (“GSE”) and
    mortgage-backed:Within one
      year
            $           -
            
            $          -
            
            -One year to five
      years
            734
            
            775
            
            5.42Five years to ten
      years
            993
            
            1,088
            
            4.94Mortgage-backed
      securities - GSE
            73,203
            
            74,287
            
            3.10Total
            74,929
            
            76,151
            
            3.15Other interest-earning investments:Within one
      year
            -
            
            -
            
            -One year to five
      years
            1,187
            
            1,225
            
            5.25Five years to ten
      years
            1,666
            
            1,688
            
            4.39Due after ten
      years
            5,054
            
            5,096
            
            4.71Restricted equity
      securities
            3,760
            
            3,760
            
            1.18Total
            11,667
            
            11,768
            
            1.54Total securities available for
      sale
            $ 86,596
            
            $ 87,919
            
            4.68(a) The yield is calculated on the amortized cost of
      the securities.







SAVB 2009 Form
10-K
 - 14 -


Loans





Following is certain information regarding the loan
portfolio as of December 31, 2009 on a consolidated basis.





Table 2 - Loan Repricing Opportunities





The following table sets forth certain loan maturity and
repricing information as of December 31, 2009.  Loan renewals
generally reprice relative to the prime rate in effect at the time of the
renewal.  Management expects that certain real estate mortgage loans
which have maturities of one to three years with longer amortization periods
will renew at maturity.





($ in thousands)
              
              
              Loan Category
            One
              Year
              or Less
            After
              One Year
              Through
              Five years
            Over
              Five
              Years
            TotalReal estate-construction and
    development
            $   55,386
            $   4,293
            $         -
            $   59,679Commercial
            63,771
            23,042
            2,466
            89,279Total
            $ 119,157
            $ 27,335
            $ 2,466
            $ 148,958Loans with fixed rates
            $   41,686
            $ 27,335
            $ 2,466
            $   71,487Loans with floating and adjustable
    rates
            77,471
            -
            -
            77,471Total
            $ 119,157
            $ 27,335
            2,466
            $ 148,958





Nonaccrual, Past Due and Restructured Loans





At December 31, 2009 and 2008, nonperforming loans were
$34,115,000 and $27,603,000, respectively.  At December 31, 2009, the
Subsidiary Banks had nonaccruing loans of $32,545,000 and $1,570,000 in loans
past due 90 days or more.  Interest income of $957,000 was recognized
on impaired loans in 2009.





Except for consumer loans, the Company's policy is to place
loans on nonaccrual status when, in management's judgment, the collection of
principal and interest in full becomes doubtful.  Interest receivable
accrued in prior years and subsequently determined to have doubtful
collectibility is charged to the allowance for loan losses.  Interest
on loans that are placed on nonaccrual is recognized after principal is
collected in full.  In some cases where borrowers are experiencing
financial difficulties, loans may be restructured to provide terms significantly
different from the original contractual terms.





Loan Concentrations





Most of the Company’s business activity is with customers
located within Chatham and Bryan County, Georgia and southern Beaufort County,
South Carolina.  Table 7 on page F-39 of the 2009
Annual Report provides details of the various real estate loan
concentrations.  The Company has no loans that are considered to be
highly leveraged transactions or foreign credits.





Allowance for Loan Losses





See pages F-34 through F-36 of
the 2009 Annual Report for details about the activity and breakdown of the
allowance for loan losses and additional information regarding accounting
estimates in the allowance.





Deposits





Deposit Average Balances and Rates Paid





Tables 9 and 10 on pages F-44 and F-45 of the
2009 Annual Report summarize the average balances of the Company’s deposits and
the average rates paid on such deposits during 2009, 2008 and 2007.


SAVB 2009 Form
10-K
 - 15 -


Table 3 - Long-term Obligations





The following table includes a breakdown of payment
obligations due under long-term contracts:





($ in
      thousands)
            Payments Due by PeriodLess than
            1 - 3
            4 - 5
            More thanContractual Obligations
            Total
            1 Year
            Years
            Years
            5 YearsFHLB advances - long-term
            $ 15,664
            $         -
            $  2,016
            $ 3,511
            $ 10,137Subordinated debt
            10,310
            -
            -
            -
            10,310Operating leases - buildings
            6,086
            597
            1,601
            1,204
            2,684Long-term contracts
            2,697
            1,222
            1,475
            -
            -Total
            $ 34,757
            $ 1,819
            $ 5,092
            $ 4,715
            $ 23,131








Item 1A. Risk Factors





Like other financial companies, the Company is subject to a
number of risks, many of which are outside of our direct
control.  Efforts are made to manage those risks while optimizing
returns.  Among the risks assumed are: (1) credit risk, which is
the risk that loan customers or other counterparties will be unable to perform
their contractual obligations, (2) market risk, which is
the risk that changes in market rates and prices will adversely affect our
financial condition or results of operation, (3) liquidity risk, which
is the risk that the Company and/or Banks will have insufficient cash or access
to cash to meet its operating needs, (4) operational risk,
which is the risk of loss resulting from inadequate or failed internal
processes, people and systems, or external events and (5) common stock marketability
risk, which is risk specifically related to the marketability of the
Company’s common stock.





In addition to the other information included or
incorporated by reference into this report, readers should carefully consider
that the following important factors, among others, could materially impact our
business, future results of operations, and future cash flows.





Credit Risk





Our business is affected by the strength of the local
economies where we operate.





Our success significantly depends upon the growth in
population, income levels, deposits and real estate development in our primary
markets in coastal Georgia and South Carolina.  If these communities
do not grow or if prevailing economic conditions locally or nationally are
unfavorable, our business may be adversely impacted.  The events in
the national economy have filtered down to the Company’s local
markets.  We are less able than larger institutions to spread the
risks of unfavorable local economic conditions across a large number of
diversified economies.  Moreover, we cannot give any assurance that we
will benefit from any market growth or favorable economic conditions in our
primary market areas.





Any adverse market or economic conditions in coastal
Georgia and South Carolina may disproportionately increase the risk that our
borrowers will be unable to make their loan payments.  In addition,
the market value of the real estate securing loans could be adversely affected
by unfavorable changes in market and economic conditions.  The
Bluffton/Hilton Head Island (“Bluffton/HHI”) market experienced a pronounced
slowdown beginning in 2007 which seriously and adversely affected our
residential real estate loans that were originated in that
market.  The Company has also experienced a slowdown in its other real
estate markets.  As of December 31, 2009, approximately 88% of our
loans held for investment were secured by real estate.  Of the
commercial real estate loans in our portfolio, approximately 39% represent
properties owned and occupied by businesses to which we have extended
loans.  The current sustained period of increased payment
delinquencies, foreclosures and losses caused by adverse market and economic
conditions in coastal Georgia and South Carolina has adversely affected the
value of our assets, our revenues, results of operations and overall financial
condition and is likely to continue to at least in the short term.


SAVB 2009 Form
10-K
 - 16 -


Our business is concentrated in the areas of Chatham and
Bryan County, Georgia and southern Beaufort County, South Carolina.





Currently, our lending and other business is concentrated
in Chatham and Bryan Counties in Georgia and southern Beaufort County in South
Carolina.  The current downturn in market conditions in these
respective areas has adversely affected the performance of our loans and the
results of our operations and financial condition.  In particular,
Hilton Head Island in southern Beaufort County is a vacation and resort area
with high concentrations of second home and investment
properties.  Further changes in interest rates, local or general
economic conditions, real estate values or the income tax deductibility of
mortgage interest would subject our markets to greater volatility which would
further adversely impact our performance.  Additionally, our market
area is susceptible to the risk of hurricane disasters and many areas are
located in flood zones.  While most such losses are insurable,
hurricanes and flooding could adversely affect operations and our financial
condition.





If our allowance for loan losses is not sufficient to cover
actual charge-offs, our earnings could decrease.





Our loan customers may not repay their loans according to
the terms of these loans and the collateral securing the payment of these loans
may be insufficient to assure repayment.  We may continue to
experience significant charge-offs which could have a material adverse effect on
our operating results.  Our management makes various assumptions and
judgments about the collectibility of our loans, including the creditworthiness
of our borrowers and the value of the real estate and other assets serving as
collateral for the repayment of our loans.  We maintain an allowance
for loan losses in an attempt to cover any charge-offs which may
occur.  In determining the size of the allowance, we rely on an
analysis of our loan portfolio based on historical loss experience, volume and
types of loans, trends in classification, volume and trends in delinquencies and
nonaccruals, national and local economic conditions and other pertinent
information.  As noted above, the Bluffton/HHI market experienced a
significant slowdown beginning in 2007 which necessitated additional provisions
for loan losses.  Our Georgia markets are experiencing a slowdown as
well.





If our assumptions are wrong, our current allowance may not
be sufficient to cover future charge-offs, and adjustments may be necessary to
allow for different economic conditions or adverse developments in our loan
portfolio.  Material additional provisions to our allowance would
materially decrease our net income and adversely affect our “well-capitalized”
status.





In addition, federal and state regulators periodically
review our allowance for loan losses and may require us to increase our
provision for loan losses or recognize further loan charge-offs, based on
judgments different than those of our management.  Any increase in our
allowance for loan losses or loan charge-offs as required by these regulatory
agencies could have a negative effect on our operating results and
“well-capitalized” status.





Market Risk





Changes in interest rates could negatively impact our
financial condition and results of operations.





Our earnings are significantly dependent on our net
interest income.  We expect to realize income primarily from the
difference between interest earned on loans and investments and the interest
paid on deposits and borrowings.  We expect that we will periodically
experience "gaps" in the interest rate sensitivities of our assets and
liabilities, meaning that either our interest-bearing liabilities will be more
sensitive to changes in market interest rates than our interest-earning assets,
or vice versa.  In either event, if market interest rates should move
contrary to our position, this "gap" would work against us, and our earnings may
be negatively affected.





For example, in the event of a decrease in interest rates,
our net interest income will be negatively affected because our interest-bearing
assets currently reprice faster than our interest-bearing
liabilities.  Although our asset-liability management strategy is
designed to control our risk from changes in market interest rates, we may not
be able to prevent changes in interest rates from having a material adverse
effect on our results of operations and financial condition.  A
significant portion of our variable rate loans have interest rate floors such
that the loans will not reprice immediately when interest rates begin to
rise.





Changes in the level of interest rates also may negatively
affect our ability to originate loans, the value of our assets and our ability
to realize gains from the sale of our assets, all of which ultimately affect our
earnings.


SAVB 2009 Form
10-K
 - 17 -


A decline in the market value of our assets may limit our
ability to borrow additional funds or result in our lenders requiring additional
collateral from us under our loan agreements.  As a result, we could
be required to sell some of our loans and investments under adverse market
conditions, upon terms that are less favorable to us, in order to maintain our
liquidity.  If those sales are made at prices lower than the amortized
costs of the investments, we will incur losses.  While rising interest
rates are favorable to us, declining rates, like those experienced during 2007
and 2008, generally have a negative impact on earnings.  There can be
no assurance or guarantee that declining rates will not continue to negatively
impact earnings or that we will be able to take measures to hedge, on favorable
terms or at all, against unfavorable events, which could adversely affect our
results of operations and financial condition.





Monetary policies may adversely affect our business and
earnings.





Our results of operations are affected by the policies of
monetary authorities, particularly the Fed.  Changes in interest rates
can affect the number of loans we originate, as well as the value of our loans
and other interest-bearing assets and liabilities and the ability to realize
gains on the sale of those assets and liabilities.  Prevailing
interest rates also affect the extent to which borrowers prepay loans owned by
us.  When interest rates decrease, borrowers are more likely to prepay
their loans, and vice versa.  We may be required to invest funds
generated by prepayments at less favorable interest rates.  Increases
in interest rates could hurt the ability of borrowers who have loans with
floating interest rates to meet their increased payment
obligations.  If those borrowers were not able to make their payments,
then we could suffer losses, and our level of nonperforming assets could
increase.





The loss of significant revenues in Minis could result in
lower operating earnings as well as significant non-cash charges to earnings
related to the impairment of goodwill and accelerated amortization of the client
list intangible asset.





Asset management fee revenues are directly impacted by the
total investments under management.  The assets under management are
impacted by stock values, bond values, interest rates and the gain or loss of
accounts due primarily to investment performance.  Minis’ selling
shareholders have significant earn-out incentives to maintain and increase
revenues through June 2010.  However, events and decisions beyond
their control can negatively impact assets under management and the related
revenues from such assets.





Liquidity Risk





Our use of brokered deposits, uninsured local deposits and
other borrowings may impair our liquidity and constitute an unstable and/or
higher cost funding source.





We use wholesale, institutional and brokered deposits,
uninsured local deposits and other borrowings, including repurchase agreements,
federal funds purchased, FRB discount window borrowings and FHLB borrowings, to
fund a portion of our operations.  Federal law requires a bank to be
well-capitalized if it accepts new brokered deposits.  Thus, the
Company and the Banks must maintain a "well-capitalized" status to meet our
funding plans.  Failure to maintain "well-capitalized" status would
limit our access to wholesale and brokered deposits and federal funds purchased
(but not necessarily repurchase agreements or FHLB or FRB borrowings), which
could impair our liquidity.  We will be considered "well-capitalized"
if we (i) have a total risk-based capital ratio of 10.0 percent or greater; (ii)
have a Tier 1 risk-based capital ratio of 6.0 percent or greater; (iii) have a
leverage ratio of 5.0 percent or greater; and (iv) are not subject to any
written agreement, order, capital directive, or prompt corrective action
directive issued by the FDIC to meet and maintain a specific capital level for
any capital measure.





Depositors that invest in brokered deposits are generally
interest rate sensitive and well informed about alternative markets and
investments.  Consequently, funding with brokered deposits may not
provide the same stability to our deposit base as traditional local retail
deposit relationships.  Our liquidity may be negatively affected if
brokered deposit supply declines due to a loss of investor confidence or a
flight to higher quality investments such as U.S. Treasury
securities.  In addition, brokered deposits historically have a higher
rate of interest than core local deposits.





Deposit balances in excess of the FDIC's $250,000 insurance
limit (through December 31, 2013) per depositor are uninsured
deposits.  Customers with uninsured deposits are more sensitive to
financial or reputation risk than insured depositors.  Consequently,
uninsured deposits do not provide the same stability to our deposit base as
insured deposits.  Our liquidity may be negatively affected by a
decline in uninsured deposits due to a loss of investor confidence and a flight
to insured deposits at other financial institutions.


SAVB 2009 Form
10-K
 - 18 -


The Subsidiary Banks participate in the FDIC’s voluntary
TAGP.  Under the TAGP the FDIC will provide full FDIC deposit
insurance coverage for non-interest bearing transaction deposit accounts, NOW
accounts paying less than 0.50 percent interest per annum, and Interest and
Lawyers Trust Accounts held at participating FDIC insured institutions through
June 30, 2010.





Operational Risk





Future departures of our key personnel may impair our
operations.





We are, and for the foreseeable future will be, dependent
on the services of John C. Helmken II, President and Chief Executive Officer of
the Company and Chief Executive Officer of Savannah; E. James Burnsed, Vice
Chairman of the Company and Chairman and Chief Executive Officer of Bryan Bank;
R. Stephen Stramm, Executive Vice President – Lending of the Company and of
Savannah; Michael W. Harden, Jr., Chief Financial Officer of the Company and
Savannah; Jerry O’Dell Keith, a Vice President of the Company and President of
Bryan Bank, and Holden T. Hayes, President of Savannah.  Should the
services of any of Messrs. Helmken, Burnsed, Stramm, Harden, Keith or Hayes
become unavailable, there can be no assurance that a suitable successor could be
found who will be willing to be employed upon terms and conditions acceptable to
us.  A failure to replace any of these individuals promptly, should
his services become unavailable, could have a material adverse effect on our
results of operations and financial performance.  These risks are
heightened by the fact that none of these officers have entered into employment
agreements with the Company or Banks.





Our continued pace of growth may require us to raise
additional capital in the future, but that capital may not be available when it
is needed.





We are required by federal and state regulatory authorities
to maintain adequate levels of capital to support our operations.  We
believe that our current capital resources are sufficient in the short
term.  We do, however, continue to evaluate the need to raise
additional capital to support growth and a possible further deterioration of
current economic conditions.





Our ability to raise additional capital, if needed, will
depend on conditions in the capital markets at that time, which are outside our
control, and on our financial performance.  Accordingly, we cannot
give any assurances of our ability to raise additional capital on terms
acceptable to us, or at all.  If we cannot raise additional capital
when needed, our overall financial condition could be materially
impaired.





Our industry operates in a highly regulated
environment.  New laws or regulations or changes in existing laws or
regulations affecting the banking industry could have a material adverse effect
on our results of operations.





The Company and the Banks are subject to extensive
government regulation and supervision under various state and federal laws,
rules and regulations, primarily the rules and regulations of the OCC, FDIC,
GDBF, SEC and the FRB.  These laws and regulations are designed
primarily to protect depositors, borrowers, and the deposit insurance funds of
the FDIC.  These regulators maintain significant authority to impose
requirements on our overall operations, such as limiting certain activities or
mandating the increase of capital levels.  The financial services
industry also is subject to frequent legislative and regulatory changes and
proposed changes, the effects of which cannot be predicted.





In February 2009, the FDIC adopted a long-term deposit
insurance fund (“DIF”) restoration plan as well as an additional emergency
assessment for 2009.  The restoration plan increases base assessment
rates for banks in all risk categories with the goal of raising the DIF reserve
ratio.  Banks in the best risk category paid initial base rates
ranging from 12 to 16 basis points of assessable deposits beginning
April 1, 2009.  Additionally, the FDIC adopted a final rule
imposing a special emergency assessment on all financial institutions of 5 basis
points of total assets minus Tier 1 capital as of June 30,
2009.  Our special emergency assessment totaled $425,000 and was
collected on September 30, 2009.  The FDIC is also permitted to
impose an emergency special assessment after June 30, 2009 of up to 10
basis points if necessary to maintain public confidence in federal deposit
insurance.  The FDIC has not to date imposed such an
assessment.  The increase in assessments by the FDIC could have a
material adverse effect on our earnings.


SAVB 2009 Form
10-K
 - 19 -


On November 12, 2009, the FDIC imposed a requirement
on all financial institutions to prepay three years of FDIC insurance
premiums.  On December 30, 2009, we prepaid $5.1 million of
FDIC insurance premiums for the next three years.





We face substantial competition in our industry sector from
banking and financial institutions that have larger and greater financial and
marketing capabilities, which may hinder our ability to compete
successfully.





The banking and financial services industry is highly
competitive.  This competitiveness may negatively impact our ability
to retain qualified management and loan officers, raise sufficient deposits at
an acceptable price, and attract customers.  The increasingly
competitive environment is a result of changes in regulation, changes in
technology and product delivery systems, and the accelerating pace of
consolidation among financial providers.





We compete with many different banking and financial
institutions, including banks and savings and loan associations, credit unions,
brokerage and investment banking firms, and mortgage companies and
brokers.  These entities may be branches or subsidiaries of much
larger organizations affiliated with statewide, regional or national banking
companies and, as a result, may have greater resources and lower costs of
funds.  These entities may also be start-up
organizations.  Any of these entities may attempt to duplicate our
business plan and strategy.  There can be no assurance that we will be
able to compete effectively in the future.





Failure to implement our business strategies may adversely
affect our financial performance.





Our management has developed a business plan that details
the strategies we intend to implement in our efforts to continue profitable
operations.  If we cannot implement our business strategies, we may be
hampered in our ability to develop business and serve our customers, which
could, in turn, have an adverse effect on our financial
performance.  Even if our business strategies are successfully
implemented, they may not have the favorable impact on operations that we
anticipate.





An extended disruption of vital infrastructure could
negatively impact our business, results of operations, and financial
condition.





Our operations depend upon, among other things, our
infrastructure, including equipment and facilities.  Extended
disruption of vital infrastructure by fire, power loss, natural disaster,
telecommunications failure, computer hacking or viruses, terrorist activity or
the domestic and foreign response to such activity, or other events outside of
our control could have a material adverse impact on the financial services
industry as a whole and on our business, results of operations, cash flows, and
financial condition in particular.  Our disaster recovery and business
resumption contingency plans may not work as intended or may not prevent
significant interruptions of our operations.





Non-compliance with the Patriot Act, Bank Secrecy Act, or
other laws and regulations could result in fines or sanctions.





The Patriot and Bank Secrecy Acts require financial
institutions to develop programs to prevent financial institutions from being
used for money laundering and terrorist activities.  If such
activities are detected, financial institutions are obligated to file suspicious
activity reports with the Treasury’s FinCEN.  These rules require
financial institutions to establish procedures for identifying and verifying the
identity of customers seeking to open new financial accounts. Failure to comply
with these regulations could result in fines or sanctions.  We have
developed policies and procedures designed to assist in compliance with these
laws and regulations.





The FRB may require the Company to commit capital resources
to support the Subsidiary Banks.





The FRB, which examines the Company and our non-bank
subsidiaries, has a policy stating that a bank holding company is expected to
act as a source of financial and managerial strength to a subsidiary bank and to
commit resources to support such subsidiary bank.  Under the source of
strength doctrine, the FRB may require a bank holding company to make capital
injections into a troubled subsidiary bank, and may charge the bank holding
company with engaging in unsafe and unsound practices for failure to commit
resources to such a subsidiary bank. Capital injections may be required at times
when the holding company may not have the resources to provide it, and,
therefore, may be required to borrow the funds.  Loans from a holding
company to its subsidiary banks are subordinate in right of payment to deposits
and to certain other indebtedness of such subsidiary
bank.


SAVB 2009 Form
10-K
 - 20 -


In the event of a bank holding company’s bankruptcy, the
bankruptcy trustee will assume any commitment by the holding company to a
federal bank regulatory agency to maintain the capital of a subsidiary
bank.  Moreover, the bankruptcy law provides that claims based on any
such commitment will be entitled to a priority of payment over the claims of the
institution’s general unsecured creditors, including the holders of its note
obligations.  Thus, any borrowing that must be done by the holding
company in order to make the required capital injection becomes more difficult
and expensive and may adversely impact the holding company’s results of
operations and cash flows.





The failure of other financial institutions could adversely
affect us.





Our ability to engage in routine transactions, including,
for example, funding transactions, could be adversely affected by the actions
and potential failures of other financial institutions.  Financial
institutions are interrelated as a result of trading, clearing, counterparty and
other relationships.  We have exposure to many different industries
and counterparties, and we routinely execute transactions with a variety of
counterparties in the financial services industry.  As a result,
defaults by, or even rumors or concerns about, one or more financial
institutions with which we do business, or the financial services industry
generally, have led to market-wide liquidity problems in the past and could do
so in the future and could lead to losses or defaults by us or by other
institutions.  Many of these transactions expose us to credit risk in
the event of default of our counterparty or client.  In addition, our
credit risk may be exacerbated when the collateral we hold cannot be sold at
prices that are sufficient for us to recover the full amount of our
exposure.  Any such losses could materially and adversely affect our
financial condition and results of operations.





A promissory note contains financial covenants and a
guarantee of the Company.





As previously mentioned, the Company has a related party
promissory note (“Note”) in the current amount of $16.0 million.  The
Note is secured by the unconditional guarantee of the Company and SAVB Holdings’
blanket assignment or pledge of all of its assets and the proceeds thereof to
the Note’s holder.  The Note contains the following financial
covenants: (i) during the term of the Note, the dividends paid out by the
Company, on a quarterly basis, shall not exceed 50 percent of the Company’s
after tax net income for the proceeding quarter; (ii) Savannah and Bryan shall
each maintain a “well-capitalized” status as determined by the OCC and GDBF,
respectively; (iii) on the last day of each calendar quarter during the term of
the Note, SAVB Holdings shall maintain a loan-to-value ratio of at least
1.00:1.00; and (iv) on the last day of each calendar quarter during the term of
the Note, the amount of non-performing assets of the Company shall not exceed
4.75 percent of the total assets of the Company.  At December 31,
2009, the Company met all covenants contained in the Note.





Common Stock Marketability Risk





Our authorized preferred stock exposes holders of our
common stock to certain risks.





Our Articles of Incorporation authorize the issuance of up
to 10,000,000 shares of preferred stock, par value $1.00 per
share.  The authorized but unissued preferred stock constitutes what
is commonly referred to as "blank check" preferred stock.  This type
of preferred stock may be issued by us, at the direction of our Board, from time
to time on any number of occasions, without shareholder approval, as one or more
separate series of shares comprised of any number of the authorized but unissued
shares of preferred stock, designated by resolution of the Board stating (i) the
dividend rate or the amount of dividends to be paid thereon, whether dividends
shall be cumulative and, if so, from which date(s), the payment date(s) for
dividends, and the participating or other special rights, if any, with respect
to dividends; (ii) the voting powers, full or limited, if any, of shares of such
series; (iii) whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which, such shares may be
redeemed; (iv) the amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution or winding up of the
Company; (v) whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or redemption of
such shares, and if so entitled, the amount of such fund and the manner of its
application, including the price or prices at which such shares may be redeemed
or purchased through the application of such funds; (vi) whether the shares of
such series shall be convertible into, or exchangeable for, shares of any other
class or classes of stock of the Company, and, if so, the conversion price(s),
or the rate(s) of exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and conditions of such
conversion and exchange; (vii) the price or other consideration for which the
shares of such series shall be issued; (viii) whether the shares of such series
which are redeemed or converted shall have the status of authorized but unissued
shares of serial preferred stock and whether such shares may be reissued as
shares of the same or any other series of serial preferred stock;


SAVB 2009 Form
10-K
 - 21 -


and (ix) whether the shares of such series shall be
entitled to other rights, preferences and privileges.  Such preferred
stock may provide our Board the ability to hinder or discourage any attempt to
gain control of us by a merger, tender offer at a control premium price, proxy
contest or otherwise.  Consequently, the preferred stock could
entrench our management.  The market price of our common stock could
be depressed to some extent by the existence of the preferred
stock.  Moreover, any preferred stock that is issued will rank ahead
of our common stock, in terms of dividends, priority and liquidation preferences
and may have greater voting rights than our Company’s common
stock.  No shares of preferred stock have been issued as of December
31, 2009.





Our directors and executive officers own a significant
portion of our common stock.





As of December 31, 2009, our directors and executive
officers, collectively, beneficially owned approximately 22 percent of our
outstanding common stock.  As a result of their ownership, the
directors and executive officers, as a group, have the ability to significantly
influence the outcome of all matters submitted to our shareholders for approval,
including the election of directors and the approval of mergers and other
significant corporate transactions, even if their interests conflict with those
of other shareholders, which could adversely affect the market price of our
common stock.





The OCC, FDIC, GDBF or other entities may impose dividend
payment and other restrictions on the Subsidiary Banks which would impact our
ability to pay dividends to shareholders.





The OCC, FDIC and the GDF are the primary regulatory
agencies that examine the Subsidiary Banks.  Under certain
circumstances, including any determination that the activities of a bank or
their subsidiaries constitute unsafe and unsound banking practices, the
regulators have the authority by statute to restrict the Subsidiary Banks’
ability to transfer assets, make shareholder distributions, and redeem preferred
securities or pay dividends to the parent company.  In addition, as
noted previously, one of our loan agreements contains a covenant that restricts
quarterly dividends to 50 percent of quarterly net income.





Certain provisions in our Articles of Incorporation and
Bylaws may deter potential acquirers and may depress our stock
price.





Our Articles of Incorporation and Bylaws divide our Board
into three classes, as nearly equal as possible, with staggered three-year
terms.  Business combinations, such as sales or mergers involving us,
require the approval of a majority of shareholders as well as the recommendation
for such business combination by at least two-thirds of the continuing
directors, or in the alternative, unanimously recommended by the continuing
directors, provided that the continuing directors constitute at least three
members of the Board at the time of such approval.  Shareholders may
remove directors with or without cause upon the affirmative vote of the holders
of at least 75% of the outstanding voting shares of the Company and the
affirmative vote of the holders of at least 75% of the outstanding voting shares
of the Company other than those of which an interested shareholder is the
beneficial owner.  These provisions could make it more difficult for a
third party to acquire control of the Company.  In addition, the above
provisions may be altered only pursuant to specified shareholder
action.  With several specific exceptions, our Articles of
Incorporation and Bylaws are silent with respect to the amendment of our
Articles of Incorporation, and thus, the Georgia Business Corporations Code
("GBCC") dictates the requirements for making such an amendment.  The
GBCC generally provides that, other than in the case of certain routine
amendments (such as changing the corporate name) and other amendments which the
GBCC specifically allows without shareholder action, the corporation's board of
directors must recommend any amendment of the Articles of Incorporation to the
shareholders (unless the board elects to make no such recommendation because of
a conflict of interest or other special circumstances and the board communicates
the reasons for its election to the shareholders) and the affirmative vote of a
majority of the votes entitled to be cast on the amendment by each voting group
entitled to vote on the amendment (unless the GBCC, the articles of
incorporation, or the board of directors require a greater percentage of votes)
is required to amend our Articles of Incorporation.





Our Articles of Incorporation provide that the provisions
regarding the approval required for certain business combinations may only be
changed by the affirmative vote of at least 75% of the outstanding voting shares
of the Company and the affirmative vote of the holders of at least 75% of the
outstanding shares of the Company other than those of which an interested
shareholder is the beneficial owner.


SAVB 2009 Form
10-K
 - 22 -


Our Articles of Incorporation also provide that the
provisions regarding the applicability of Article 11, Parts 2 and 3 of the GBCC
(regarding mergers and share exchanges) to the Company may only be repealed by
both the affirmative vote of at least two-thirds of the continuing directors and
a majority of the votes entitled to be cast by voting shares of the Company, in
addition to any other vote required by our Articles of
Incorporation.





Our Bylaws generally provide that the Bylaws may be altered
or amended by our shareholders at any annual meeting or special meeting of the
shareholders or by our Board at any regular or special meeting of the Company's
Board.





The existence of the above provisions could result in our
being less attractive to a potential acquirer, or result in our shareholders
receiving less for their shares of common voting stock than otherwise might be
available if there were a takeover attempt.





We have certain obligations and the general ability to
issue additional shares of our common stock in the future, and such future
issuances may depress the price of our common stock.





We have various obligations to issue additional shares of
common stock in the future.  These obligations include non-qualified
and incentive stock options as detailed in Note 13 on page F-20 and page
F-21 to the Consolidated Financial Statements in the 2009 Annual
Report.





The options permit the holders to purchase shares of our
common stock at specified prices.  These purchase prices may be less
than the then current market price of our common stock.  Any shares of
our common stock issued pursuant to these options would dilute the percentage
ownership of existing shareholders.  The terms on which we could
obtain additional capital during the life of these options may be adversely
affected because of such potential dilution.  Finally, we may issue
additional shares in the future.  There are no preemptive rights in
connection with our common stock.  Thus, the percentage ownership of
existing shareholders may be diluted if we issue additional shares in the
future.  For issuances of shares and grants of options, our Board will
determine the timing and size of the issuances and grants and the consideration
or services required thereof.  Our Board intends to use its reasonable
business judgment to fulfill its fiduciary obligations to our then existing
shareholders in connection with any such issuance or
grant.  Nonetheless, future issuances of additional shares could cause
immediate and substantial dilution to the net tangible book value of shares of
our common stock issued and outstanding immediately before such
transaction.  Any future decrease in the net tangible book value of
such issued and outstanding shares could materially and adversely affect the
market value of the shares.





Sales of large quantities of our common stock could reduce
the market price of our common stock.





Any sales of large quantities of shares of our common
stock, or the perception that any such sales are likely to occur, could reduce
the market price of our common stock.  In 2005, we issued 397,273
restricted shares to investors in a private placement of our shares which were
registered with the SEC on October 21, 2005.  When the registration
statement covering the resale of those restricted shares became effective, the
holders of those shares are able to offer to sell those shares from time to time
at the current market price or at negotiated prices.  In 2007, we
issued 71,000 shares related to the acquisition of Minis.  If holders
sell large quantities of shares of our common stock, the market price of our
common stock may decrease and the public market for our common stock may
otherwise be adversely affected because of the additional shares available in
the market.





Our common stock has experienced only limited
trading.





Our common stock is quoted and traded on the NASDAQ Global
Market in the United States under the symbol "SAVB".  The trading
volume in our common stock has been relatively low when compared with larger
companies quoted on the NASDAQ Global Market or listed on the other stock
exchanges.  We cannot say with any certainty that a more active and
liquid trading market for our common stock will develop.  Because of
this, it may be more difficult for you to sell a substantial number of shares
for the same price at which you could sell a smaller number of
shares.





We cannot predict the effect, if any, that future sales of
our common stock in the market, or the availability of shares of common stock
for sale in the market, will have on the market price of our common
stock.  We, therefore, can give no assurance that sales of substantial
amounts of our common stock in the market, or the potential for large amounts of
sales in the market, would not cause the market price of our common stock to
decline or impair our future ability to raise capital through sales of our
common stock.


SAVB 2009 Form
10-K
 - 23 -


As of December 31, 2009, there were 5,933,789 shares of
common stock outstanding.  The price of our common stock will be
determined in the marketplace and may be influenced by many factors, including
the following:





Ø
            The depth and liquidity of the markets for our common
      stock;


Ø
            Investor perception of us and the industry in which
      we participate;


Ø
            General economic and market
    conditions;


Ø
            Responses to quarter-to-quarter variations in
      operating results;


Ø
            Earnings relative to securities analysts'
      estimates;


Ø
            Changes in financial estimates by securities
      analysts;


Ø
            Conditions, trends or announcements in the banking
      industry;


Ø
            Announcements of significant acquisitions, strategic
      alliances, joint ventures or capital commitments by us or our
      competitors;


Ø
            Additions or departures of key
    personnel;


Ø
            Accounting pronouncements or changes in accounting
      rules that affect our financial statements;
and,


Ø
            Other factors and events beyond our
      control.





The market price of our common stock could experience
significant fluctuations unrelated to our operating performance.  As a
result, an investor (due to personal circumstances) may be required to sell
their shares of our common stock at a time when our stock price is depressed due
to random fluctuations, possibly based on factors beyond our
control.








Item 1B. Unresolved Staff Comments





None





Item 2. Properties





See Note 6 and Note 15 of Notes
to Consolidated Financial Statements on page F-17 and page F-22 of
the Registrant's 2009 Annual Report, which is specifically incorporated herein
by reference.





Savannah's main office is located at 25 Bull Street,
Savannah, Georgia, on the ground floor of a seven story office building located
on Johnson Square in downtown Savannah.  The building also serves as
the headquarters for the Company.  Savannah has leased space at this
location since 1990.  The Company signed a new lease as of February 1,
2010 increasing the total square footage rented in the building to approximately
18,800 square feet, which is 40% of the building.  Minis and the Trust
department of Savannah will move into the building from other leased space in
2010.  The Company is responsible for its pro rata share of operating
cost increases in utilities, janitorial services, property taxes and
insurance.  In September 2005, SAVB Properties LLC, a nonconsolidated
subsidiary of the Company, acquired a 50 percent interest in Johnson Square
Associates, LLP, which owns the 25 Bull Street property.  SAVB
Properties LLC also acquired a 50 percent interest in Whitaker Street
Associates, which owns the adjacent parking lot.





In 1989, Bryan Bank constructed its 8,500 square foot,
two-story main office in Richmond Hill, Georgia, on land owned by Bryan
Bank.  The building has a walk-up ATM, a drive-up ATM and 4
drive-through lanes.





Savannah leases approximately 6,500 square feet on the
first floor of a two-story building located at 400 Mall Boulevard, Savannah,
Georgia.  This space is used for a branch location and the mortgage
and construction lending departments.  The building is near the
intersection of Mall Boulevard and Hodgson Memorial Drive, a location that is
convenient to a significant concentration of commercial, service, and retail
entities.  The lease rate increases with the Consumer Price
Index.  The initial lease term was for five years and ended March 31,
1997.  Savannah committed to exercise the third five-year lease option
in February 2007.  There is one additional five-year renewal option
included in the terms.  Savannah is also responsible for its prorata
share of increases in the cost of ad valorem taxes, insurance and maintenance of
common areas.  Savannah renovated the space, constructed a vault, and
added a five lane drive-through teller facility adjacent to the
building.





During 1995, Savannah entered into a five-year ground lease
with seven five-year renewal options on land located at 100 Chatham
Parkway.  Savannah also has a right of first refusal to buy the
property at appraised value should the owner ever decide to sell the
property.


SAVB 2009 Form
10-K
 - 24 -


The location is at the intersection of Chatham Parkway and
U.S. Highway 80, a major commercial and industrial intersection in west Chatham
County.   Savannah made land improvements and constructed a 2,200
square-foot banking facility including four drive-through lanes and an ATM
drive-through lane.  The West Chatham Office opened for business on
November 20, 1995.





In 1997, Savannah constructed a 2,300 square foot office on
an out lot owned in the Island Towne Centre Shopping Plaza on Whitemarsh Island,
six miles east of downtown Savannah.  This office includes a four lane
drive-through facility.





In November 1997, Savannah entered into a ten-year lease
beginning June 1, 1998 with four five-year renewal options in the Medical Arts
Shopping Center at 4809 Waters Avenue.  The Company exercised its
first five-year renewal in 2008.  The property consists of 3,055
square feet of banking office space and a separate drive-through facility behind
the shopping center.





On February 24, 2006, Harbourside entered into a lease
agreement, effective March 1, 2006, for approximately 17,400 square feet of
office space at 852 William Hilton Parkway on Hilton Head
Island.  During 2009, the Company purchased the building from the
landlord.  Harbourside has consolidated its operations to the first
floor and has fully leased out the second floor.  The branch is now a
branch of Savannah.





On August 1, 2006, Savannah entered into a lease agreement
for approximately 1,200 square feet of banking office space in The Village, a
shopping center on Skidaway Island.  The initial term of the lease is
for five years and includes two five-year renewal options.  The rent
will adjust annually by an amount that approximates the increase in the Consumer
Price Index.  Savannah is also responsible for its prorata share of
increases in the cost of ad valorem taxes, insurance and maintenance of common
areas.





On January 31, 2007, Harbourside entered into a lease
agreement, effective October 1, 2007, for approximately 4,500 square feet of
office space on Bluffton Parkway in Bluffton, South Carolina.  The
lease is on a new building for a 10-year initial lease term with three five-year
renewal options.  The tenant is responsible for all taxes, insurance
and maintenance.  After three years the rent will adjust three
percent.  The branch is now a branch of Savannah.





In 2008, Bryan Bank acquired a lot for a future branch site
in a commercial development on Highway 144 in Richmond Hill.





In August 2008, Bryan opened its second office in Richmond
Hill at 3700 Highway 17, about one-half mile from I-95.  The new
branch is 3,000 square feet.  The Company also relocated its regional
banking operations center from previously leased space in Savannah to the new
facility.  The imaged item processing, statement rendering,
information technology, deposit operations and branch operations support
functions are located at this center.  The operations center occupies
the remainder of the 11,500 square foot facility.





In September 2008, Savannah purchased a commercial lot in
Pooler, Georgia as a potential branch location.  Savannah leases a
separate location in Pooler for a drive-up ATM.





In October 2008, Savannah entered into a two year lease for
office space located at 400 Main Street in St. Simons Island,
Georgia.  The location serves as a loan production office for the
Brunswick/St. Simons Island area.








Item 3. Legal Proceedings





The Company is not a party to, nor is any of its property
the subject of, any material pending legal proceedings incidental to the
business of the Company or the Subsidiary Banks.








Item 4. Reserved





None


SAVB 2009 Form
10-K
 - 25 -


PART II





Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters





Incorporated herein by reference to sections entitled
“Table 4 - Market for Registrant's Common Equity and Related Shareholder
Matters” on page F-31 of the Financial
Statement Section of the 2009 Annual Report.








Item 6. Selected Financial Data





Incorporated herein by reference to sections entitled
“Table 1– Selected Financial Condition Highlights – Five-Year Comparison,”
“Table 2 – Selected Operating Highlights – Five-Year Comparison,” “Table 3 –
Selected Quarterly Data,”  “Table 6 – Allowance for Loan Losses and
Nonperforming Assets,” “Table 7 – Loan Concentrations,” “Table 9 – Average
Balance Sheet and Rate/Volume Analysis-2009 and 2008” and “Table 10 – Average
Balance Sheet and Rate/Volume Analysis-2008 and 2007” in the Registrant’s
MD&A on pages F-29 through F-45 of the Financial
Statement Section of the 2009 Annual Report.  Additional selected
financial data is included on pages 15 and 16 of this Annual
Report on Form 10-K.








Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations





The MD&A on pages F-29 through F-45 of the Financial
Statement Section of the 2009 Annual Report are incorporated herein by
reference.








Item 7A. Quantitative and Qualitative Disclosures about
Market Risk





Incorporated herein by reference to the sections entitled
“Liquidity and Interest Rate Sensitivity Management” and “Table 8 – Cash
Flow/Maturity Gap and Repricing Data” in the Registrant’s MD&A on pages
F-40, F-41 and
F-43 of the Financial Statement Section of the 2009 Annual
Report.








Item 8. Financial Statements and Supplementary
Data





(a)


1.  Financial Statements – See listing in Item 15


2.
            Financial Statement Schedules – See Item
      15








Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure





None








Item 9A. Controls and
  Procedures





Evaluation of Disclosure Controls
and Procedures-We have evaluated the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this
Annual Report on Form 10-K as required by Rule 13a-15 of the Securities
Exchange Act of 1934, as amended.  This evaluation was carried out
under the supervision and with the participation of our management, including
our chief executive officer and chief financial officer.  Based on
this evaluation, the chief executive officer and chief financial officer have
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in our periodic SEC filings.





Management’s Report on Internal
Control over Financial Reporting and Report of Independent Registered Public
Accounting Firm- Our management is responsible for establishing and
maintaining adequate internal control over financial reporting for the
Company.


SAVB 2009 Form
10-K
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Internal control over financial reporting is a process to
provide reasonable assurance regarding the reliability of our financial
reporting for external purposes in accordance with accounting principles
generally accepted in the United States of America.  Internal control
over financial reporting includes maintaining records that in reasonable detail
accurately and fairly reflect our transactions; providing reasonable assurance
that transactions are recorded as necessary for preparation of our financial
statements; providing reasonable assurance that receipts and expenditures of
Company assets are made in accordance with management authorization; and
providing reasonable assurance that unauthorized acquisition, use or disposition
of Company assets that could have a material effect on our financial statements
would be prevented or detected in a timely manner.  Because of its
inherent limitations, internal control over financial reporting is not intended
to provide absolute assurance that a misstatement of our financial statements
would be prevented or detected.





Management conducted an evaluation of the effectiveness of
our internal control over financial reporting based on criteria established in
Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.  Based on this evaluation, management concluded
that the Company’s internal control over financial reporting was effective as of
December 31, 2009.  Mauldin & Jenkins, LLC has audited the
effectiveness of our internal control over financial reporting and their report
is included below.





Changes
in Internal Control over Financial Reporting - No change in our internal
control over financial reporting occurred during the fourth fiscal quarter
covered by this Annual Report on Form 10-K that materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.


SAVB 2009 Form
10-K
 - 27 -


Report of Independent Registered Public Accounting
Firm





To the Board of Directors and Shareholders


The Savannah Bancorp, Inc.: 
 
 We have
audited The Savannah Bancorp Inc. internal control over financial reporting as
of December 31, 2009, based on criteria established inInternal Control - Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).   The
Savannah Bancorp Inc.’s management is responsible for maintaining effective
internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting included in the
accompanying “Management’s Report on Internal Control over Financial Reporting”.
Our responsibility is to express an opinion on the Company's internal control
over financial reporting based on our audit.
 
 We conducted
our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States).  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects.  Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk.  Our audit also included
performing such other procedures as we considered necessary in the
circumstances.  We believe that our audit provides a reasonable basis
for our opinion.
 
 A company's
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.  A company's internal
control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the Company's
assets that could have a material effect on the financial
statements.
 
 Because of
its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
 
 In our
opinion, The Savannah Bancorp, Inc. and Subsidiaries maintained, in all material
respects, effective internal control over financial reporting as of December 31,
2009, based on criteria established inInternal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
 
 We have also
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of The Savannah
Bancorp, Inc. and Subsidiaries as of December 31, 2009 and 2008 and the related
consolidated statements of income, changes in shareholders’ equity and cash
flows for each of the three years in the period ended December 31,
2009.  Our report dated March 15, 2010 expressed an unqualified
opinion.





/s/ Mauldin & Jenkins, LLC







Albany, Georgia


March 15, 2010


SAVB 2009 Form
10-K
 - 28 -


Item 9B. Other Information





None








PART III





Item 10. Directors, Executive Officers and Corporate
Governance





Incorporated herein by reference to the sections entitled
“Election of Directors,” “Information about the Board of Directors and Certain
Committees” and “Executive Compensation and Benefits” in the Registrant’s Proxy
Statement dated March
29, 2010 and filed on March 22,
2010.  All transactions required pursuant to the insider
trading regulations were filed on either Form 4 or Form 5 of the
SEC.  The required Code of Ethics disclosures are also incorporated by
reference to the section entitled “Code of Business Conduct and Ethics” in the
Registrant’s Proxy Statement dated March 22,
2010.








Item 11. Executive Compensation





Incorporated herein by reference to the sections entitled
“Information about the Board of Directors and Certain Committees” under the
caption “Compensation Committee” and “Executive Compensation and Benefits” in
the Registrant’s Proxy Statement dated March 29, 2010and
filed on March 22,
2010.








Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Shareholder Matters





Incorporated herein by reference to the sections entitled
“Election of Directors” and “Ownership of Equity Securities” in the Registrant’s
Proxy Statement dated March 29, 2010and
filed on March 22,
2010.








Item 13. Certain Relationships and Related
Transactions





Incorporated by reference, the information contained in
Note 5 and Note
9 to the Consolidated Financial Statements and under the caption “Certain
Transactions” in the Registrant’s Proxy Statement dated March 29, 2010and
filed on March 22,
2010.








Item 14. Principal Accountant Fees and
Services





Incorporated herein by reference to the information under
the caption entitled “Principal Accountant Fees and Services” in the
Registrant’s Proxy Statement dated March 29, 2010and
filed on March 22,
2010.


SAVB 2009 Form
10-K
 - 29 -


PART IV
 
 Item 15. Exhibits and Financial Statement
Schedules
 
 (a)  The following documents are filed as part of
this report:
 
 1.
              Financial
statements
 
 Incorporated herein by reference to the financial
statements, together with the applicable report of independent accountants, are
included on pages F-2 through F-28 of the Financial Statement Section of the
2009 Annual Report.  The index for the financial statements is as
follows:
 
 Financial
      Statement
                Page(i)   Report of Independent Registered Public Accounting
      Firm
                F-2(iii) Consolidated Balance SheetsDecember 31, 2009 and 2008
                F-3(iv)  Consolidated Statements of Income for the
      YearsEnded
      December 31, 2009, 2008 and 2007
                F-4(v)   Consolidated Statements of Changes in Shareholders'
      Equityfor
      the Years Ended December 31, 2009, 2008 and 2007
                F-5(vi)  Consolidated Statements of Cash Flows for the
      YearsEnded December 31, 2009, 2008 and 2007
                F-6(vii)  Notes to Consolidated Financial
Statements
                F-7 to
F-28
 
 2.
              Required financial statement
  schedules
 
 Other schedules and exhibits are not required information
or are inapplicable and, therefore, have been omitted.
 
 3.
              The exhibits listed in the accompanying index to
      exhibits are filed or incorporated by reference as part of this Annual
      Report on Form 10-K.





SAVB 2009 Form
10-K
 - 30 -


Index to Exhibits
 
 
 Exhibit
 Number                      Description
 3.1 *
                Articles of Incorporation3.2 *
                By-laws as amended10.1 *
                Lease for Bank site at 25 Bull Street and
      Assumption of Lease10.5 *
                Form of Organizers' Stock Option
      Agreement10.6 *
                Lease for Mall Boulevard Office dated February
      14, 199210.7
                The Savannah Bancorp, Inc. Incentive Stock Option
      Plan approved by shareholders on April 18,
1995
 10.8
              Amendment to The Savannah Bancorp, Inc. Incentive
      Stock Option Plan approved by shareholders on April 16,
    1996.
 10.9 *
              The Savannah Bancorp, Inc. 2005 Omnibus Stock
      Ownership and Long Term Incentive Plan approved by shareholders on April
      21, 2005.
 10.10 *
              Lease for Harbourside Community Bank main office
      dated February 24, 2006.
 11
              Computation of Earnings Per Share
  **
 ** Earnings per share data is provided in Note 1 to
the consolidated financial statements in the 2009 Annual Report.
 13
              2009 Annual Report to
  Shareholders
 21
              Subsidiaries of
Registrant
 22          
Proxy Statement for Annual Meeting – filed in DEF 14A on March
19, 2010
 23.1
              Consent of Mauldin & Jenkins, LLC, Independent
      Registered Public Accounting Firm
 31.1
              Certification Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
 31.2
              Certification Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
 32
              Certification Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002
 
 *Items 3.1, 10.1 and 10.5 were previously filed by the
Company as Exhibits (with the same respective Exhibit Numbers as indicated
herein) to the Company's Registration Statement (Registration No. 33-33405)
filed in February 1990 and such documents are incorporated herein by
reference.
 
 Item 10.6 was filed as an exhibit with the 1992 Annual
Report on Form 10-K in March 1993.
 Item 10.9 was filed as an exhibit with the DEF 14A on March
25, 2005.


SAVB 2009 Form
10-K
 - 31 -


Signature Page








Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on March ______, 2010 by the undersigned, thereunto duly
authorized.





THE SAVANNAH BANCORP, INC.__________________________
              John C. Helmken II
              President and Chief Executive Officer
              (Principal Executive Officer)
            ___________________________
              Michael W. Harden, Jr.
              Chief Financial Officer
              (Principal Financial and Accounting
      Officer)Directors:____________________________
              J. Wiley Ellis
              Chairman of the Board
            ____________________________
              Berryman W. Edwards
            ______________________
              J. Toby Roberts, Sr.____________________________
              E. James Burnsed
              Vice Chairman
            ___________________________
              L. Carlton Gill
            ______________________
              James W. Royal, Sr._____________________________
              Francis A. Brown
            _____________________________
              John C. Helmken II
            _______________________
              Robert T. Thompson, Jr._____________________________
              Russell W. Carpenter
            _____________________________
              Aaron M. Levy_____________________________
              Clifford H. Dales
            _____________________________
              J. Curtis Lewis III_____________________________
              Robert H. Demere, Jr.
            ____________________________
              M. Lane Morrison







- 32
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SAVB 2009 Form 10-K