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                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549
                                    FORM 10-K

                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1999

                         Commission file number 0-18560

                           The Savannah Bancorp, Inc.
             -------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                           Georgia                 58-1861820
             --------------------------------   ---------------
             (State or Other Jurisdiction of     (IRS Employer
             Incorporation or Organization)    Identification No.)

                       25 Bull Street, Savannah, GA 31401
             ------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                  912-651-8200
               ---------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

                    Securities registered under Section 12(b)
                            of the Exchange Act: None

                    Securities registered under Section 12(g)
                              of the Exchange Act:

                         Common Stock - $1.00 par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act 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_

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K405 or any amendment to
this Form 10-K405. ( )

Issuer's revenues for its most recent fiscal year were $23,012,000.

The aggregate market value of the voting and non-voting common equity at March
3, 2000 held by non-affiliates, based on the price of the last trade of $18.375
per share times 2,009,661 non-affiliated shares, was $36,928,000.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of March 3, 1999, the registrant had issued 2,719,614 and outstanding
2,705,464 shares of common stock.

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<PAGE>

Portions of the 1999 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 17, 2000 are incorporated in Part III of
this report.

                Registrant's Documents Incorporated by Reference


                                                Part Number and Item
Document Incorporated                           Number of Form 10-K Into
by Reference                                    Which Incorporated

Page F-27                                       Part II, Item 5, Market
of Registrant's 1999 Annual                     for Registrant's Common
Report to Shareholders                          Equity and Related
                                                Stockholder Matters

Page F-20 through F-27 of                       Part II, Item 6,
Registrant's 1999 Annual                        Selected
Report to Shareholders                          Financial Data

Pages F-22 through F-23                         Part II, Item 7,
of Registrant's                                 Management's Discussion
1999 Annual Report to                           and Analysis of Financial
Shareholders                                    Condition and Results of
                                                Operations

Page F-22 through F-23 of                       Part II, Item 7A, Quantitative
Registrant's 1999 Annual                        and Qualitative Disclosures
Report to Shareholders                          About Market Risk

Pages F-1 through F-19,                         Part II, Item 8,
of Registrant's 1999                            Financial Statements and
Annual Report to Shareholders                   Supplementary Data

Pages 3 through 5, and 7 through                Part III, Item 10,
9 of Registrant's Proxy                         Directors and Executive
Statement in connection with                    Officers of the Registrant
its Annual Shareholders' Meeting
to be held April 18, 2000

Pages 8 through 10,                             Part III, Item 11,
of Registrant's Proxy Statement                 Executive Compensation
in connection with its
Annual Shareholders' Meeting
to be held April 18, 2000

Pages 3 through 5 and 8, 9 and                  Part III, Item 12,
12 of Registrant's Proxy Statement              Security Ownership of
in connection with its Annual                   Certain Beneficial Owners
Shareholders' Meeting to be held                and Management
April 18, 2000

Page 12 of Registrant's Proxy Statement in      Part III, Item 13,
connection with its Annual Shareholders'        Certain Relationships
Meeting to be held April 18, 2000               and Related Transactions

Pages F-4 through F-19                          Part IV, Item 14,
of Registrant's 1999                            Exhibits, Financial Statement
Annual Report to Shareholders                   Schedules and Reports on
                                                Form 8-K


<PAGE>


THE SAVANNAH BANCORP, INC.
1999 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

PART I                                                                   PAGE

Item 1.  Business                                                          6

Item 2.  Properties                                                       21

Item 3.  Legal Proceedings                                                22

Item 4.  Submission of Matters to a Vote of Security Holders              22

PART II

Item 5.  Market for the Registrant's Common Equity
          and Related Stockholder Matters                                 22

Item 6.  Selected Financial Data                                          22

Item 7.  Management's Discussion and Analysis
          of Financial Condition and Results of Operations                22

Item 7A. Quantitative and Qualitative Disclosures about Market Risk       22

Item 8.  Financial Statements and Supplementary Data                      23

Item 9.  Changes in and Disagreement with Accountants
          on Accounting and Financial Disclosure                          22

PART III

Item 10. Directors and Executive Officers of the Registrant               23

Item 11. Executive Compensation                                           23

Item 12. Security Ownership of Certain Beneficial
          Owners and Management                                           23

Item 13. Certain Relationships and Related Transactions                   23

PART IV

Item 14. Exhibits and Reports on Form 8-K                                 24

         Signature page                                                   25

                                       3
<PAGE>

PART I

THE SAVANNAH BANCORP, INC. (THE COMPANY) MAY FROM TIME TO TIME MAKE WRITTEN OR
ORAL "FORWARD-LOOKING STATEMENTS" INCLUDING STATEMENTS CONTAINED IN THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE 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, WHICH ARE MADE IN GOOD
FAITH BY THE COMPANY PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.

THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, SUCH AS
STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS, ESTIMATES AND
INTENTIONS, THAT ARE SUBJECT TO CHANGE BASED ON VARIOUS IMPORTANT FACTORS (SOME
OF WHICH ARE BEYOND THE COMPANY'S CONTROL). THE FOLLOWING FACTORS, AMONG OTHERS,
COULD CAUSE THE COMPANY'S FINANCIAL PERFORMANCE TO DIFFER MATERIALLY FROM THE
PLANS, OBJECTIVES, EXPECTATIONS, ESTIMATES AND INTENTIONS EXPRESSED IN SUCH
FORWARD-LOOKING STATEMENTS: THE STRENGTH OF THE UNITED STATES ECONOMY IN GENERAL
AND THE STRENGTH OF THE LOCAL ECONOMIES IN WHICH THE COMPANY CONDUCTS
OPERATIONS; 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; INFLATION, INTEREST RATE, MARKET AND MONETARY
FLUCTUATIONS; THE TIMELY DEVELOPMENT OF AND ACCEPTANCE OF NEW PRODUCTS AND
SERVICES OF THE COMPANY AND THE PERCEIVED OVERALL VALUE OF THESE PRODUCTS AND
SERVICES BY CUSTOMERS, INCLUDING THE FEATURES, PRICING AND QUALITY COMPARED TO
COMPETITORS' PRODUCTS AND SERVICES; THE WILLINGNESS OF CUSTOMERS TO SUBSTITUTE
COMPETITORS' PRODUCTS AND SERVICES FOR THE COMPANY'S PRODUCTS AND SERVICES; THE
SUCCESS OF THE COMPANY IN GAINING REGULATORY APPROVAL OF ITS PRODUCTS AND
SERVICES, WHEN REQUIRED; THE IMPACT OF CHANGES IN FINANCIAL SERVICES' LAWS AND
REGULATIONS (INCLUDING LAWS CONCERNING TAXES, BANKING, SECURITIES AND
INSURANCE); TECHNOLOGICAL CHANGES; ACQUISITIONS; CHANGES IN CONSUMER SPENDING
AND SAVING HABITS; AND 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
BEHALF OF THE COMPANY.

                                       4
<PAGE>


Item 1. Business

(a)      General Development of Business

General

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

In February 1998, the Company entered into a plan of merger to exchange 1.85
shares of its stock for each share of the Bryan Bancorp of Georgia, Inc.
("Bryan"), the bank holding company for Bryan Bank & Trust ("Bryan Bank"). Based
on the Company's closing stock price of $25.50 per share on February 10, 1998,
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.

As of December 31, 1999, Savannah Bank had five full service offices, total
assets of $208 million, total deposits of $170 million, total stockholders'
equity of $15.8 million and $2.2 million in 1999 earnings. As of December 31,
1999, Bryan Bank had one full service office, total assets of $78 million, total
deposits of $65 million, total stockholders' equity of $8.6 million and $1.5
million in 1999 earnings.

Savannah Bank and Bryan Bank (the "Subsidiary Banks") currently are the sole
operating subsidiaries of the Company. Savannah Bank 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 (the "GDBF") in December 1989. The
deposits at the Subsidiary Banks are insured by the Federal Deposit Insurance
Corporation (the "FDIC").

(b)      Information About Industry Segments

In June, 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information". The
provisions of this statement require disclosure of financial and descriptive
information about an enterprise's operating segments in annual and interim
financial reports issued to shareholders. The statement defines an operating
segment as a component of an enterprise that engages in business activities that
generate revenue and incur expense, whose operating results are reviewed by the
chief operating decision maker in the determination of resource allocation and
performance, and for which discrete financial information is available. The
Company presently operates as two commercial banks offering traditional banking
services. Certain departmental revenues, asset and liability volumes are used by
executive management for performance and resource allocation purposes; however,
sufficient discrete financial information is not available for presentation of
segmented line of business financial information to shareholders. These
disclosure requirements had no impact on the Company's financial position or
results of operations.

(c)      Narrative Description of Business

GENERAL

The Company is authorized to engage in any activity permitted by law to a
corporation, subject to applicable Federal regulatory restrictions on the
activities of bank holding companies. The Company was formed for the 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.
While the Company has no present plans to engage actively in any nonbanking
business activities, management anticipates studying the feasibility of
establishing or acquiring subsidiaries to engage in other business activities to
the extent permitted by law.

                                       5
<PAGE>

Banking Services

The Subsidiary Banks have approximately 97 full-time and 17 part-time employees
and offer a full range of deposit services, including checking accounts, savings
accounts and various time deposits ranging from daily money market accounts to
longer-term certificates of deposit. The transaction accounts and time
certificates are tailored to the principal market areas at rates competitive to
those offered in the area. In addition, retirement accounts such as IRA
(Individual Retirement Account) and SEP (Simplified Employee Pension) accounts
are offered. The FDIC insures all deposit accounts up to the maximum amount
(currently $100,000 per account). The Subsidiary Banks solicit these accounts
from individuals, businesses, foundations and organizations, and governmental
authorities.

The Subsidiary Banks offer a full range of short-term and medium-term
commercial, real estate and personal loans. The Bank's primary lending focus is
business, real estate and consumer lending. Commercial loans include both
secured 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
our 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 generally require an 80 percent
loan-to-value ratio on secured term real estate lending. Additionally, the
existence of a reliable source of repayment/cash flow is usually required before
making any loans, regardless of the security. Appraisals are obtained as
required, and lending officers make on-site inspections. New loans over $25,000
are reported to the Credit/ALCO (Executive Committee of Bryan Bank) Committee,
and this Committee approves loans over $750,000, prior to the loan being made.
Generally, lending relationships over $100,000 are reported to the full Board of
Directors.

Both 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.

Both Subsidiary Banks operate residential mortgage loan origination departments.
The departments 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 department also generates 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.

Credit Risk Management and Allowance for Loan Losses

 The Subsidiary Banks have a multi-faceted program designed to control and
continually monitor the credit risks inherent in its loan portfolio. This begins
with a structured loan approval process in which the Board of Directors
delegates authority for various types and amounts of loans to loan officers on a
basis commensurate with seniority and lending experience. The Subsidiary Banks
use an asset classification system that is consistent with regulatory
classifications, which applies to all assets of an insured institution and
requires each institution to periodically classify its assets.

There are four risk grades of "criticized" assets: Special Mention, Substandard,
Doubtful and Loss. Assets classified as substandard, doubtful or loss are
considered "classified". The classification of assets is subject to regulatory
review and re-classification. The Subsidiary Banks include aggregate totals of
criticized assets, and general and specific valuation reserves in quarterly
reports to the Board of Directors, which approves the overall loan loss reserve
evaluation. The Subsidiary Banks' loan classification systems utilize both the
account officer and loan review function to monitor the classification of the
Subsidiary Banks' loans.

The account officers are 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. Additionally, loan review performs a
review of the Subsidiary Banks' loans to determine that the appropriate risk
grade has been assigned to each borrowing relationship. Delinquencies are
monitored on all loans as a basis for potential inclusion in general valuation
reserves or, ultimately, for potential charge-off. Loans which are delinquent 90

                                       6
<PAGE>

days (four payments) or longer generally are placed on nonaccrual status unless
the collectibility of principal and accrued interest is assured beyond a
reasonable doubt. In certain cases, loans less than 90 days (four payments)
delinquent are placed on nonaccrual status when uncertainty exists as to the
loan's collectibility. Real estate acquired through foreclosure is classified as
substandard unless there is sufficient evidence to indicate such classification
is not warranted.

Loan loss reserves are determined based on management's internal review of
nonperforming loans, delinquency trends, the level of rated assets and
charge-off trends. Additionally, management assesses general and specific
economic trends both nationally and locally and regulatory information to
determine the impact of those external factors on loan loss reserve levels.
Based on the internal and external reviews, the Subsidiary Banks segregate their
loan portfolio by type of loans and by loan classification within each loan
type. Reserve percentages are applied based on historical loss rates and
inherent risk to each loan group to determine the required amount of allocated
general loan loss reserves. Additionally, an amount is provided for unallocated
general loan loss reserves, reflecting the potential for estimation errors in
allocated reserves. This methodology has been applied consistently for all
periods presented.

Other Banking Services

In November 1996, Savannah Bank applied for and received trust powers from the
OCC. Savannah Bank hired a Trust Department Manager/Trust Officer and an
assistant. The employee benefit administration and certain money management
functions are being outsourced to third parties, at least for the early years of
the department. Using these resources, the Trust Department offers a full array
of trust services, including investment management, personal trusts, custodial
accounts, estate administration and employee benefit administration. In late
1998, the Trust Department entered into a contract with Marshall & Ilsley Trust
Company to outsource trust data processing, securities safekeeping and certain
other operational functions for the Trust Department.

The Subsidiary Banks also offer cash management services, a non-cash deposit
courier service, safe deposit boxes, travelers checks, direct deposit of
payroll, U.S. Savings bonds, official bank checks and money orders and automatic
drafts for various accounts. The Subsidiary Banks are members of the HONOR
networks of automated teller machines that may be used by customers in our
market area and other cities. Both Subsidiary Banks issue ATM and debit cards
and have seven automated teller machines in the area. The Subsidiary Banks also
offer both VISA and MasterCard credit cards, on an agent bank basis, which have
a pre-authorized line of credit for personal purchases and expenses.

Location and Service Area

The primary service area of the Subsidiary Banks is the city of Savannah,
Georgia, certain contiguous areas of Chatham County and the Richmond Hill and
Bryan County market, which is 20 miles south of downtown Savannah. Its secondary
service area is the remainder of Chatham County and communities in Bryan,
Effingham and Liberty Counties, Georgia, and Beaufort and Jasper Counties, South
Carolina. The Subsidiary Banks' target markets are individuals residing in the
primary service area, small to medium size businesses, including retail shops
and professional service businesses in the community. The Subsidiary Banks are
also targeting individuals who meet certain net worth and income requirements as
potential customers for private banking services.

The Savannah Bank's main office, known as the Johnson Square Office, is located
in the primary business district in downtown Savannah on Johnson Square, where
most of the commercial banks in the primary service area have their main
Savannah offices. In recent years, regional banks with headquarter outside of
the state of Georgia have acquired several of the banks in the primary service
area. The Savannah Bank emphasizes that it is based in Savannah, and that its
directors and the executive 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. Bryan Bank has limited competition
in the Richmond Hill market. One other community bank and one grocery store
branch office are located in Richmond Hill. Bryan Bank has approximately 70
percent of the commercial bank deposits in the Richmond Hill market. Richmond
Hill is experiencing substantial residential growth due to its proximity to
Savannah, its school system and affordable single-family residences.

                                       7
<PAGE>

On October 1, 1992, Savannah Bank opened its second office at 400 Mall
Boulevard. The Mall Boulevard Office competes in the area of Savannah that has
the second largest concentration of deposits. This office is in the primary
commercial and retail district in Savannah and includes a high concentration of
professional and service-related businesses.

On November 20, 1995, Savannah Bank 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 location in a significant commercial and
industrial growth area of Chatham County.

On October 1, 1997, the fourth office at 4741 Highway 80 East on Whitemarsh
Island, six miles east of the main office location opened for business.
Deposits, mortgage loan origination and consumer loans are the primary
opportunities for this location that will serve a large concentration of higher
net worth individuals, as well as a young adult population in apartments and
first homes.

On October 8, 1998, Savannah Bank opened its fifth Savannah 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. The lease
term began in July 1998.

The Subsidiary Banks' business plans rely principally upon local advertising and
promotional activity and upon personal contacts by its directors, officers and
stockholders to attract business and to acquaint potential customers with the
Subsidiary Banks' personalized services. Both Subsidiary Banks emphasize a high
degree of personalized customer service in order to be able to provide for each
customer's banking needs. The marketing approach emphasizes the advantages of
dealing with an independent, locally-owned and relationship-oriented bank to
meet the particular needs of individuals, professionals and small to medium-size
businesses in the community. All banking services are continually evaluated with
regard to their profitability, and efforts will be made to modify the business
plan if the plan does not prove successful.

Asset and Liability Management

Assets of the Subsidiary Banks consist primarily of loans and an investment
portfolio. In an effort to maintain adequate levels of liquidity and minimize
fluctuations in the net interest margin (the difference between interest income
and interest expense), the rate sensitivity of the loan and investment
portfolios are matched to the maturities and rate sensitivity of the
liabilities.

The Subsidiary Banks invest the majority of its investment portfolio in highly
marketable medium-term and short-term maturity assets, such as Federal Funds,
U.S. Treasury securities, U.S. agency securities, marketable mortgage-backed
securities and high quality bank-qualified tax-exempt securities. By pricing
loans on a variable rate structure, or by keeping the maturity of the investment
and loan portfolios relatively short-term, the Bank expects to be able to
maintain loan interest, or to reinvest securities proceeds, at prevailing market
rates. These policies will help to maintain a generally consistent spread over
the interest rates paid by the Subsidiary Banks on the deposits which are used
to fund the investment and loan portfolios.

Deposit accounts represent the majority of the liabilities of the Subsidiary
Banks. These include noninterest-bearing checking accounts and interest-bearing
NOW accounts, savings accounts, money market accounts and certificates of
deposit, including Individual Retirement Accounts (IRAs). Most time deposits
have maturities of 12 months and less, but the maturities may be extended based
on liquidity position, interest rate expectations and the rate sensitivity in
the loan portfolio of the Subsidiary Banks. In managing its liabilities, both
Subsidiary Banks attempt to attract deposits from customers who, assuming rates
are competitive, are inclined to maintain an ongoing relationship with the
Subsidiary Banks.

The Company has no investment risk in off-balance sheet derivative-related
investments. The Subsidiary Banks own approximately $26.6 million in callable
agency obligations which have normal interest rate and marketability risk. Of
the callable obligations, $20.4 million have one time only calls. The call dates
and the final maturities are laddered so that an excessive amount of cash flow
from callable bonds will not be received in any one quarter or year. The
remaining $6.2 million of callable obligations are callable quarterly or
semiannually.

                                       8
<PAGE>

Interest Rate Risk

Interest rate risk is a measure of exposure to changes in net interest income or
the theoretical market value of portfolio equity due to changes in market
interest rates. The differential (known as "gap") between interest rate
sensitive assets and interest rate sensitive liabilities over a specified period
of time represents a measure of sensitivity of net interest income to changes in
interest rates. A positive gap indicates an excess of rate sensitive assets over
rate sensitive liabilities, while a negative gap indicates an excess of rate
sensitive liabilities over rate sensitive assets.

The Subsidiary Banks operate under an interest rate risk policy through an Asset
Liability Management Committee ("Credit/ALCO") at Savannah Bank and the
Executive Committee at Bryan Bank. The policy outlines limits on interest rate
risk in terms of changes in net interest income and changes in the net market
values of assets and liabilities over certain changes in interest rate
environments. These measurements are made through a certain cash flow and
repricing analyses which projects the impact of changes in interest rates on the
Subsidiary Banks assets and liabilities. Additionally, the committees may set
other interest rate risk objectives. The policy also outlines responsibility for
monitoring interest rate risk, the process for the approval, implementation and
monitoring of interest rate risk strategies to achieve the Company's interest
rate risk objectives.

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

Bank holding companies and banks are extensively regulated under both federal
and state law. 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. Any change in applicable law or
regulation may have a material effect on the business of the Company and its
subsidiary.

Savannah Bank 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
regulator of each bank is responsible for overseeing the affairs of all banks
and periodically examines banks to determine their compliance with laws and
regulations. Banks must make quarterly call reports of their financial condition
and results of operations to the FDIC, who reviews the call report information
for accuracy, consistency and reasonableness. Quarterly Call Report financial
information is made available to regulators and the public approximately 90 days
after each quarter-end. Regulators use this data for quarterly offsite
monitoring of the financial condition of banks. Quarterly holding company
reports are filed with the Federal Reserve Bank of Atlanta (FRB) within 45 days
of each quarter-end. This financial information is reviewed by the FRB for
accuracy, consistency and reasonableness and is also made available to holding
company database providers within 120 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.

In addition, 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 an unsafe or unsound practice in the conduct of
their business. The regulators can order affirmative action to correct any harm
resulting from a violation of 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 and the Depository Institution Management Interlocks Act, which
apply to national banks. The Subsidiary Banks also 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
adopted FDIC insurance assessment rates based on certain risk-based and equity
capital ratios. The table in Note 13 of the notes to the consolidated financial
statements in the 1999 Annual Report shows the capital ratios for the Company,
and the regulatory minimum capital ratios at December 31, 1999. The capital
ratios of the Company and each Subsidiary Bank exceeded the ratios required to
be "well-capitalized" by the FDIC.

A national banking association is insured by the FDIC and must be a member of
the Federal Reserve System. Therefore, the Subsidiary Banks are subject to
applicable provisions of the Federal Reserve Act, which restrict the ability of
any national bank to extend credit to its parent holding company. Additionally,
a national banking association cannot extend credit to any affiliate (including

                                       9
<PAGE>

its parent and non-bank subsidiaries of its parent) to purchase the assets
thereof, to issue a guarantee, acceptance or letter of credit (including an
endorsement or standby letter of credit) to its affiliates, or to invest in the
stock or securities thereof or to take such stock or securities as collateral
for loans to any borrower.

Stockholders 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 shall have become
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 additional 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 Federal Reserve Board, 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, changes in reserve requirements against bank
deposits and limitations on interest rates that banks may pay on time and
savings 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 Federal Reserve Board have had a significant effect
on the operating results of commercial banks in the past and are expected to
continue to do so in the future.

In view of changing conditions in the national economy and money markets, as
well as the effect of actions by monetary and fiscal authorities, no prediction
can be made as to possible future changes in interest rates, deposit levels,
loan demand or the business and earnings of the Company and the Bank.

The Company, as a bank holding company, is required to register as such with the
Federal Reserve Board and the Georgia Department of Banking and Finance. It is
required to file with both of these agencies quarterly and annual reports and
other information regarding its business operation 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 5 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 or managing or
controlling banks or furnishing services to or performing services for its
subsidiary banks. During 1996, the Federal Reserve Board enacted regulations
that are slightly less restrictive of the types of businesses which bank holding
companies may own.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
Act) has introduced a process that enables nationwide interstate banking through
bank subsidiaries and interstate bank mergers. Separately, the 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. Any 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 immediate 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.

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 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 not obtain some

                                       10
<PAGE>

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 Federal Reserve Board has cease and desist powers over parent bank holding
companies and non-banking subsidiaries should their actions constitute a serious
threat to the safety, soundness or stability of a subsidiary bank. 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 the Savannah
Bank may pay without obtaining prior approval. Based on such regulatory
restrictions, the Savannah Bank is limited 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 is limited to paying 50 percent
of the prior year net income without getting approval from the GDBF. Banks also
have a financial advantage in the form of lower FDIC assessments if they are
classified as "well-capitalized" by the FDIC. Dividend payout plans of the
Subsidiary Banks will always consider maintaining their "well-capitalized"
classification an important objective.

Both Subsidiary Banks are members of the Federal Home Loan Bank ("FHLB") System,
which consists of 12 regional FHLBs subject to supervision and regulation by the
Federal Housing Finance Board ("FHFB"). The FHLBs maintain central credit
facilities primarily for member institutions. The Subsidiary Banks, as a member
of the FHLB of Atlanta, is required to acquire and hold shares of capital stock
in the FHLB of Atlanta in an amount at least equal to the greater of: (i) 1
percent of the aggregate outstanding principal amount of its unpaid residential
mortgage loans, home purchase contracts and similar obligations as of the
beginning of each year, (ii) 5 percent of its advances (borrowings) from the
FHLB of Atlanta, or (iii) $500,000. Additionally, during 1996, the FHLB of
Atlanta imposed a maximum investment in its capital stock equal to $500,000 and
over the required minimum. The Subsidiary Banks are in compliance with this
requirement at December 1999.

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 of
Directors. The Subsidiary Banks are authorized to borrow funds from the FHLB of
Atlanta to meet demands for withdrawals of savings 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 existing advances.
Interest rates charged for advances vary depending upon maturity, the cost of
funds to the regional FHLB and the purpose of the borrowing.

Community Reinvestment Act

The Community Reinvestment Act of 1977 ("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 will be examined using a
performance-based lending, investment and service test. Small institutions will
be 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,

                                       11
<PAGE>

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. The Bank received an "satisfactory"
rating on the most recent performance evaluation of its CRA efforts by the OCC.

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 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. Lenders are particularly uncertain about the application of the
"disparate impact" criteria by virtue of the vague nature of the Policy
Statement. The Policy Statement notes that "the precise contours of the law on
disparate impact as it applies to lending discrimination are under development."

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.

On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley
Act ("the Act"), formerly known as the Financial Modernization Act. The new
statute is the most sweeping financial services legislation enacted in decades.
It repeals depression-era laws and eliminates the barriers preventing
affiliations among banks, insurance companies, and securities firms. Key
provisions to the Act are summarized in the following paragraphs.

Repeal of the Glass-Stegall Act - At its core, the Act repeals, effective 120
days after enactment, the anti-affiliation provisions in sections 20 and 32 of
the Banking Act of 1933 (also known as the Glass-Steagall Act) and amends
provisions in the Bank Holding Company Act of 1956 to permit financial companies
to offer a broad array of banking, insurance, securities, and other financial
products, either through financial holding companies ("FHCs") or through
operating subsidiaries qualifying under the Act.

In general, Congress decided to preserve the Federal Reserve's role as the
umbrella supervisor for holding companies. The Board will work, however, within
a system of functional regulation designed to take advantage of the traditional
strengths of the federal and state financial supervisors. In addition, the
legislation establishes a mechanism for coordination between the Federal Reserve
and Treasury regarding the approval of new financial activities for both holding
companies and national bank financial subsidiaries.

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" Community Reinvestment Act ("CRA")
rating at its most recent examination.

Affiliation Authority - The Act amends section 4 of the Bank Holding Company Act
("BHCA") to provide a new 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"). New
provisions of the BHCA 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

                                       12
<PAGE>

activities that are "complementary" to financial activities if the Board of
Governors of the Federal Reserve Bank ("FRB Board") 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 FRB Board 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 FRB Board must notify the 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 Board find a particular activity
financial in nature or incidental to a financial activity. The Act establishes a
similar procedure with regard to the Treasury's (acting through the Office of
the Comptroller of the Currency ("OCC")) determination of financial activities
and activities that are incidental to financial activities for subsidiaries of
national banks. Congress intends for the Federal Reserve and Treasury to
establish a consultative process that will negate the need for either agency to
veto a proposal of the other agency.

Federal Home Loan Bank Reform - The Act reforms the Federal Home Loan Bank
System, including greatly expanding the collateral that a community bank can
pledge against FHLB System advances, thus giving smaller banks access to a
substantial new liquidity source. FHLB members under $500 million in assets can
now pledge small business and agricultural loans (or securities representing a
whole interest in such loans) as collateral for advances.

Privacy - The Act imposes a number of new restrictions on the ability of
financial institutions - read as any entity offering financial products,
including banks, insurance companies, securities houses, and credit unions - to
share nonpublic personal information with nonaffiliated third parties.
Specifically, the bill:

o        requires financial institutions to establish privacy policies and
         disclose them annually to all their customers, setting forth how the
         institutions share nonpublic personal financial information with
         affiliates and third parties
o        directs regulators to establish regulatory standards that ensure the
         security and confidentiality of customer information o permits
         customers to prohibit ("opt out" of permitting) such institutions from
         disclosing personal financial information to nonaffiliated third
         parties
o        prohibits transfer of credit card or other account numbers to
         third-party marketers
o        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)
o        protects stronger state privacy laws, as well as those not
         "inconsistent" with these Federal rules
o        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.

The bill 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.

On February 2, 2000, the United States Senate passed the Bankruptcy Reform Act
of 1999. This legislation revises the existing Bankruptcy code and requires
debtors in bankruptcy who have the ability to repay part or all of their debt
obligations to do so. The legislation next moves to conference, where a joint
conference committee will be appointed to resolve differences that exist between
the Senate bill and a very similar bill passed last year by the United States
House of Representatives.

The bill passed by the Senate would:

o       force debtors into Chapter 13 (requiring a repayment schedule) if the
        debtor has enough "net monthly income" to repay at least 25 percent (or
        $15,000, whichever is less) of their unsecured, nonpriority debts over
        five years;
o       prohibit bankruptcy courts from "cramming down" (reducing the value) of
        secured first liens on residential real estate mortgages in bankruptcy;
o       reduce the ability of debtors to repeatedly file petitions in
        bankruptcy; and
o       permit the bankruptcy courts to proceed against co-debtors.

                                       13
<PAGE>

Although the proposed bankruptcy legislation is not finalized and signed into
law, it appears likely that the final legislation will assist in reducing the
number of voluntary liquidation bankruptcies. This legislation will be a
long-term benefit to financial institutions and other creditors.

Various other legislative proposals are expected in Congress concerning the
banking industry. Given the uncertainty of the legislative process, management
cannot assess the effect any such legislation would have on the Company's
financial condition or results of operations.

Competition

The banking business is highly competitive. The Subsidiary Banks compete with
other commercial banks and savings and loan associations in their Primary
Service Areas.

Banks generally compete with other financial institutions through the banking
products and services offered, the pricing of services, the level of service
provided, the convenience and availability of services, and the degree of
expertise and the personal manner in which services are offered. The Subsidiary
Banks encounter competition from most of the financial institutions in the
Subsidiary Banks' Primary Service Areas. In the conduct of certain areas of its
banking business, 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
same degree of regulation and restrictions imposed upon the Subsidiary Banks.
Many of these competitors have substantially greater resources and lending
limits than the Subsidiary Banks and offer certain services, such as
international banking services, that the Subsidiary Banks do not provide
currently.

Many of these competitors have more branch offices in the Savannah Bank's
Primary Service Area. However, the Company's plan is to expand into the markets
which will best serve our 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.

Both Subsidiary Banks offer the full range of deposit services that are
typically available from financial institutions, including NOW accounts, demand,
savings and other time deposits ranging from money market accounts to longer
term certificates of deposit. In addition, retirement accounts such as
Individual Retirement Accounts are available. All deposit accounts will be
insured by the FDIC up to the maximum amount permitted by law.

Competition in the area of deposit growth is a substantial challenge facing the
banking industry and the Subsidiary Banks. It is likely that deposit growth in
competitive markets will require higher than historical 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 market share
growth on lower costing core deposits, higher revenue growth on fee based
services and lower overhead growth rates are the key items required to
accomplish the Company's earnings growth objectives.

                                       14
<PAGE>

                 SELECTED STATISTICAL INFORMATION OF THE COMPANY

The following statistical information is provided for the Company for the years
ended December 31, 1999 and 1998. The data is presented using daily average
balances. This data should be read in conjunction with the financial statements
appearing elsewhere in this report. The Company has no foreign operations and,
accordingly, there are no assets or liabilities attributable to foreign
operations.

Table 1 - Average Balance Sheet and Rate/Volume Analysis - 1999 and 1998

The following table presents average balances of the Company and the Subsidiary
Banks on a consolidated basis, the taxable-equivalent interest earned and the
rate paid thereon during 1999 and 1998.

<TABLE>
<CAPTION>

                                                                                         (a) Variance
     Average Balance   Average Rate                                   Interest          Attributable to
    ----------------  --------------                              --------------  Vari-  --------------
     1999     1998     1999    1998                                1999    1998   Ance    Rate   Volume
    -------  -------  ------  ------                              ------  ------ ------  ------  ------
      (Thousands)           (%)       Taxable-Equivalent            (Thousands)            (Thousands)
                                      Interest Income and
                                      fees(b)
       <S>       <C>    <C>     <C>                                 <C>     <C>     <C>      <C>    <C>
   $    203 $    347    4.93    5.76  Interest-bearing deposits   $   10  $   20 $  (10) $   (2) $   (8)
     51,492   45,346    5.88    6.04  Investments - taxable        3,026   2,739    287     (84)    371
      8,505    7,102    7.84    7.17  Investments - non-taxable      667     509    158      57     101
     10,474   18,162    4.95    5.25  Federal funds sold             518     954   (436)    (32)   (404)
    186,997  160,262    8.97    9.43  Loans (c)                   16,769  15,120  1,649    (873)  2,522
    -------  -------                  Total int.-earning assets   ------  ------  -----
    257,671  231,219    8.15    8.37                              20,990  19,342  1,648    (565)  2,213
    -------  -------  ------  ------                              ------  ------  -----  ------   -----
                                      Interest Expense
                                      Deposits
    45,649    40,215    2.15    2.76  NOW accounts                   981   1,110   (129)   (279)    150
    12,252    11,850    2.78    3.24  Savings accounts               341     384    (43)    (56)     13
    35,128    31,946    3.83    4.00  Money market accounts        1,345   1,278     67     (60)    127
    37,744    37,603    6.04    5.81  CD's, $100M or more          2,278   2,184     94      86       8
    61,045    60,362    4.65    5.55  Other time deposits          2,840   3,348   (508)   (546)     38
   -------   -------                                              ------  ------  -----
                                      Total interest-bearing
   191,818   181,976    4.06    4.56    deposits                   7,785   8,304   (519)   (968)    449
                                      Federal Home Loan
     8,082     3,325    5.74    6.17    Bank advances                464     205    259     (34)    293
    10,402     4,358    4.72    5.21  Other borrowings               491     227    264     (51)    315
   -------   -------  ------  ------                              ------  ------  -----   -----   -----
                                      Total interest-bearing
  $210,302  $189,659    4.16    4.61    liabilities                8,740   8,736      4    (947)    951
   -------   ------   ------  ------                              ------  ------  -----   -----   -----
                        3.99    3.76  Interest rate spread
                      ======  ======
                                      Net yield on interest-
                                      Earning assets and

                        4.75%  4.59%  Net interest income        $12,250 $10,606 $1,644  $  382  $1,262
                      ======  ======                              ======  ======  =====   =====   =====

</TABLE>

(a) This table shows the changes in interest income and interest expense for the
comparative periods based on either changes in average volume or changes in
average rates for interest-earning assets and interest-bearing liabilities.
Changes which are not solely due to volume changes or solely due to rate changes
have been attributed to rate.

(b) The taxable equivalent adjustment results from tax exempt income less
non-deductible TEFRA interest expense.

(c) The loan classifications shown here are based on the primary source of
repayment. There are loans secured by real estate in both the commercial and the
consumer categories.

                                       15
<PAGE>

Table 2 - Average Balance Sheet and Rate/Volume Analysis - 1998 and 1997

The following table presents average balances of the Company and the Subsidiary
Banks on a consolidated basis, the taxable-equivalent interest earned and the
rate paid thereon during 1998 and 1997.

<TABLE>
<CAPTION>
                                                                                         (a) Variance
     Average Balance   Average Rate                                   Interest          Attributable to
    ----------------  --------------                              --------------  Vari-  --------------
     1998     1997     1998    1997                                1998    1997   Ance    Rate   Volume
    -------  -------  ------  ------                              ------  ------  -----  ------  ------
      (Thousands)          (%)        Taxable-Equivalent             (Thousands)            (Thousands)
                                      Interest Income and fees(b)
        <S>      <C>    <C>    <C>                                   <C>     <C>     <C>     <C>    <C>
   $    347  $   205    5.76   5.85   Interest-bearing deposit   $    20 $    12 $    8  $    0 $     8
     45,346   34,050    6.04   6.36   Investments - taxable        2,739   2,164    575    (143)    718
      7,102    6,506    7.17   7.02   Investments - non-taxable      509     457     52      10      42
     18,162   12,590    5.25   5.47   Federal funds sold             954     689    265     (40)    305
    160,262  139,772    9.43   9.64   Loans (c)                   15,120  13,481  1,639    (337)  1,976
    -------  -------                                              ------  ------  -----
    231,219  193,123    8.37   8.70   Total int.-earning assets   19,342  16,803  2,539    (776)  3,315
    -------  -------  ------  ------                              ------  ------  -----  ------  ------
                                      Interest Expense
                                      Deposits
     40,215   32,752    2.76   3.03   NOW accounts                 1,110     994    116    (110)    226
     11,850   10,531    3.24   3.41   Savings accounts               384     359     25     (20)     45
     31,946   20,247    4.00   3.88   Money market accounts        1,278     785    493      39     454
     37,603   32,866    5.81   5.72   CD's, $100M or more          2,184   1,879    305      34     271
     60,362   55,082    5.55   5.62   Other time deposits          3,348   3,096    252     (45)    297
    -------  -------                                              ------  ------  -----
                                      Total interest-bearing
    181,976  151,478    4.56   4.70     deposits                   8,304   7,113  1,191    (241)  1,432
                                      Federal Home Loan
      3,325    1,026    6.17   6.63     Bank advances                205      68    137     (15)    152
      4,358    3,215    5.21   5.04   Other borrowings               227     162     65       7      58
    -------  -------  ------  ------                              ------  ------  -----
                                      Total interest-bearing
   $189,659 $155,719    4.61   4.72     liabilities                8,736   7,343  1,393    (207)  1,600
    -------  -------  ------  ------                              ------  ------  -----  ------  ------
                        3.76   3.99   Interest rate spread
                      ======  ======
                                      Net yield on interest-
                                      Earning assets and

                        4.59   4.90  Net interest income         $10,606 $ 9,460 $1,146  $ (569)$ 1,715
                      ======  ======                              ======  ======  =====  ======  ======
</TABLE>

(a) This table shows the changes in interest income and interest expense for the
comparative periods based on either changes in average volume or changes in
average rates for interest-earning assets and interest-bearing liabilities.
Changes which are not solely due to volume changes or solely due to rate changes
have been attributed to rate.

(b) The taxable equivalent adjustment results from tax exempt income less
non-deductible TEFRA interest expense.

(c) The loan classifications shown here are based on the primary source of
repayment. There are loans secured by real estate in both the commercial and the
consumer categories.

                                       16
<PAGE>

Table 3 - Investments - Weighted Average Yields by Maturity

The following table sets forth the amortized cost, fair value and tax-equivalent
yields by investment type and maturity category at December 31, 1999

                                                                   Taxable
                                            Amortized     Fair    Equivalent
                                               Cost       Value    Yield (a)
                                              -------    -------   --------
                                                  (Thousands)         (%)
Securities available for sale:
U.S. Treasury, other U.S. Government
  Agencies and mortgage-backed:
     Within one year                          $ 4,121    $ 4,105     6.12
     One year to five years                    36,205     34,997     6.03
     Five years to ten years                    8,008      7,626     6.11
     Over ten years                               -          -        -
                                              -------    -------   --------
          Total                                48,334     46,728     6.05
                                              -------    -------   --------

Other interest-earning investments:
     Within one year                              155        155     7.12
     One year to five years                     4,701      4,750     7.51
     Five years to ten years                    4,251      4,165     7.49
     Over ten years                               675        675     8.18
                                              -------    -------   --------
          Total                                 9,782      9,745     7.55
                                              -------    -------   --------
Total interest-earning investments
     available for sale                        58,116     56,473     6.18
Federal Reserve Bank stock
     and other investments                      1,729      1,690
                                              -------    -------

   Total securities available-for-sale        $59,845    $58,163
                                              =======    =======

 (a) the yield is calculated on the amortized cost of the securities.

                                       17
<PAGE>

Loans

The following tables set forth certain information regarding the Subsidiary
Banks' loan portfolio as of December 31, 1999 and 1998.

Table 4 - Loan Repricing Opportunities

The following table sets forth certain loan maturity information as of December
31, 1999. 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 that have maturities of one to three years and longer amortization periods
will renew at maturity.

                                                  After
                                        One      one year    Over
                                        year     through     Five
  Loan Category                        or less  five years   Years   Total
  -------------                        -------  ----------  ------  -------
  Real estate-construction
     and development                   $19,540     $ 4,025  $  453  $24,018
  Commercial                            20,009      12,150     140   32,299
                                       -------  ----------  ------  -------
     Total                            $ 39,549    $ 16,175  $  593  $56,317
                                       =======  ==========  ======  =======

  Loans with floating and
     adjustable rates                 $ 16,961    $  7,158  $  189  $24,308
  Loans with fixed rates                22,588       9,017     404   32,009
                                       -------  ----------  ------  -------
     Total                            $ 39,549    $ 16,175  $  593  $56,317
                                       =======  ==========  ======  =======

Nonaccrual, Past Due and Restructured Loans

At December 31, 1999 and 1998, nonperforming loans were $342 and $233,
respectively. Interest income of $8 was recognized from nonaccrual loans in 1999
and none in 1998. At December 31, 1999, the Subsidiary Banks had $229 nonaccrual
loans, had $68 in loans past due over 90 days and $45 in real estate owned.

Except for consumer loans, the Company's policy is to place a loan on nonaccrual
status when, in management's judgment, the collection of principal and interest
appears doubtful. Interest receivable accrued in prior years and subsequently
determined to have doubtful collectibility will be charged to the allowance for
possible loan losses. Interest on loans that are classified as nonaccrual is
recognized when received. 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 Subsidiary Banks' business activity is with customers located within
the Chatham and Bryan County area. As of December 31, 1999, the Subsidiary Banks
had a concentration of credit risk aggregating $156.1 million on loans secured
by real estate. The Subsidiary Banks have no exposure to highly leveraged
transactions and has no foreign credits in its loan portfolio.

                                       18
<PAGE>

Table 5 - Provision for Possible Loan Losses

Changes in the allowance for loan losses in 1999 and 1998 are summarized as
follows:

                                                  1999       1998
                                                 ------     ------
                                                     (Thousands)
      Balance at the beginning of the year       $2,323     $2,063
      Charge-offs - Commercial                      (80)      (145)
      Charge-offs - Consumer                        (78)       (84)
      Charge-offs - Real estate                     (10)       (29)
                                                 ------     ------
      Charge-offs - Total                          (168)      (258)
                                                 ------     ------
      Recoveries - Commercial                        30          4
      Recoveries - Consumer                          61         79
      Recoveries - Real estate                        3         -
                                                 ------     ------
      Recoveries - Total                             94         83
                                                 ------     ------
      Net charge-offs                               (74)      (175)
                                                 ------     ------
      Provision for loan losses                     545        435
                                                 ------     ------
      Balance at the end of the year             $2,794     $2,323
                                                 ======     ======

      Ratio of net charge-offs to average loans    .04%       .11%
                                                 ======     ======



Table 6 - Allocation of Allowance for Loan Losses by Loan Type

The allowance for loan losses is allocated by loan category based on
management's assessment of risk within the various categories of loans. The
Company's allocation of the allowance for loan losses according to the amount
deemed to be reasonably necessary to absorb potential losses within each loan
category is presented in the following tables:

                                                    % of                % of
                                         1999      Total      1998      Total
                                        ------     -----     ------     -----
                                      (Thousands)          (Thousands)

   Commercial                            $ 520       .25       $ 450      .26
   Real estate - construction
     and development                       635       .31         520      .30
   Real estate -  mortgage                 993       .48         866      .51
   Installment and consumer                425       .21         324      .19
   Unallocated                             221       .11         163      .10
                                        ------                ------
   Total allowance for loan losses      $2,794      1.36      $2,323     1.36
                                        ======                ======

The allowance for loan losses is based on estimates and is maintained at a level
considered adequate to provide for potential loan losses. The adequacy of the
allowance is based on management's continuing evaluation of the loan portfolio
under current economic conditions, underlying collateral value securing loans
and such other factors, which deserve recognition in estimating loan losses.
Actual future losses may be different from estimates due to unforeseen events.
Loans, or portions thereof, which are deemed to be uncollectible will be charged
against the allowance.

Loan loss reserves are determined based on management's internal review of
nonperforming loans, delinquency trends, the level of rated assets and
charge-off trends. Additionally, management assesses general and specific
economic trends both nationally and locally and regulatory information to
determine the impact of those external factors on loan loss reserve levels.
Based on the internal and external reviews, The Subsidiary Banks segregates
their loan portfolios by type of loans and by loan classification within each
loan type. The allowance for loan losses is allocated by different loan
classifications based on management's assessment of risk inherent in the various
types of loans. Reserve percentages are applied (based on historical and
anticipated loss rates) to each loan group to determine the required amount of
allocated general loan loss reserves. Additionally, an amount is provided for
unallocated general loan loss reserves reflecting the potential for estimation
errors in allocated reserves.

Although historically, there have been minimal losses in loans secured by real
estate, management has allocated additional reserves to these categories based
upon the large concentration of real estate loans, larger individual loan

                                       19
<PAGE>

amounts, a very competitive market for loan growth and rapidly rising property
valuations during 1999 and 1998 in certain locations in our market area which
may not be sustainable.

Deposits

Table 7 - Deposit Average Balances and Rates Paid

The following table summarizes average balances of deposits of the Company and
the Subsidiary Banks on a consolidated basis and the average rates paid on such
deposits during 1999 and 1998.

                                            1999                  1998
                                    ------------------     ------------------
                                      Amount     Rate        Amount    Rate
                                   (Thousands)            (Thousands)
Non-interest-bearing demand         $ 36,724     0.00%     $ 30,137     0.00%
Interest-bearing savings              45,649     2.15%       40,215     2.76%
Savings deposits                      12,252     2.78%       11,850     3.24%
Money market deposits                 35,128     3.83%       31,946     4.00%
Time deposits                         98,789     5.18%       97,965     5.65%
                                    --------               --------
       Total                        $228,542               $212,113
                                    ========               ========

Item 2.  Properties

See Note 6 and Note 14 of Notes to Consolidated Financial Statements on page
F-12, and page F-17, of the Registrant's 1999 Annual Report to Shareholders,
which are specifically incorporated herein by reference.

The Savannah Bank's main office is located at 25 Bull Street, Savannah, Georgia
31401, on the ground floor and lower level of a seven story office building
located on Johnson Square in downtown Savannah. The location is sometimes called
the Financial Square because seven financial institutions surround the square
(downtown park). The location is convenient to commercial customers and
consumers who already use the services of the six other financial institution
offices on Johnson Square.

The Savannah Bank has leased approximately 4,710 square feet on the main floor,
and 2000 square feet in the lower level of the building under a five-year lease
with one optional five-year extension in June 2004. In November 1998, an
additional 1,475 square feet of space was rented on the sixth floor. This lease
is through June 2004 with one five-year renewal option. The rental costs
increase by 3 percent of the gross rental amount each year during the initial
five-year term and thereafter in accordance with the Consumer Price Index. The
Company is also responsible for its pro rata share of increases in the cost of
ad valorem taxes, insurance, utilities and janitorial services.

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-in lanes. All bank personnel are housed in this
one location.

Savannah Bank also leases approximately 6,700 square feet on the first floor of
a two-story building located at 400 Mall Boulevard, Savannah, Georgia. This
space is being used for the Savannah Bank's first branch location, the Mortgage
Loan Department and expansion space. The building is located near the corner 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. The Savannah Bank has committed to exercise
the next five-year lease option. There are four five-year renewal options
included in the terms. The Company is also responsible for its prorata share of
increases in the cost of ad valorem taxes, insurance and maintenance of common
areas. The bank renovated the existing space, constructed a vault, drive-in
teller area and five drive-in teller lanes adjacent to the building.

During 1995, Savannah Bank entered into a five-year ground lease with nine
five-year renewal options at 100 Chatham Parkway. The Savannah Bank also has a
right of first refusal to buy the property at appraised value should the owner
ever decide to sell the property. The location is at the intersection of Chatham
Parkway and U.S. Highway 80, a major commercial and industrial intersection in
west Chatham County. The Savannah Bank made land improvements and constructed a
2200 square-foot banking facility including four drive-in lanes and an ATM
drive-through lane. The West Chatham Office opened for business on November 20,
1995.

                                       20
<PAGE>

In 1997, Savannah Bank constructed a 2300 square foot office on an outlot owned
in the Island Towne Centre Shopping Plaza, six miles east of downtown Savannah.

In November 1997, the Savannah Bank 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 Road. The property consists of 3,055 square feet of banking
office space and a separate drive-through behind the shopping center.

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.  Submission of Matters to a Vote of Security Holders

None

PART II

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

Incorporated herein by reference to sections entitled "Market for Registrant's
Common Equity and Related Stockholder Matters" on page F-27 of the Financial
Statement Section of the 1999 Annual Report to Shareholders.

Item 6.  Selected Financial Data

Incorporated herein by reference to sections "Table 1 - Selected Financial
Condition Highlights - Five-Year Comparison," "Table 2 - Selected Operating
Highlights" and "Table 5 - Selected Quarterly Data" in the Registrant's
Management and Analysis of Financial Condition and Results of Operations on
pages F-20 through F-27 of the Financial Statement Section of the 1999 Annual
Report to Shareholders.

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

Incorporated herein by reference to the sections entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages F-22 and F-23 of the Financial Statement Section of the 1999 Annual Report
to Shareholders.

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 3 - Long-term Maturity Gap and
Repricing Data" in the Registrant's Management's Discussion and Analysis of
Financial Condition and Results of Operations on pages F-22 and F-23 of the
Financial Statement Section of the 1999 Annual Report to Shareholders.

                                       21
<PAGE>

Item 8.  Financial Statements and Supplementary Data

(a)    1.  Financial Statements

The financial statements, together with the applicable report of independent
accountants, are included as Exhibit 13 on pages F-3 to F-27 in this 1999 Annual
Report on Form 10-K as shown in the following index.

                                                                  Page Number


   (i)    Management's Responsibility for Financial Reporting         F-2
  (ii)    Report of Independent Certified Public Accountants          F-3
 (iii)    Consolidated Balance Sheets
              December 31, 1999 and 1998                              F-4
  (iv)    Consolidated Statements of Income for the Years
              Ended December 31, 1999, 1998 and 1997                  F-5
   (v)    Consolidated Statements of Changes in Stockholders'
              Equity for the Years Ended December 31, 1999,
              1998 and 1997                                           F-6
  (vi)    Consolidated Statements of Cash Flows for the Years
              Ended December 31, 1999, 1998 and 1997                  F-7
 (vii)    Notes to Consolidated Financial Statements              F-8 to F-19

       2.  Financial Statement Schedules

           Computation of Earnings Per Share                     Exhibit 11

           1999 Annual Report to Shareholders                    Exhibit 13

           Report of Predecessor Independent Accountants         Exhibit 23.1
           The report Arthur Andersen LLP for the year ended
           December 31, 1998 and 1997 is included as a financial
           schedule exhibit in this Form 10-K.

           Report of Predecessor Independent Accountants         Exhibit 23.1
           The report of Moore, Stephens, Tiller for the
           year ended December 31, 1997 is included as a
           financial schedule exhibit in this Form 10-K.

           Consent of BDO Seidman, LLP                           Exhibit 23.1
           Consent of Arthur Andersen LLP                        Exhibit 23.2
           Consent of Moore Stephens Tiller LLC                  Exhibit 23.3

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

Change in Registrant's Certifying Accountant.

(a)  Previous independent accountants

(i)  Effective April 19, 1999 The Savannah Bancorp, Inc. ("TSB, Inc.") dismissed
     its prior certifying accountants, Arthur Andersen LLP ("AA LLP"). AA LLP
     audited the consolidated financial statements for the years ending December
     31, 1996 through December 31, 1998. Unqualified opinions were issued in
     each of those years. The decision to dismiss AA LLP was approved by the
     Audit Committee and the full board of directors.

(ii) During the two most recent fiscal years and the subsequent interim period
     to the date hereof, there were no disagreements between TSB, Inc. and AA
     LLP on any matters of accounting principles, practices, financial statement
     disclosure, or auditing scope or procedures, which disagreements, if not
     resolved to the satisfaction of AA LLP would have caused them to make a
     reference thereto in their report on the financial statements for such
     years.

                                       22
<PAGE>

None of the "reportable events" described in Regulation S-K Item 304 (a)(1)(v)
occurred with respect to TSB, Inc. within the last two fiscal years and
subsequent interim period to the date hereof.

(b) New independent accountants

A competitive proposal was received from BDO Siedman LLP, ("BDO") which has
significant publicly-traded, community banking expertise. Effective April 19,
1999, TSB Inc.'s Board of Directors engaged the services of BDO as its
independent accountants. During the last two years and subsequent interim period
to the date hereof, TSB, Inc. did not consult BDO regarding any of the matters
or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

PART III

Item 10.  Directors and Executive Officers of the Registrant

Incorporated herein by reference to the sections entitled "Election of
Directors" and "Executive Officers" in the Registrant's Proxy Statement dated
March 17, 2000 and filed on March 15, 2000. All reports required pursuant to the
insider trading regulations were filed timely with the exception of Mr. Burnsed
and Mr. Briscoe, CFO, who each exercised options during 1999 and did not
correctly report the transactions.

Item 11.  Executive Compensation

Incorporated herein by reference to the sections entitled "Executive
Compensation and Benefits" in the Registrant's Proxy Statement dated March 17,
2000 and filed on March 15, 2000.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Incorporated herein by reference to the sections entitled "Election of
Directors" and "Ownership of Equity Securities" in the Registrant's Proxy
Statement dated March 17, 2000 and filed on March 15, 2000.

Item 13.  Certain Relationships and Related Transactions

The information contained in Note 5 to the Consolidated Financial Statements
incorporated by reference and under the caption "Certain Transactions" in the
Registrant's Proxy Statement dated March 17, 2000 and filed on March 15, 2000.

                                       23
<PAGE>

PART IV

Item 14.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibit
     Number    Description
     -------   ------------
       3.1 *   Articles of Incorporation
       3.2 *   By-laws as amended
      10.1 *   Lease for Bank Site at 25 Bull Street and Assumption of Lease
      10.5 *   Form of Organizers' Stock Option Agreement
      10.6 *   Lease for Mall Boulevard Office dated February 14, 1992
      10.7 *   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.
      11       Computation of Earnings Per Share
      13       1999 Annual Report to Shareholders
      21       Subsidiaries of Registrant
      22.1     Reports of Predecessor Independent Certified Public Accountants
      22.2     Reports of Predecessor Independent Certified Public Accountants
      23.1     Consent of BDO Seidman, LLP
      23.2     Consent of Arthur Andersen LLP
      23.3     Consent of Moore Stephens Tiller LLC
      27       Financial Data Schedule

*Items 3.1, 3.2, 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.

(b)  REPORTS ON FORM 8-K.   NONE








                                       24
<PAGE>

                                   SIGNATURES

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
20, 2000 by the undersigned, thereunto duly authorized.

THE SAVANNAH BANCORP, INC.

By:  /s/ ARCHIE H. DAVIS
         Archie H. Davis, President and
         Chief Executive Officer
         (Principal Executive Officer)


     /s/ ROBERT B. BRISCOE
         Robert B. Briscoe, Chief
         Financial Officer
         (Principal Financial and Accounting Officer)



Directors:

/s/  J. WILEY ELLIS                          /s/  JACK M. JONES
     J. Wiley Ellis                               Jack M. Jones
     Chairman of the Board

/s/  E. JAMES BURNSED                        /s/
     E. James Burnsed                             Aaron M. Levy
     Vice Chairman

/s/  RUSSELL W. CARPENTER                    /s/  J. CURTIS LEWIS, III
     Russell W. Carpenter                         J. Curtis Lewis, III

/s/  ARCHIE H. DAVIS                         /s/  M. LANE MORRISON
     Archie H. Davis                              M. Lane Morrison

/s/  ROBERT H. DEMERE, JR.                   /s/  J. TOBY ROBERTS
     Robert H. Demere, Jr.                        J. Toby Roberts, Sr.

/s/  L. CARLTON GILL                         /s/  JAMES W. ROYAL
     L. Carlton Gill                              James W. Royal

/s/                                          /s/  JACK W. SHEAROUSE
     Robert W. Groves III                         Jack W. Shearouse

/s/  PENELOPE S. JOHNSON                     /s/  ROBERT T. THOMPSON, JR.
     Penelope S. Johnson                          Robert T. Thompson, Jr.


                                       25
<PAGE>

Exhibit 11 - Computation of Per Share Earnings

Earnings per share has been calculated in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share"
issued by the Financial Accounting Standards Board. SFAS No. 128 requires
presentation of earnings per share on a basic computation and a diluted
computation. The basic computation divides net income by only the weighted
average number of common shares outstanding for the year and the diluted
computation gives effect to all diluted common shares that were outstanding
during the year. Earnings and outstanding shares for 1998 and 1997 have been
restated to give effect to the merger with Bryan Bancorp of Georgia, Inc. that
was consummated on December 15, 1998 and accounted for using the pooling of
interests accounting method.

The following data shows the amounts used in computing earnings per share and
the effect on income and the weighted average number of shares of dilutive
potential common stock.

    Years Ended December 31,                          1999     1998     1997
    ------------------------                         ------   ------   ------
       Income available to common shareholders:

       Used in basic earnings per share              $3,533   $2,626   $2,911
                                                     ------   ------   ------
       Used in diluted earnings per share            $3,533   $2,626   $2,911
                                                     ------   ------   ------
       Weighted average number of common
          shares used in basic earnings per share     2,704    2,661    2,640
       Effect of dilutive securities:
          Stock options                                  66       99      117
                                                     ------   ------   ------
       Weighted average number of common
          and dilutive potential common shares
          used in diluted earnings per share          2,770    2,760    2,757
                                                     ------   ------   ------