NEWNAN HOLDINGS INC, 424B3, 1996-08-08

NEWNAN HOLDINGS INC
424B3, 1996-08-08
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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NEWNAN SAVINGS BANK, FSB
19 Jefferson Street
Newnan, Georgia 30263
(770) 353-5017

July 30, 1996

To the Shareholders of NEWNAN SAVINGS BANK, FSB:

You are cordially invited to attend the Special Shareholders' Meeting of
Newnan Savings Bank, FSB ("Newnan Savings") to be held on August 21, 1996.
Official Notice of the meeting and the Joint Proxy Statement/Prospectus of
management of Newnan Savings accompany this letter.

The purpose of the meeting is to consider and vote upon a plan to
reorganize Newnan Savings into a holding company structure.

The terms of the reorganization provide that each outstanding share of
Newnan Savings common stock will be converted into one share of common stock in
the new holding company. This means that all of the present shareholders of
Newnan Savings will become shareholders of the new holding company.

The accompanying Joint Proxy Statement/Prospectus describes in greater
detail the proposed transaction, as well as the Board's reasons for supporting
it. The Joint Proxy Statement/Prospectus also describes the simultaneous
acquisition of Southside Financial Group, Inc. by the new holding company. The
Joint Proxy Statement/Prospectus has been prepared in accordance with the
requirements of various federal and state laws and regulations. Please read the
Joint Proxy Statement/Prospectus carefully.

The directors of Newnan Savings have advised me that they intent to vote
their shares of Newnan Savings common stock in favor of the reorganization, and
I urge you to vote in favor of the transaction as well.

Whether or not you plan to attend the meeting, please mark, date and sign
the enclosed form of proxy and return it to the Bank in the envelope provided as
soon as possible. Adoption of the plan of reorganization requires approval by
the holders of one-half of the Bank's outstanding common stock, which means that
your vote is very important regardless of the number of shares that you own.
Again, we urge you to read the Joint Proxy Statement/Prospectus carefully.

Very truly yours,

Tom Moat
President

<PAGE>

NEWNAN SAVINGS BANK, FSB
19 Jefferson Street
Newnan, Georgia 30263
(770) 353-5017

July 30, 1996

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of Newnan Savings Bank, FSB:

Notice is hereby given that a Special Meeting of shareholders of Newnan
Savings Bank, FSB ("Newnan Savings") will be held on August 21, 1996 at
4:30 p.m., at the main office of Newnan Savings, 19 Jefferson Street,
Newnan, Georgia, for the following purposes:

(1) To consider and vote upon a Plan of Reorganization, a copy of which is
attached as Appendix A to the Joint Proxy Statement/Prospectus accompanying this
Notice, providing for the reorganization of Newnan Savings into a holding
company structure by merging Newnan Savings with Interim Newnan FSB, a wholly-
owned subsidiary of Newnan Holdings, Inc. (both Interim Newnan FSB and Newnan
Holdings, Inc. have been organized at the direction of Newnan Savings); and

(2) To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.

If the Reorganization is consummated, shareholders who dissent to the
transaction are entitled to be paid the "fair value" or "appraised value" of
their shares of Newnan Savings common stock, if they file a written objection to
the Reorganization before the vote is taken and comply with the further
provisions of Section 552.4 of the Rules and Regulations of the Office of Thrift
Supervision regarding the rights of dissenting shareholders. See "Statutory
Provisions for Dissenting Shareholders" and "Appendix C" to the Joint Proxy
Statement/Prospectus for a description of the rights of dissenting shareholders.

The Board of Directors has fixed the close of business on July 12, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.

<PAGE>

All shareholders are requested to mark, date, sign and return the enclosed
form of proxy as soon as possible. If you attend the meeting and wish to revoke
the proxy that you had previously returned, you may do so at any time before the
proxy is exercised.

By order of the Board of Directors,

Tom Moat
President

IMPORTANT NOTICE

TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO COMPLETE,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY YOU ANY TIME BEFORE IT IS
VOTED.

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
675 North Jeff Davis Drive
Fayetteville, Georgia 30214
(770) 460-6550

July 30, 1996

To the Shareholders of SOUTHSIDE FINANCIAL GROUP, INC.:

You are cordially invited to attend the Special Shareholders' Meeting of
Southside Financial Group, Inc. ("Southside") to be held on August 21, 1996.
Official Notice of the meeting and the Joint Proxy Statement/Prospectus of
management of Southside accompany this letter.

The purpose of the meeting is to consider and vote upon the acquisition of
Southside by Newnan Holdings, Inc., a company formed by Newnan Savings Bank, FSB
in order to reorganize into a holding company structure.

Newnan Holdings, Inc. proposes to acquire 100% of the Southside common
stock for the purchase price of $41.00 per share less a pro rata portion of a
special reserve established with respect to several loans on the books of
Citizens Bank & Trust of Fayette County which will be distributed after
repayment and collection on the loans equal their net book value. The terms of
the acquisition are discussed in detail in the accompanying Joint Proxy
Statement/Prospectus.

The accompanying Joint Proxy Statement/Prospectus describes in greater
detail the proposed transaction, as well as the Board's reasons for supporting
it. The Joint Proxy Statement/Prospectus has been prepared in accordance with
the requirements of various federal and state laws and regulations. Please read
the Joint Proxy Statement/Prospectus carefully.

The directors of Southside have advised me that they intend to vote their
shares of Southside common stock in favor of the acquisition, and I urge you to
vote in favor of the transaction as well.

Whether or not you plan to attend the meeting, please mark, date and sign
the enclosed form of proxy and return it to Southside in the envelope provided
as soon as possible. Adoption of the plan of reorganization requires approval
by the holders of two-thirds of Southside's outstanding common stock, which
means that your vote is very important regardless of the number of shares that
you own. Again, we urge you to read the Joint Proxy Statement/Prospectus
carefully.

Very truly yours,

B.D. Murphy, III
Chairman of the Board

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
675 North Jeff Davis Drive
Fayetteville, Georgia 30214
(770) 460-6550

July 30, 1996

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of Southside Financial Group, Inc.:

Notice is hereby given that a Special Meeting of shareholders of Southside
Financial Group, Inc. ("Southside") will be held on August 21, 1996 at
4:30 p.m., at the main office of Southside, 675 North Jeff Davis Drive,
Fayetteville, Georgia, for the following purposes:

(1) To consider and vote upon an acquisition agreement, a copy of which is
attached as Appendix B to the Joint Proxy Statement/Prospectus accompanying this
Notice, providing for the acquisition (the "Acquisition") of Southside Financial
Group, Inc. by Newnan Holdings, Inc., by merging Southside with Interim Citizens
Corporation, a wholly-owned subsidiary of Newnan Holdings, Inc.; and

(2) To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.

If the Acquisition is consummated, shareholders who dissent to the
transaction are entitled to be paid the "fair value" of their shares of
Southside common stock, if they file a written objection to the Acquisition
before the vote is taken and comply with the further provisions of Section 7-1-
537 of the Georgia Financial Institutions Code and Article 13 of the Georgia
Business Corporation Code regarding the rights of dissenting shareholders. See
"Statutory Provisions for Dissenting Shareholders" and "Appendix D" to the Joint
Proxy Statement/Prospectus for a description of the rights of dissenting
shareholders.

The Board of Directors has fixed the close of business on July 12, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.

<PAGE>

By order of the Board of Directors,

B.D. Murphy, III
Chairman of the Board

IMPORTANT NOTICE

<PAGE>

JOINT PROXY STATEMENT
FOR SPECIAL MEETINGS OF SHAREHOLDERS

Both To Be Held On August 21, 1996

NEWNAN SAVINGS BANK, FSB SOUTHSIDE FINANCIAL GROUP, INC.
19 Jefferson Street 675 North Jeff Davis Drive
Newnan, Georgia 30263 Fayetteville, Georgia 30214

PROSPECTUS
OF
NEWNAN HOLDINGS, INC.
19 Jefferson Street
Newnan, Georgia 30263
(770) 253-5017
for
1,604,407 SHARES OF COMMON STOCK

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

THESE SECURITIES ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER OBLIGATIONS
OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

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

No person is authorized to give any information nor to make any
representations other than the information and representations contained in this
Joint Proxy Statement/Prospectus, and if given or made, such information or
representations must not be relied upon as having been authorized. Neither the
delivery of this Joint Proxy Statement/Prospectus nor any distribution of the
Common Stock made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of either Newnan
Holdings, Inc., Newnan Savings Bank, FSB, or Southside Financial Group, Inc.
since the date as of which information is furnished herein.

Newnan Holdings, Inc. has undertaken to update this Joint Proxy
Statement/Prospectus to reflect any facts or events arising after the date
hereof, which individually or in the aggregate represent a fundamental change in
the information set forth herein, and to include any material information with
respect to the plan of distribution not previously disclosed in this Joint Proxy
Statement/Prospectus or any material changes to such information.

<PAGE>

A Special Meeting of Shareholders will be held by Newnan Savings Bank, FSB
for the purpose of considering and voting upon a plan of reorganization
providing for the reorganization of Newnan Savings Bank, FSB into a holding
company structure. Each shareholder of Newnan Savings Bank, FSB will receive
one share of stock in Newnan Holdings, Inc. for each share of stock in Newnan
Savings Bank, FSB which he or she currently holds.

A Special Meeting of Shareholders will be held by Southside Financial
Group, Inc. to consider and vote upon the acquisition of Southside Financial
Group, Inc. by Newnan Holdings, Inc. The shareholders of Southside Financial
Group, Inc. will receive merger consideration in the amount of $41.00 per
share of stock, less a pro rata portion of a special reserve established with
respect to certain loans on the books of Citizens Bank & Trust of Fayette
County. Any shareholder of Southside Financial Group, Inc. who owns or
controls 5,000 or more shares may, at his or her election, receive 50% of his
or her merger consideration in the form of stock in Newnan Holdings, Inc.,
provided that the number of shares of stock in Newnan Holdings, Inc.
exchanged accordingly will not exceed 145,000 shares. Each share of stock in
Southside Financial Group, Inc. will be converted into the number of shares
of stock in Newnan Holdings, Inc. equal to $41.00 per share (less a pro rata
portion of a special reserve described above), divided by the average market
value of Newnan Holdings, Inc. as calculated for each of the 20 trading days
ending on the fifth day immediately preceding consummation of the proposed
transaction, but in no event will the market value be less than $15.50 per
share or greater than $20.00 per share. As of May 31, 1996, the market value
of Newnan Savings Bank, FSB stock was $18.50 per share.

SHAREHOLDERS OF NEWNAN SAVINGS BANK, FSB WILL VOTE ONLY ON THE
REORGANIZATION, AND SHAREHOLDERS OF SOUTHSIDE FINANCIAL GROUP, INC. WILL VOTE
ONLY ON THE ACQUISITION.

The date of this Joint Proxy Statement/Prospectus is July 12, 1996, and
it was first mailed to the shareholders of Newnan Savings Bank, FSB and
Southside Financial Group, Inc. on or about July 31, 1996.

<PAGE>

JOINT PROXY STATEMENT
FOR SPECIAL MEETINGS OF SHAREHOLDERS
of
NEWNAN SAVINGS BANK, FSB
and
SOUTHSIDE FINANCIAL GROUP, INC.

PROSPECTUS
of
NEWNAN HOLDINGS, INC.

TABLE OF CONTENTS
-----------------

PAGE NO.
--------
SUMMARY.................................................................... 1
Joint Proxy Statement/Prospectus..................................... 1
Businesses........................................................... 2
Special Meeting of Newnan Savings Shareholders....................... 2
Special Meeting of Southside Shareholders............................ 3
Record Date and Voting Rights........................................ 3
Summary of the Newnan Savings Reorganization......................... 4
Terms.......................................................... 4
Management..................................................... 4
Reasons for the Newnan Savings Reorganization;
Board Recommendation.......................................... 4
Regulatory and Shareholder Approvals........................... 5
Dissenters' Provisions......................................... 5
Dividends...................................................... 5
Summary of the Southside Acquisition by the Holding Company.......... 5
Terms.......................................................... 5
Management..................................................... 6
Reasons for the Southside Acquisition; Board Recommendation.... 6
Regulatory and Shareholder Approvals........................... 7
Dissenters' Provisions......................................... 7
Dividends...................................................... 7
Tax Consequences..................................................... 7
Reorganization................................................. 7
Acquisition.................................................... 8
Regulatory Approvals................................................. 8
Interests of Management in the Transactions.......................... 8
Comparative Rights of Shareholders................................... 9
Preemptive Rights.............................................. 9
Company Preferred Stock........................................ 9
Antitakeover Provisions........................................ 9

<PAGE>

Market for Capital Stock............................................. 10
Newnan Savings................................................. 10
Southside...................................................... 11
Comparative Information........................................ 11

THE NEWNAN SAVINGS REORGANIZATION.......................................... 13
Parties to the Newnan Savings Reorganization......................... 13
Terms of the Newnan Savings Reorganization........................... 14
Effective Date................................................. 14
Consideration to Shareholders.................................. 14
Effect of the Newnan Savings Reorganization.................... 14
Reasons for the Newnan Savings Reorganization; Board Recommendation.. 14
Surrender of Stock Certificates...................................... 15
Regulatory Approvals and Conditions; Amendment and Termination....... 16
Accounting Treatment................................................. 16
Tax Consequences..................................................... 17

THE SOUTHSIDE ACQUISITION.................................................. 18
Parties to the Southside Acquisition................................. 18
Terms of the Southside Acquisition................................... 19
General........................................................ 19
Effective Date................................................. 19
Consideration to Southside Shareholders........................ 19
Background of the Southside Acquisition.............................. 21
Reasons for the Southside Acquisition................................ 20
Newnan Savings and the Holding Company......................... 20
Southside...................................................... 20
Surrender of Stock Certificates...................................... 22
Representations and Warranties....................................... 22
Covenants............................................................ 23
General........................................................ 23
Conditions........................................................... 23
Termination, Amendment and Waiver.................................... 24
Accounting Treatment................................................. 24
Tax Consequences..................................................... 25

COMPARATIVE RIGHTS OF SHAREHOLDERS......................................... 27
Common Stock......................................................... 27
Authorization and Issuance of Shares........................... 27
Dividends...................................................... 28
Voting Rights.................................................. 28
Preemptive Rights.............................................. 28
Liquidation Rights............................................. 29
Other.......................................................... 29
Preferred Stock...................................................... 29

<PAGE>

Antitakeover Provisions.............................................. 29
Classification of the Board of Directors....................... 29
Change in Number of Directors.................................. 30
Removal of Directors........................................... 30
Advantages and Disadvantages of Articles 7, 8 and 9............ 30
Supermajority Voting on Certain Transactions................... 31
Evaluation of Acquisition Proposal............................. 32
Amendment of Antitakeover Provisions........................... 33
Limitation of Liability.............................................. 33
Indemnification...................................................... 34

STATUTORY AND REGULATORY PROVISIONS FOR DISSENTING SHAREHOLDERS............ 35
Newnan Savings Reorganization........................................ 35
Southside Acquisition................................................ 36

MANAGEMENT................................................................. 38
Directors............................................................ 38
Officers............................................................. 39

EXECUTIVE COMPENSATION..................................................... 39
Summary of Cash and Certain Other Compensation....................... 39
Stock Options........................................................ 40

CERTAIN OTHER TRANSACTIONS................................................. 40

INTERESTS OF MANAGEMENT IN THE TRANSACTIONS................................ 41

OWNERSHIP OF STOCK......................................................... 42
Principal Holders of Newnan Savings Stock............................ 42
Newnan Savings Stock Owned by Management............................. 43
Principal Holders of Southside Stock................................. 44
Southside Stock Owned by Management.................................. 45

BUSINESS................................................................... 47
Company.............................................................. 47
Newnan Savings....................................................... 47
General........................................................ 47
Properties..................................................... 48
Lending Activities............................................. 48
Investment Activities.......................................... 51
Savings Activities and Other Sources of Funds.................. 51
Asset/Liability Management..................................... 51
Subsidiaries................................................... 51
Recent Developments............................................ 51
Competition.................................................... 52
Legal Proceedings.............................................. 52

iii

<PAGE>

Southside............................................................ 52
General........................................................ 52
Properties..................................................... 53
Lending Activities............................................. 53
Investment Activities.......................................... 54
Asset/Liability Management..................................... 54
Competition.................................................... 54
Legal Proceedings.............................................. 54

SUPERVISION AND REGULATION................................................. 55
Savings and Loan Holding Company Regulation.......................... 55
Bank Holding Company Regulation...................................... 56
Regulation........................................................... 58
Regulation for State Banks........................................... 58
Capital Requirements................................................. 59
Capital Requirements for Federal Savings Banks and Their Holding
Companies................................................ 59
Capital Requirements for Banks................................. 59
Prompt Corrective Action....................................... 60
FDIC Insurance Assessments........................................... 61
CRA.................................................................. 63
Fair Lending......................................................... 63
Future Requirements.................................................. 64
Monetary Policy...................................................... 64
Other Regulations Applicable for Federal Savings Banks............... 64
Qualified Thrift Lender Test................................... 64
Equity Investments............................................. 65
Interest Rate Risk............................................. 65
Capital Treatment of Intangible Assets......................... 65
Acquisition of Control......................................... 66
Mergers and Charter Conversions................................ 66

MISCELLANEOUS.............................................................. 66
Available Information................................................ 66
Legal Matters........................................................ 67
Experts.............................................................. 67
Other Matters........................................................ 67
Expenses............................................................. 67

<PAGE>

SUMMARY

The following is a summary of certain important aspects of Newnan
Savings Bank, FSB's reorganization into a holding company structure, the
acquisition by the new holding company, Newnan Holdings, Inc., of Southside
Financial Group, Inc. and related information. The summary is qualified in
its entirety by reference to the more detailed information appearing
elsewhere in this Joint Proxy Statement/Prospectus, including the financial
information and the appendices. Shareholders are urged to review the entire
Joint Proxy Statement/Prospectus carefully.

JOINT PROXY STATEMENT/PROSPECTUS

This Joint Proxy Statement/Prospectus is furnished in connection with
the solicitation of proxies by the separate Boards of Directors of Newnan
Savings Bank, FSB ("Newnan Savings") and Southside Financial Group, Inc.
("Southside") for use at the Special Meetings of Newnan Savings and
Southside, both to be held on August 21, 1996, at the times and places set
forth below and in the accompanying Notices of Special Meeting, and at any
adjournments thereof.

The purpose of Newnan Savings' Special Meeting is to consider and vote
upon a Plan of Reorganization (the "Plan of Reorganization") providing for
the reorganization (the "Newnan Savings Reorganization") of Newnan Savings
into a holding company structure by merging Interim Newnan Savings FSB
("Interim"), a wholly-owned subsidiary of the new holding company, Newnan
Holdings, Inc. (the "Holding Company") into Newnan Savings (both Interim and
the Holding Company have been organized at the direction of Newnan Savings).

The purpose of Southside's Special Meeting is to consider and vote upon
an Agreement and Plan of Merger (the "Acquisition Agreement") providing for
the acquisition (the "Southside Acquisition") by the Holding Company of
Southside by merging Interim Citizens Corporation ("Acquisition Corp."), a
wholly-owned subsidiary of the Holding Company, into Southside (Acquisition
Corp. has been organized at the direction of the Holding Company).
Southside's banking subsidiary, Citizens Bank and Trust of Fayette County
("Citizens Bank") will continue in existence as a subsidiary of the Holding
Company. The Holding Company will change its corporate title to "Southside
Financial Group, Inc." after the Acquisition.

This document also serves as a Prospectus of the Holding Company
relating to 1,459,407 shares of the Holding Company's common stock (the
"Holding Company Stock"), $1.00 par value, to be issued by the Holding
Company in connection with the Newnan Savings Reorganization and a maximum of
145,000 shares of the Holding Company Stock to be issued to shareholders of
Southside in connection with the Southside Acquisition.

Pursuant to the Rules and Regulations of the Office of Thrift
Supervision (the "OTS") and to Georgia law, Newnan Savings shareholders will
vote only on the Newnan Savings Reorganization and Southside shareholders
will vote only upon the Southside Acquisition. Nevertheless, since
consummation of the Newnan Savings Reorganization is conditioned upon the
Southside Acquisition by the Holding Company of Southside, and since the
Southside Acquisition by the Holding Company of Southside is conditioned upon
the consummation of the Newnan Savings Reorganization, subject in both cases
to receipt of required approvals and satisfaction of conditions specified in
the Plan of Newnan Savings Reorganization and the Acquisition Agreement,
Newnan Savings and Southside are providing information concerning the Newnan
Savings Reorganization and the Southside Acquisition

<PAGE>

by the Holding Company of Southside in this Joint Proxy Statement/Prospectus
so that shareholders of both entities will have a full description of each of
the proposed transactions.

BUSINESSES

Newnan Savings is a federal savings bank chartered under the laws of
the United States of America. Newnan Savings operates a full-service banking
business in Coweta, Fayette and Troup Counties, and Citizens Bank operates a
full-service commercial banking business in Fayette County. Citizens Bank is
a commercial bank chartered under the laws of the State of Georgia. The
Holding Company has been organized at the direction of Newnan Savings for the
purpose of acquiring all of the outstanding common stock of Newnan Savings in
the Newnan Savings Reorganization and, simultaneously, for the purpose of
acquiring all of the outstanding common stock of Southside in the Southside
Acquisition.

SPECIAL MEETING OF NEWNAN SAVINGS SHAREHOLDERS

The Special Meeting of Shareholders of Newnan Savings will be held at
4:30 p.m. on August 21, 1996 at Newnan Savings' main office located at 19
Jefferson Street, Newnan, Georgia 30263 for the purpose of considering and
voting on approval of the Plan of Reorganization and transacting such other
business as may properly come before the meeting. The Newnan Savings
Reorganization must be approved by the affirmative vote of the holders of
one-half of the outstanding shares of Newnan Savings Stock. Abstentions and
broker non-votes will not be counted for or against any matter properly
brought before the special meeting.

The accompanying form of proxy is for use at Newnan Savings' special
meeting and any adjournment thereof. A shareholder may use this proxy if he
or she is unable to attend the meeting in person or wishes to have his or her
shares voted by proxy even if the shareholder does attend the meeting.
Shareholders who sign proxies have the right to revoke them at any time
before they are voted either by written notice of revocation which is
received at Newnan Savings main office before the meeting or by the Corporate
Secretary at the meeting or by attending the meeting and voting in person.
All shares represented by valid proxies received pursuant to this
solicitation and not revoked before they are exercised will be voted as
directed, and where no direction is given, the shares represented by such
proxies will be voted FOR the Newnan Savings Reorganization. Newnan Savings'
Board of Directors is aware of no other matters which may be presented for
action at the meeting, but if other matters do properly come before the
meeting, it is intended that shares represented by proxies will be voted by
the persons named in the proxies in accordance with their best judgment.

Solicitation of proxies may be made in person or by mail, telephone or
telegraph by directors, officers and regular employees of Newnan Savings who
will not be specially compensated for such solicitations. Brokerage houses,
nominees, fiduciaries and other custodians will be requested to forward
solicitation materials to beneficial owners and to secure their voting
instructions if necessary, and will be reimbursed for their expenses incurred
in sending proxy materials to beneficial owners. Newnan Savings will bear
the cost associated with solicitation of proxies and other expenses
associated with its meeting.

<PAGE>

SPECIAL MEETING OF SOUTHSIDE SHAREHOLDERS

The Special Meeting of Shareholders of Southside will be held at
4:30 p.m. on August 21, 1996 at Southside's main office located at 675
North Jeff Davis Drive, Fayetteville, Georgia 30214 for the purpose of
considering and voting on approval of the Southside Acquisition and
transacting such other business as may properly come before the meeting. The
Southside Acquisition must be approved by the affirmative vote of the holders
of two-thirds of the outstanding shares of Southside Stock.

The accompanying form of proxy is for use at Southside's special
meeting and any adjournment thereof. A shareholder may use this proxy if he
or she is unable to attend the meeting in person or wishes to have his or her
shares voted by proxy even if the shareholder does attend the meeting.
Shareholders who sign proxies have the right to revoke them at any time
before they are voted either by written notice of revocation which is
received at Southside's main office before the meeting or by the Corporate
Secretary at the meeting or by attending the meeting and voting in person.
All shares represented by valid proxies received pursuant to this
solicitation and not revoked before they are exercised will be voted as
directed, and where no direction is given, the shares represented by such
proxies will be voted FOR the Southside Acquisition. Southside's Board of
Directors is aware of no other matters which may be presented for action at
the meeting, but if other matters do properly come before the meeting, it is
intended that shares represented by proxies will be voted by the persons
named in the proxies in accordance with their best judgment.

Solicitation of proxies may be made in person or by mail, telephone or
telegraph by directors, officers and regular employees of Southside who will
not be specially compensated for such solicitations. Brokerage houses,
nominees, fiduciaries and other custodians will be requested to forward
solicitation materials to beneficial owners and to secure their voting
instructions if necessary, and will be reimbursed for their expenses incurred
in sending proxy materials to beneficial owners. Southside will bear the
cost associated with solicitation of proxies and other expenses associated
with the meeting.

RECORD DATE AND VOTING RIGHTS

The shareholders of record of Newnan Savings and Southside at the close
of business on July 12, 1996 (the "Record Date") are entitled to notice
of and to vote at the meetings or any adjournments thereof. As of the close
of business on the Record Date, (a) Newnan Savings had 8,000,000 shares of
common stock ("Newnan Savings Stock"), $1.00 par value, authorized, of which
1,459,407 shares were issued and outstanding and held of record by 600
shareholders, and (b) Southside had 5,000,000 shares of common stock
("Southside Stock"), $10.00 par value, authorized, of which 382,232 shares
were issued and outstanding and held of record by 683 shareholders. Each
issued and outstanding share of Newnan Savings Stock and Southside Stock is
entitled to one vote on the matters to be presented at the meetings.

<PAGE>

SUMMARY OF THE NEWNAN SAVINGS REORGANIZATION

Consummation of the Newnan Savings Reorganization is conditioned upon
consummation of the Southside Acquisition and consummation of the Southside
Acquisition is conditioned upon consummation of the Newnan Savings
Reorganization. The parties to the Plan of Reorganization may waive the
condition that the Southside Acquisition be consummated. However, the parties
to the Acquisition Agreement may not waive the condition that the Newnan
Savings Reorganization be consummated. The following is a summary of certain
important aspects of the Newnan Savings Reorganization.

TERMS

The terms of the Newnan Savings Reorganization provide that each
outstanding share of Newnan Savings Stock will be converted into the right to
receive one share of Holding Company Stock. This one-for-one exchange ratio
was determined to ensure that, after the Newnan Savings Reorganization, every
Newnan Savings shareholder would have an equivalent ownership position in the
Holding Company. See "The Newnan Savings Reorganization."

MANAGEMENT

The existing directors of the Holding Company are three of the Newnan
Savings directors (J. Littleton Glover, Jr., Tom Moat and Ellis A. Mansour)
who also serve as the executive officers of the Holding Company, and no
changes will be effected in the directorate and executive officers of Newnan
Savings solely as a result of the Newnan Savings Reorganization. Mr. Moat
will serve both as a director and as chief executive officer of both the
Holding Company and Newnan Savings. See "Management."

REASONS FOR THE NEWNAN SAVINGS REORGANIZATION; BOARD RECOMMENDATION

The Board of Directors of Newnan Savings believes that the Newnan
Savings Reorganization is in the best interests of Newnan Savings because a
holding company is a more modern corporate structure for a financial
institution. A holding company will have greater corporate flexibility, such
as the right to issue stock, borrow money, and redeem stock under certain
circumstances, than Newnan Savings has at the present time. In addition, a
holding company subject to required approvals can acquire interests and
operate banks throughout Georgia and elsewhere in the Southeast if deemed
appropriate. A holding company may also, subject to existing laws, engage in
activities closely related to banking and form non-bank subsidiaries (subject
to Federal Reserve approval, since the holding company will also be a bank
holding company after the Southside Acquisition). Management believes that
these powers will better enable Newnan Savings and the Holding Company to
compete with other financial institutions and will place the Holding Company
in a better position for future growth. The Board of Directors of Newnan
Savings has unanimously approved the Newnan Savings Reorganization and
unanimously recommends that Newnan Savings shareholders vote FOR the Newnan
Savings Reorganization.

<PAGE>

REGULATORY AND SHAREHOLDER APPROVALS

Consummation of the Newnan Savings Reorganization is subject to
approval by the Office of Thrift Supervision (the "OTS") and the Georgia
Department of Banking and Finance. As of the date hereof, applications for
such approvals have been filed and are pending. Newnan Savings and the
Holding Company do not anticipate any difficulty in securing the necessary
regulatory approvals. The Newnan Savings Reorganization must also be approved
by the affirmative vote of the holders of one-half of the outstanding shares
of Newnan Savings Stock. The directors and executive officers of Newnan
Savings beneficially own 30.57% of the outstanding Newnan Savings Stock, and
they intend to vote FOR the Newnan Savings Reorganization.

DISSENTERS' PROVISIONS

A shareholder of Newnan Savings who opposes the Newnan Savings
Reorganization may exercise certain rights under 12 C.F.R. Section 552.14 if
he or she files a written objection to the Newnan Savings Reorganization with
Newnan Savings either before Newnan Savings' Special Meeting, or at the
meeting but before the vote on the Newnan Savings Reorganization is taken.
Failure to comply with this and all of the other statutory requirements (the
"Dissenters' Provisions") will constitute a waiver of the right to dissent.
See "Statutory and Regulatory Provisions For Dissenting Shareholders" and
"Appendix C," which contains the text of 12 C.F.R. Section 552.14.

DIVIDENDS

Newnan Savings paid a cash dividend of $0.34 per share in fiscal 1996
and $0.23 per share in fiscal 1995 to its shareholders; Newnan Savings paid
no dividend for the fiscal years 1994, 1993 or 1992. Upon consummation of the
Newnan Savings Reorganization, the future dividend policies of the Holding
Company will depend upon its earnings, financial condition, applicable legal
restrictions and other factors relevant at the time the Board of Directors
considers dividends. The Holding Company presently contemplates payment of
quarterly dividends at a rate comparable to that paid in fiscal year 1996.
See "Comparative Rights of Shareholders - Common Stock - Dividends."

SUMMARY OF THE SOUTHSIDE ACQUISITION BY THE HOLDING COMPANY

Consummation of the Newnan Savings Reorganization is conditioned upon
consummation of the Southside Acquisition by the Holding Company, and
consummation of the Southside Acquisition is conditioned upon consummation of
the Newnan Savings Reorganization. The parties to the Plan of Reorganization
may waive the condition that the Southside Acquisition be consummated.
However, the parties to the Acquisition Agreement may not waive the condition
that the Newnan Savings Reorganization be consummated. The following is a
summary of certain important aspects of the Southside Acquisition.

TERMS

The Holding Company will acquire 100% of the Southside Stock. The
purchase price will be $41.00 per share, less a pro rata portion of a special
reserve (the "Special Reserve") established with respect to certain loans on
the books of Citizens Bank (the "Net Cash Price"). The Acquisition

<PAGE>

Agreement also provides that any shareholder who owns or controls 5,000 or
more shares of Southside Stock may, at his or her election, receive 50% of
his or her merger consideration in the form of Holding Company Stock,
provided that the number of shares of Holding Company Stock exchanged
accordingly will not exceed 145,000 shares. Each share of Southside Stock
exchanged in accordance herewith will be converted into the number of shares
of Holding Company Stock equal to the Net Cash Price divided by the market
value of Holding Company Stock (the market value is defined in the
Acquisition Agreement as the per share value of Newnan Savings Stock as
determined by calculating the average of the closing prices or the average of
the closing bid and ask prices if there are no trades as reported in the
Nasdaq NMS on each of the 20 trading days ending on the fifth day immediately
preceding consummation of the transaction, but in no event will the market
value be less than $15.50 per share or greater than $20.00 per share). The
parties to the Acquisition Agreement have not received and do not plan to
receive an opinion on the fairness of the consideration by a financial
advisor.

The parties to the Acquisition Agreement have agreed that the Special
Reserve be established with respect to certain loans to two borrowers of
Citizens Bank (the two borrowers in question are not affiliates of Citizens
Bank and Southside). While Citizens Bank and Southside believe that the
existing reserves are adequate, in order to resolve any concerns in this
regard, the parties have agreed that at the closing date, a portion of the
cash purchase price payable to Southside shareholders shall be set aside in
the Special Reserve. The Special Reserve shall be in a maximum amount equal
to $558,000, less any specific reserves with respect to the loans in question
and the amount by which the general loan loss reserve at Citizens Bank
exceeds that amount which would be deemed "adequate" pursuant to Citizens
Bank's existing valuation methodology for determining the adequacy of the
loan loss reserves. Based on the maximum amount of the Special Reserve,
shareholders would receive merger consideration of $39.54 per share.
However, the amount of the Special Reserve at June 30, 1996 was $162,000 or
$0.42 per share, and, therefore, as of June 30, 1996, Southside shareholders
would receive merger consideration of $40.58 per share. The payment of the
funds in the Special Reserve to Southside shareholders depends upon repayment
of the loans and these funds may be distributed to the Southside shareholders
only after repayment and collection on the loans equal their net book value.

MANAGEMENT

Upon consummation of the Southside Acquisition, the existing directors
and executive officers of Citizens Bank will be the same as those of Citizens
Bank currently, except for the addition of Tom Moat to the board of
directors. No other changes will be effected solely as a result of the
Southside Acquisition. Southside will be dissolved and Citizens Bank will be
a wholly-owned subsidiary of the Holding Company.

REASONS FOR THE SOUTHSIDE ACQUISITION; BOARD RECOMMENDATION

The Boards of Directors of Newnan Savings and Southside believe that
the ownership of the two banks under the Holding Company as a result of the
Southside Acquisition should reduce duplicative overhead, increase
profitability, strengthen management and enhance the competitive position of
the Holding Company, Newnan Savings and Citizens Bank. The Holding Company
can offer Citizens Bank financial strength and, while maintaining its local
ties, enhance its ability to compete on an equal footing with the larger
financial institutions in and near its market area.

<PAGE>

The Board of Directors of Southside has unanimously approved the
Southside Acquisition and unanimously recommends that Southside shareholders
vote FOR the Southside Acquisition.

REGULATORY AND SHAREHOLDER APPROVALS

Consummation of the Southside Acquisition is subject to approval by the
Federal Reserve Bank of Atlanta and the Georgia Department of Banking and
Finance. As of the date hereof, applications for such approvals have been
filed and are pending. The parties do not anticipate any difficulty in
securing the necessary regulatory approvals. The Southside Acquisition must
also be approved by the affirmative vote of the holders of two-thirds of the
outstanding shares of Southside Stock. The directors and executive officers
of Southside and their affiliates own 41.77% of the outstanding Southside
Stock, and they intend to vote FOR the Southside Acquisition.

DISSENTERS' PROVISIONS

A shareholder of Southside who opposes the Southside Acquisition may
exercise certain statutory rights under the Dissenters' Provisions of the
Georgia Code if he or she files a written objection to the Southside
Acquisition with Southside before Southside's Meeting, or at the meeting, but
before the vote on the Southside Acquisition is taken. Failure to comply with
this and all of the other statutory requirements of the Dissenters'
Provisions will constitute a waiver of the right to dissent. See "Statutory
and Regulatory Provisions for Dissenting Shareholders" and "Appendix D."

DIVIDENDS

In 1995, Southside paid a cash dividend of $.31 per share to its
shareholders. Upon consummation of the Southside Acquisition, the future
dividend policies of the Holding Company will depend upon its earnings,
financial condition, applicable legal restrictions and other factors relevant
at the time the Board of Directors considers dividends. The Holding Company
contemplates payment of quarterly dividends at a rate comparable to that paid
in 1996 by Newnan Savings Bank. See "Comparative Rights of Shareholders -
Common Stock - Dividends."

TAX CONSEQUENCES

REORGANIZATION

<PAGE>

substance as an exchange by shareholders of their Newnan Savings Stock for
Holding Company Stock. Moreover, if the Southside Acquisition and the Newnan
Savings Reorganization are viewed as part of a single transaction, Interim's
transitory existence, most likely, will be disregarded and the transaction
will be treated as an exchange by shareholders of their Newnan Savings Stock
for Holding Company Stock. See "Reorganization - Tax Consequences."

ACQUISITION

As special counsel to the Holding Company, Powell, Goldstein, Frazer &
Murphy , Atlanta, Georgia, has delivered a written opinion to the respective
boards of directors of the Holding Company and Southside which states that if
the Newnan Savings Reorganization and the Southside Acquisition are treated
as part of a single transaction, Acquisition Corp.'s transitory existence,
most likely, will be disregarded and the transaction will be treated as an
exchange by Southside shareholders of their Southside Stock for Holding
Company Stock and cash pursuant to Section 351 of the Code. If the Newnan
Savings Reorganization and the Southside Acquisition are not treated as part
of a single transaction, the Southside Acquisition will not qualify as a
reorganization pursuant to Section 368(a) of the Code or an exchange pursuant
to Section 351 of the Code. See "Acquisition - Tax Consequences."

REGULATORY APPROVALS

Consummation of the Newnan Savings Reorganization and consummation of
the Southside Acquisition are subject to various conditions, including
approvals by federal and state bank regulatory authorities. Appropriate
filings have been made with the various bank regulatory authorities for all
required approvals and are pending. Consummation of the Newnan Savings
Reorganization is conditioned upon consummation of the Southside Acquisition.
Consummation of the Southside Acquisition is conditioned upon consummation of
the Newnan Savings Reorganization. See "The Newnan Savings Reorganization -
Regulatory Approvals and Conditions; Amendment and Termination" and "The
Southside Acquisition-Conditions."

INTERESTS OF MANAGEMENT IN THE TRANSACTIONS

No director or officer of Newnan Savings or Southside nor any of their
associates has any direct or indirect material interest in the Newnan Savings
Reorganization or the Southside Acquisition other than an interest resulting
solely from ownership of Newnan Savings Stock or Southside Stock or from his
or her proposed position as a director or executive officer of the Holding
Company, Newnan Savings or Citizens Bank. See "Interests of Management in
the Transactions."

Southside directors and officers will receive the same amount of merger
consideration as any other Southside shareholder. See "Terms of the Southside
Acquisition -- Consideration to Southside Shareholders." As of June 30, 1996,
Southside directors and executive officers would have received merger
consideration in the aggregate amount of $6,651,265.

COMPARATIVE RIGHTS OF SHAREHOLDERS

Both the Holding Company and Southside are incorporated under the laws
of the State of Georgia and are subject to the Georgia Business Corporation
Code. Newnan Savings is chartered under the laws of the United States of
America and is subject to federal statutes and the Rules and Regulations of
the OTS. Upon consummation of the Newnan Savings Reorganization, the
shareholders of Newnan Savings will become shareholders of the Holding
Company and their rights will be governed by the Articles of Incorporation
and Bylaws of the Holding Company. Upon

<PAGE>

consummation of the Southside Acquisition, those Southside shareholders who
receive a portion of their merger consideration in Holding Company Stock will
also have their rights governed by the Articles of Incorporation and Bylaws
of the Holding Company, which are substantially the same as Southside's. The
material differences among the Federal Stock Charter, Articles of
Incorporation and Bylaws of Newnan Savings, Southside and the Holding Company
are summarized below:

PREEMPTIVE RIGHTS

Shareholders of Newnan Savings and Southside do not have preemptive
rights and shareholders of the Holding Company will not have preemptive
rights. This means that upon a proposed sale of additional shares,
shareholders do not have the right to acquire such shares in proportion to
their present holdings of stock. This will permit the Board of Directors of
the Holding Company to utilize the authorized and unissued shares of Holding
Company Stock as it determines to be in the best interests of the Holding
Company and its shareholders. Apart from the transactions discussed in this
Joint Proxy Statement/Prospectus, management of the Holding Company does not
have any plans to issue additional shares of Holding Company Stock at the
present time.

COMPANY PREFERRED STOCK

The Articles of Incorporation of the Holding Company authorize the
issuance of up to 8,000,000 shares of preferred stock upon such terms and
conditions as the Board of Directors of the Holding Company may determine
from time to time, as well as up to 8,000,000 shares of common stock. Since
the Board could issue shares of preferred stock to raise additional capital
or for other proper corporate purposes, this difference could result in
dilution of a shareholder's percentage interest in the Holding Company.
Similarly, the Federal Stock Charter of Newnan Savings also provides for the
issuance of up to 8,000,000 shares of preferred stock. The Articles of
Incorporation of Southside do not provide for the issuance of preferred stock.

ANTITAKEOVER PROVISIONS

Certain provisions of the Articles of Incorporation of the Holding
Company, variations of which have been adopted by many other companies, are
designed to make the Holding Company a less attractive target for acquisition
of control by an outsider who does not have the support of the Holding
Company's Board of Directors.

Over the years, there have been takeovers of publicly-owned banks and
other corporations effected by a swift purchase of control through a tender
offer, commonly followed by a merger or other transformation of the acquired
company by the purchasers, who are not then dealing at arms' length because
of their control. While such a takeover may have benefits to shareholders of
the acquired company, both to those who tender and to those who do not, it
may also be detrimental to them because the suddenness and relatively short
duration of the offer may leave insufficient time for them to evaluate the
merits of the offer in comparison with other possible alternatives, and
because the terms of an ensuing merger or other transformation offered by
those newly in control may be less favorable to the remaining shareholders
than is warranted.

None of the provisions of the Holding Company's Articles of
Incorporation will prevent the tender for or other acquisition of all or part
of the stock of the Holding Company. Rather, the

<PAGE>

objective is to discourage any attempt to gain control of the Holding Company
in a transaction which is not supported by its Board of Directors by
deterring or delaying such an attempt. This will give the Holding Company a
better opportunity to analyze any prospective offers and to make a careful
recommendation to shareholders. The Holding Company believes this is
desirable, although it recognizes that such provisions could have the effect
of making more difficult the acquisition of control, the accomplishment of a
business combination or a change of management, even if such actions are
considered to be in their best interests by the holders of a majority of the
outstanding shares.

While the decision to include antitakeover provisions in the Holding
Company's Articles of Incorporation was influenced by concerns of a hostile
tender offer, the Holding Company has no knowledge of any hostile efforts,
pending or proposed, by any outside person or group to obtain control of
Newnan Savings, Southside or the Holding Company. The directors of the
Holding Company and Newnan Savings have unanimously approved the Holding
Company's Articles of Incorporation.

The antitakeover provisions of the Holding Company's Articles of
Incorporation consist of Articles 7, 8, 9, 13 and 14 which are described
under the heading "Comparative Rights of Shareholders - Antitakeover
Provisions." The Articles of Incorporation and Bylaws of the Holding Company
do not contain other provisions which the Holding Company considers as having
an effect of deterring takeovers, and the Holding Company does not have plans
to propose further provisions to shareholders concerning deterrence of
takeovers. The Federal Stock Charter of Newnan Savings also contains
antitakeover provisions. The Articles of Incorporation of Southside do not
contain any such provisions.

MARKET FOR CAPITAL STOCK
NEWNAN SAVINGS

Newnan Savings Stock is traded over-the-counter on the Nasdaq National
Market System under the symbol "NFSL." As of May 31, 1996, there were 600
holders of record of such shares. As of May 31, 1996, Newnan Savings Stock
was trading at $18.50. Immediately prior to the public announcement of the
Southside Acquisition on November 3, 1995, Newnan Savings Stock was trading
at $15.25. Newnan Savings Stock has traded since January 1994 at prices
ranging from a high of $18.50 to a low of $7.50, as shown below:

Newnan Savings Stock
Price Per Share
--------------------
For the Quarter Ending High Low
---------------------- ---- ---
March 31, 1994 $9.50 $7.50

June 30, 1994 10.50 8.50

September 30, 1994 12.00 9.00

December 31, 1994 12.00 10.00

March 31, 1995 14.25 10.00

June 30, 1995 14.25 12.00

<PAGE>

Newnan Savings Stock
Price Per Share
--------------------
For the Quarter Ending High Low
------------------ ---- ---
September 30, 1995 15.50 13.00

December 31, 1995 17.25 15.25

March 31, 1996 18.00 16.00

Newnan Savings paid quarterly dividends of $0.05 per share during the
quarter ending June 30, 1994, $0.05 per share during the quarter ending
September 30, 1994, $0.06 during the quarter ending December 31, 1994, $0.07
during the quarter ending March 31, 1995, $0.07 per share during the quarter
ending June 30, 1995, $0.08 during the quarter ending September 30, 1995, $0.09
per share during the quarter ending December 31, 1995, and $0.10 per share
during the quarter ending March 31, 1996.

SOUTHSIDE

Southside Stock is not traded on an established public trading market.
However, Southside is aware of several private trades of its stock. As of
June 30, 1996, there were 683 holders of record of such shares. There have
been no trades of Southside Stock during the first two quarters of 1996.
Immediately prior to the public announcement of the Southside Acquisition on
November 3, 1995, Southside Stock was trading at $25.00. Since January 1994,
based on information regarding private trades of which Southside is aware,
Southside Stock has traded at prices ranging from a high of $28.00 to a low
of $21.00, as shown below:

Southside Stock
Price Per Share
--------------------
For the Quarter Ending High Low
------------------ ---- ---
March 31, 1994 $22.60 $21.67

June 30, 1994 24.00 21.67

September 30, 1994 -- --

December 31, 1994 25.00 25.00

March 31, 1995 25.00 21.00

June 30, 1995 -- --

September 30, 1995 28.00 25.00

December 31, 1995 25.00 25.00

March 31, 1996 -- --

Southside declared a 5% stock dividend in 1994. Southside paid no cash
dividends in 1994. Southside declared an annual cash dividend of $0.31 per
share during 1995.

<PAGE>

COMPARATIVE INFORMATION

The following table sets forth certain comparative per share data
relating to income, cash dividends and book value on (a) a historical basis
per share for Newnan Savings and Southside; (b) a pro forma combined basis
per share of Newnan Savings Stock, giving effect to the proposed acquisition;
and (c) an equivalent pro forma basis per share of Southside Stock, giving
effect to the proposed acquisition. The Newnan Savings pro forma combined
information and the Southside pro forma equivalent information give effect to
the proposed acquisition using the purchase method of accounting. In
accordance with the Acquisition Agreement, Southside shareholders will
receive $41.00 per share of common stock held, reduced by a pro rata portion
of a special reserve to be established as a holdback against potential losses
(over a defined amount) that could occur relating to certain loans to two
borrowers of Citizens Bank. Certain stockholders, as defined in the
agreement, may elect to receive shares of Holding Company Stock up to an
aggregate of 145,000 shares, in exchange for Southside shares. The exchange
ratio is based on the market value, as defined in the Acquisition Agreement,
of a share of Holding Company Stock provided that for purposes of determining
the exchange ratio, the market value shall not be less than $15.50 per share
nor greater than $20.00 per share. For purposes of this comparative per share
data, it has been assumed that the full 145,000 shares will be issued to
Southside shareholders in the acquisition and the remainder of the purchase
price will be in cash. In addition, the market value of Holding Company Stock
is assumed to be $18.50 per share, the market value on May 31, 1996,
resulting in an exchange ratio of approximately 2.2162.

The pro forma data are presented for information purposes only and are
not necessarily indicative of the results of operations or combined financial
position that would have resulted had the proposed acquisition been
consummated at the dates or during the periods indicated, nor are they
necessarily indicative of future results of operations or combined financial
position.

The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Newnan
Savings and Southside, including the notes thereto, appearing elsewhere
herein.

Newnan Savings Southside
-------------- ----------
Year ended Year ended
3/31/96 12/31/95
-------------- ----------
Net income per common share

Historical 2.71 3.29
Pro forma combined 2.78 N/A
Pro forma equivalent N/A 6.16(1)

Dividends per common share
Historical 0.34 0.31
Pro forma equivalent N/A 0.75(2)

<PAGE>

Newnan Savings Southside
-----------------------------------
3/31/96 3/31/96
-----------------------------------
Book Value per common share
Historical 13.90 26.20
Pro forma combined 14.32 N/A
Pro forma equivalent N/A 31.74(1)

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

(1) Determined by multiplying the pro forma combined amount by the assumed
exchange ratio of 2.2162.

(2) Determined by multiplying the historical amount by the assumed exchange
ratio of 2.2162.

THE NEWNAN SAVINGS REORGANIZATION

Consummation of the Newnan Savings Reorganization is conditioned upon
consummation of the Southside Acquisition. Consummation of the Southside
Acquisition is conditioned upon consummation of the Newnan Savings
Reorganization. Reference is made to the copy of the Plan of Reorganization
set forth in full as Appendix A to this Joint Proxy Statement/Prospectus for
a complete statement of the terms of the Newnan Savings Reorganization. The
statements contained herein with respect to the Plan of Reorganization are
qualified in their entirety by the foregoing reference.

PARTIES TO THE NEWNAN SAVINGS REORGANIZATION

The parties to the Newnan Savings Reorganization are Newnan Savings,
the Holding Company and Interim. Newnan Savings is a federal savings bank
organized and operating pursuant to the Home Owners Loan Act and the Rules
and Regulations of the OTS. As of the close of business on the Record Date,
Newnan Savings had 8,000,000 shares of common stock, $1.00 par value,
authorized, of which 1,459,407 shares were issued and outstanding. The
Holding Company is a Georgia corporation, and it was organized on October 26,
1995 at the direction of Newnan Savings. As of the close of business on the
Record Date, the Holding Company had 8,000,000 shares of common stock, $1.00
par value, authorized, of which one share was issued and outstanding. Interim
is an interim federal savings bank organized at the direction of Newnan
Savings for the sole purpose of facilitating the Newnan Savings
Reorganization. At the close of business on the Record Date, Interim had
8,000,000 shares of common stock ("Interim Stock"), $1.00 par value,
authorized, of which one share was issued and outstanding and held of record
by the Holding Company.

TERMS OF THE NEWNAN SAVINGS REORGANIZATION

The reorganization of Newnan Savings into a holding company structure
is proposed to be accomplished by merging Interim with and into Newnan
Savings pursuant to the terms of the Plan of Newnan Savings Reorganization.
Newnan Savings will be the survivor of the merger with Interim (the
"Surviving Bank") and will be a wholly-owned subsidiary of the Holding
Company. Interim will cease to exist.

<PAGE>

EFFECTIVE DATE

If the shareholders of Newnan Savings approve the Plan of Reorganization
by the necessary vote, the merger of Interim with Newnan Savings will be
effective and the Newnan Savings Reorganization will be consummated as of the
date specified in the Articles of Combination which will be approved by the OTS
in accordance with the provisions of 12 C.F.R. Section 552.13.

CONSIDERATION TO SHAREHOLDERS

Each share of Newnan Savings Stock shall, by virtue of the Newnan Savings
Reorganization and without any action on the part of such shareholder, be
converted into the right to receive one share of Holding Company Stock. The
parties to the Newnan Savings Reorganization determined the exchange ratio in
order to ensure that each shareholder of Newnan Savings would have an equivalent
ownership position in the Holding Company. Newnan Savings has not requested
an opinion on the fairness of the exchange ratio by a financial advisor.

EFFECT OF THE NEWNAN SAVINGS REORGANIZATION

The Plan of Reorganization provides that Newnan Savings shall be the
Surviving Bank. Neither the Federal Stock Charter nor the Bylaws of Newnan
Savings nor Newnan Savings' officers and directors will be changed as a result
of the Newnan Savings Reorganization.

REASONS FOR THE NEWNAN SAVINGS REORGANIZATION; BOARD RECOMMENDATION

The Board of Directors of Newnan Savings believes that the Newnan Savings
Reorganization is in the best interests of Newnan Savings because a holding
company is a more modern corporate structure for a financial institution and can
acquire interests in and operate banks located throughout Georgia and, if deemed
appropriate, elsewhere in the Southeast.

A holding company will also have greater corporate flexibility, such as
the right to issue stock, borrow money and redeem stock under certain
circumstances, than Newnan Savings has at the present time. A holding company
may also, subject to the limitations of the Savings and Loan Holding Company Act
(which allows unrestricted activities only for unitary savings and loan holding
companies) and the Bank Holding Company Act (which limits activities for bank
holding companies to those deemed to be closely related to banking), engage in
certain nonbanking activities and form non-bank subsidiaries. Since many of
Newnan Savings' competitors are already members of a holding company system,
Newnan Savings believes that the corporate flexibility afforded by a holding
company structure will better enable the Holding Company to compete with other
financial institutions and will place the Holding Company in a better position
for future growth.

Apart from the proposed Southside Acquisition, Newnan Savings and the
Holding Company do not have any understandings or commitments to make
acquisitions, to issue additional shares of Holding Company Stock or to engage
in new activities. Management of the Holding Company believes, however, that if
the Newnan Savings Reorganization is consummated, there may be opportunities for
additional acquisitions and new activities for the Holding Company which the
Board of Directors might consider to be beneficial to the Holding Company and
its shareholders.

14
<PAGE>

Although cognizant of the aforementioned advantages to forming a holding
company, because Newnan Savings' decision to do so was based upon the Southside
Acquisition, the Board of Directors of Newnan Savings decided to condition the
Newnan Savings Reorganization on the simultaneous consummation of the Southside
Acquisition.

SURRENDER OF STOCK CERTIFICATES

As soon as practicable after the effective date of the Newnan Savings
Reorganization, a Letter of Transmittal furnishing instructions for surrendering
Newnan Savings Stock certificates (and for replacing any lost, stolen or
destroyed stock certificates) will be mailed to each shareholder of record as of
the close of business on the date prior to the effective date of the Newnan
Savings Reorganization. Each Newnan Savings shareholder will be urged to return
this Letter of Transmittal, as soon as possible, together with his or her Newnan
Savings Stock certificates to American Stock Transfer & Trust Company, New York,
New York, acting as exchange agent (the "Exchange Agent") for the Holding
Company. As soon as practicable after receipt by the Exchange Agent of a
shareholder's Newnan Savings Stock certificate or certificates, such shareholder
will be mailed the consideration to which he or she is entitled pursuant to the
Plan of Reorganization.

As of the effective date of the Newnan Savings Reorganization, each
certificate which prior to that time represented one or more outstanding shares
of Newnan Savings Stock will be deemed for all corporate purposes only to
evidence the right to receive Holding Company Stock or cash in accordance with
the Plan of Reorganization. Until any such Newnan Savings Stock certificate is
surrendered (or suitable arrangements are made for any lost, stolen or destroyed
certificate according to Newnan Savings' usual procedures), the holder of the
Newnan Savings Stock certificate (a) will not be issued a certificate
representing the shares of Holding Company Stock which such stock certificate
may entitle the shareholder to receive; (b) will not be paid the cash which such
stock certificate may entitle the shareholder to receive; (c) except to the
extent granted by law, will not have any voting rights in respect of the shares
of Holding Company Stock which such stock certificate may entitle the
shareholder to receive; and (d) will not be paid dividends or other
distributions in respect of the shares of Holding Company Stock which such stock
certificate may entitle the shareholder to receive. Any dividends or
distributions or other cash payable to shareholders will be retained, without
interest, for the shareholder's account until surrender of his or her stock
certificate.

REGULATORY APPROVALS AND CONDITIONS; AMENDMENT AND TERMINATION

The Board of Directors of Newnan Savings has unanimously approved the
terms of the Newnan Savings Reorganization and unanimously recommends that
shareholders of Newnan Savings vote FOR the Newnan Savings Reorganization. The
directors of the Holding Company and Interim have also unanimously approved the
terms of the Newnan Savings Reorganization.

Consummation of the Newnan Savings Reorganization is subject to various
conditions set forth in the Plan of Reorganization including the following: (a)
approval of the Plan of Reorganization by the holders of at least 50.1% of the
outstanding shares of Newnan Savings Stock; (b) approval by the OTS and the
Georgia Department of Banking and Finance; (c) compliance with applicable
federal securities laws; and (d) receipt of a favorable legal opinion from
special counsel

15
<PAGE>

to Newnan Savings and the Holding Company as to certain federal income tax
matters. One further condition to the obligation of the Holding Company and
Newnan Savings to consummate the Newnan Savings Reorganization is that the
number of shares of Newnan Savings Stock dissenting to the Newnan Savings
Reorganization shall not exceed 10% of the outstanding shares of Newnan Savings
Stock (or 145,830). As of the date hereof, applications for approval have been
filed with the OTS and the Georgia Department of Banking and Finance, and the
tax opinion has been delivered. Newnan Savings and the Holding Company do not
anticipate any difficulty in securing the necessary regulatory approvals or in
satisfying the other conditions to consummation of the Newnan Savings
Reorganization.

The Plan of Reorganization may be amended at any time before the Newnan
Savings Reorganization becomes effective pursuant to a written agreement among
Newnan Savings, the Holding Company and Interim; provided, however, that no
amendment reducing the consideration payable to shareholders of Newnan Savings
will be valid without being approved by the shareholders of Newnan Savings.

The Plan of Reorganization may be terminated by any of the parties to the
Newnan Savings Reorganization if any lawsuit has been instituted or threatened
relating to the Newnan Savings Reorganization which makes consummation of the
Newnan Savings Reorganization inadvisable in the opinion of the Board of
Directors of any of the parties to the Newnan Savings Reorganization or if any
of the conditions to consummation of the Newnan Savings Reorganization have not
been satisfied. Newnan Savings and the Holding Company do not anticipate any
difficulty in satisfying the conditions to consummation of the Newnan Savings
Reorganization.

ACCOUNTING TREATMENT

The Newnan Savings Reorganization, if completed as proposed, will be
treated in a manner similar to a "pooling of interests" for accounting purposes.
Accordingly, under generally accepted accounting principles, the assets and
liabilities of Newnan Savings will be recorded in the financial statements of
the Holding Company at historical cost.

TAX CONSEQUENCES

THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE NEWNAN SAVINGS REORGANIZATION. THIS SUMMARY IS BASED ON THE
FEDERAL INCOME TAX LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT
TAKE INTO ACCOUNT POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING
AMENDMENTS TO APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR
ADMINISTRATIVE RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX
CONSEQUENCES OF THE NEWNAN SAVINGS REORGANIZATION, BUT DOES ADDRESS ALL MATERIAL
FEDERAL INCOME TAX CONSEQUENCES TO THE NEWNAN SAVINGS SHAREHOLDERS WITHOUT
TAKING INTO ACCOUNT THE FEDERAL INCOME TAX CONSEQUENCES OF THE NEWNAN SAVINGS
REORGANIZATION TO SHAREHOLDERS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES OR
STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT ENTITIES, DEALERS IN
SECURITIES, INSURANCE COMPANIES, OR CORPORATIONS, AMONG OTHERS). NOR DOES THIS
SUMMARY ADDRESS ANY CONSEQUENCES OF THE NEWNAN SAVINGS REORGANIZATION UNDER ANY
STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. SHAREHOLDERS, THEREFORE, ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO

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THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE NEWNAN SAVINGS REORGANIZATION,
INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND EFFECT OF
FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY
PROPOSED CHANGES IN THE TAX LAWS.

As special counsel to the Holding Company, Powell, Goldstein, Frazer &
Murphy, Atlanta, Georgia, has delivered a written opinion to the respective
boards of directors of the Holding Company and Newnan Savings which states that
the Newnan Savings Reorganization will be treated either as a tax-free
reorganization under Sections 368(a)(1)(a) and 368(a)(2)(e) of the Internal
Revenue Code of 1986 (the "Code"), or as a tax-free exchange under Section 351
of the Code. In form, the merger of Interim with and into Newnan Savings is
structured to qualify as a reorganization within the meaning of Sections
368(a)(1)(a) and 368(a)(2)(e) of the Code. However, because Interim was formed
solely for the purpose of participating in the Newnan Savings Reorganization,
will engage in no other business activities, and will go out of existence on the
effective date of the Newnan Savings Reorganization, special counsel believes
that Interim's transitory existence may be disregarded for tax purposes, and the
transaction may be treated in substance as an exchange by shareholders of their
Newnan Savings Stock for Holding Company Stock. Moreover, if the Southside
Acquisition and the Newnan Savings Reorganization are viewed as part of a single
transaction, Interim's transitory existence, most likely, will be disregarded
and the transaction will be treated as an exchange by shareholders of their
Newnan Savings Stock for Holding Company Stock. Special counsel's opinion
further states that, in either case of the Newnan Savings Reorganization being
treated as a tax-free reorganization or a tax-free exchange, the federal income
tax consequences will be as follows:

(a) No gain or loss will be recognized for federal income tax
purposes by Newnan Savings shareholders upon the exchange of their shares
of Newnan Savings Stock for Holding Company Stock.

(b) The aggregate basis of the shares of Holding Company Stock to
be received by Newnan Savings shareholders will be the same as the
aggregate basis of Newnan Savings Stock surrendered in exchange therefor.

(c) The holding period of the Holding Company Stock to be received
by each Newnan Savings shareholder will include the period during which
the shares of Newnan Savings Stock surrendered in exchange therefor had
been held, provided such shares were held by such shareholder as a capital
asset at the effective time of the Newnan Savings Reorganization.

(d) Newnan Savings shareholders who exercise their statutory right
to dissent and receive solely cash in exchange for their shares of Newnan
Savings Stock will be treated as having received such payments as
distributions in redemption, as provided in Section 302(a) of the Internal
Revenue Code, of shares of Newnan Savings Stock. Each affected Newnan
Savings shareholder will be required to consult such shareholder's own tax
advisor for the tax effect of such redemption (i.e., exchange treatment or
dividend) in light of such shareholder's particular facts or
circumstances.

(e) No gain or loss will be recognized by the Holding Company or
Interim as a consequence of the Newnan Savings Reorganization.

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(f) No gain or loss will be recognized by Newnan Savings as a
consequence of the Newnan Savings Reorganization, except for deferred gain
or loss recognized pursuant to Treasury Regulations issued under Section
1502 of the Code.

THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX
CONSEQUENCES OF THE NEWNAN SAVINGS REORGANIZATION. SHAREHOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED
TRANSACTION TO THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR
LOCAL LAW.

THE SOUTHSIDE ACQUISITION

Consummation of the Newnan Savings Reorganization is conditioned on
consummation of the Southside Acquisition (although the parties to the Plan of
Reorganization may waive this condition). Consummation of the Southside
Acquisition is conditioned on consummation of the Newnan Savings Reorganization.
Reference is made to the copies of the Acquisition Agreement set forth in full
as Appendix B to this Joint Proxy Statement/Prospectus for a complete statement
of the terms of the Southside Acquisition. The statements contained herein with
respect to the Acquisition Agreement are qualified in their entirety by the
foregoing reference.

PARTIES TO THE SOUTHSIDE ACQUISITION

The parties to the Southside Acquisition are Newnan Savings, Southside,
Citizens Bank, Southside Acquisition Corp. and the Holding Company. Southside is
a Georgia corporation with 5,000,000 shares of common stock, $10.00 par value,
authorized, of which 382,232 were issued and outstanding as of the Record
Date. Citizens Bank is a commercial bank organized and operating pursuant to the
Georgia Financial Institutions Code. All of the issued and outstanding common
stock of Citizens Bank is held by Southside. Southside Acquisition Corp. is a
Georgia corporation, and it was organized on October 26, 1995 at the direction
of the Holding Company for the sole purpose of facilitating the Southside
Acquisition. As of the close of business on the Record Date, Southside
Acquisition Corp. had 8,000,000 shares of common stock ("Southside Acquisition
Corp. Stock"), $1.00 par value, authorized, of which one share was issued and
outstanding and held of record by the Holding Company. Information concerning
Newnan Savings and the Holding Company is set forth under the heading "The
Newnan Savings Reorganization - Parties to the Newnan Savings Reorganization."

TERMS OF THE SOUTHSIDE ACQUISITION

GENERAL

The acquisition by the Holding Company of Southside is proposed to be
accomplished by merging Southside Acquisition Corp. with and into Southside
pursuant to the terms of the Acquisition Agreement. Southside will be the
survivor of the merger and will be a wholly-owned subsidiary of the Holding
Company. Southside Acquisition Corp. will cease to exist. Southside will then be
dissolved and the Holding Company will amend its Articles to change its
corporate title to "Southside Financial Group, Inc." Citizens Bank, whose
officers and directors will remain unchanged, will be a wholly-owned subsidiary
of the Holding Company.

<PAGE>

EFFECTIVE DATE

If the shareholders of Southside approve the Acquisition Agreement by the
necessary vote, and if the shareholders of Newnan Savings approve the Newnan
Savings Reorganization by the necessary vote, and all other conditions to both
transactions are satisfied, the Southside Acquisition will be effective as of
the date specified in the certificate of merger which will be issued by the
Georgia Secretary of State in accordance with the provisions of Section 7-1-535
of the Georgia Financial Institutions Code.

CONSIDERATION TO SOUTHSIDE SHAREHOLDERS

The amount of the Merger Consideration was determined through
arms-length negotiations between representatives of Newnan Savings and
Southside. Southside has not received and does not plan to receive an opinion
on the fairness of the consideration by a financial advisor. Each share of
Southside Stock issued and outstanding on the effective date of the Southside
Acquisition shall, by virtue of the Southside Acquisition and without any
action on the part of such shareholder, be converted into the right to
receive Merger Consideration which shall be cash in the amount of $41.00 per
share of Southside Stock, less a pro rata portion of the Special Reserve. The
parties to the Acquisition Agreement have agreed that the Special Reserve be
established with respect to certain loans to two borrowers of Citizens Bank.
While Citizens Bank and Southside believe that the existing reserves are
adequate, in order to resolve any concerns in this regard, the parties have
agreed that at the closing date, a portion of the cash purchase price payable
to Southside shareholders shall be set aside in the Special Reserve. The
Special Reserve shall be in a maximum amount equal to $558,000 ($1.46 per
share), less any specific reserves with respect to the loans in question and
the amount by which the general loan loss reserve at Citizens Bank exceeds
that amount which would be deemed "adequate" pursuant to Citizens Bank's
existing valuation methodology for determining the adequacy of the loan loss
reserves. Based on the maximum amount of the Special Reserve, Southside
shareholders would receive $39.54 per share. However, the amount of the
Special Reserve at June 30, 1996 was $162,400, or $0.42 per share.
Therefore, as of June 30, 1996, Southside shareholders would receive merger
consideration of $40.58 per share.

The Acquisition Agreement provides for semi-annual review of any amounts
in the Special Reserve by management of Newnan with B.D. Murphy, Buford
Chandler and Gary McGaha (or their successors) to review the status of the
loans and the status of the Special Reserve, and to calculate and authorize
payments, if any, to Southside shareholders.

Following the Closing Date, any payments received with respect to loans
in question shall be applied first to the repayment of all direct,
out-of-pocket collection costs and expenses payable to third parties with
respect to the loans. The balance of any such payments, regardless of the
source of such payments, shall be applied to repay the "Net Book Amount" of
each loan in full, and thereafter shall be the face amount of such loan at
the Closing Date, plus interest thereafter at the non-default rate stated in
the respective loan documents, less the amount of any specific reserves
allocated to the loan in question, the amount of the excess loan loss reserve
allocated to the loan in question, and the amount of the Special Reserve
allocated to each loan at the Closing Date.

At June 30, 1998, the parties shall make a final settlement of the
Special Reserve, based on the amount and condition of the loans in question
and the amount of the Special Reserve at that time. The Special Reserve shall
terminate if, prior to the Closing Date, it is reduced to zero as a result of
the specific loan loss reserves allocated against the loans in question and
any excess general loan loss reserves, and, following the Closing Date, the
Special Reserve will terminate upon final payment to the Southside
shareholders of any sums due thereunder.

Any holder of Southside Stock who owns or controls 5,000 or more shares of
Southside Stock may elect (not later than the adjournment of the shareholders'
meeting at which the Southside Acquisition is approved by the shareholders) to
receive up to but not more than fifty percent of his or her Merger Consideration
in the form of shares of Holding Company Stock. However, the aggregate number of
shares of Holding Company Stock issued in connection with the Southside
Acquisition shall not exceed 145,000 shares. Each share of Southside Stock which
is to be converted into Holding Company Stock shall be converted into the number
of shares or such fractions of a share which shall be equal to the Net Cash
Price divided by the market value of Newnan Savings Stock (the "Exchange
Ratio"). The market value shall represent the per share market value of Newnan
Savings Stock at the effective date and shall be determined by calculating the
average of the closing prices (or if there are no reported trades, the average
of the closing bid and asked prices) of Newnan Savings stock as reported on the
Nasdaq NMS on each of the 20 trading days ending on the fifth trading day
immediately preceding the effective date; provided, that for purposes of
calculating the Exchange Ratio, the market value shall not be less than $15.50
per share nor greater than $20.00

<PAGE>

per share. Each holder of shares of Southside Stock exchanged for Holding
Company Stock who would otherwise have been entitled to receive a fraction of a
share of Holding Company Stock shall receive in lieu thereof cash without
interest in an amount equal to such fractional part of a share of Holding
Company Stock multiplied by the Net Cash Price per share.

BACKGROUND OF THE SOUTHSIDE ACQUISITION

During the second quarter of 1995, the Board of Directors of Southside
began to seek expressions of interest from various financial institutions.
After discussions with five banks, Southside received four offers. On September
21, 1995, Newnan Savings presented Southside with its written proposal to
acquire Southside. After follow-up discussions between J. Littleton Glover, Jr.
and Tom Moat, Chairman of the Board and President, respectively, of Newnan
Savings, and the Negotiating Committee of the Board of Directors of Southside,
Newnan Savings amended its offer on October 10, 1995 to increase the price per
share to be paid to the shareholders of Southside. The Board chose the offer
presented by Newnan Savings because Newnan Savings offered shareholders the
highest price per share.

There is no, nor has there ever been any, affiliation between Newnan
Savings and Southside. Mr. Glover and Mr. Moat were the primary negotiators on
behalf of Newnan Savings (the Holding Company was not yet organized) and B.D.
Murphy III, Chairman of the Board of Southside, and the Negotiating Committee of
the Board of Directors of Southside took the primary role in negotiations on
behalf of Southside.

REASONS FOR THE SOUTHSIDE ACQUISITION

NEWNAN SAVINGS AND THE HOLDING COMPANY

The Boards of Directors of Newnan Savings and the Holding Company believe
that the Southside Acquisition, with ultimately the Holding Company being both a
savings and loan holding company and a bank holding company since Newnan Savings
and Citizens Bank will be held separately, will enable the Holding Company and
both financial institutions to benefit from a greater asset base, a broader
range of financial products, a greater geographic base and increased managerial
resources, while allowing both institutions to remain home town banks, therefore
enabling both to be better poised to compete in the highly competitive
metropolitan Atlanta market. Although the two banks will operate as separate
entities, the common holding company should allow both to reduce certain
duplicative overhead expenses and increase profitability. See also "Interests
of Management in the Transactions."

SOUTHSIDE

The Board of Directors of Southside believes the Southside Acquisition is
in the best interest of Southside and its shareholders based on a number of
factors, including the per share purchase price offered by the Holding Company,
the absence of an established trading market for Southside Stock, and the
expectation that the Southside Acquisition will result in a financial
institution with stronger financial and managerial resources.

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<PAGE>

All of the directors and executive officers of Southside, who beneficially
own an aggregate of 41.77% of Southside Stock, have indicated that they intend
to vote their shares of Southside Stock FOR the Southside Acquisition and
unanimously recommend that all Southside shareholders vote FOR the Southside
Acquisition. See also "Interests of Management in the Transactions."

SURRENDER OF STOCK CERTIFICATES

As soon as practicable after the effective date of the Southside
Acquisition, a Letter of Transmittal furnishing instructions for surrendering
certificates representing Southside Stock (and for replacing any lost, stolen or
destroyed certificates) will be mailed to each shareholder of record as of the
close of business on the date prior to the effective date of the Southside
Acquisition. Each shareholder will be urged to return this Letter of
Transmittal, as soon as possible, together with his or her stock certificates to
Newnan Savings, acting as exchange agent (the "Exchange Agent") for the Holding
Company. As soon as practicable after receipt by the Exchange Agent of a
shareholder's stock certificate or certificates, such shareholder will be mailed
the consideration to which he or she is entitled pursuant to the Acquisition
Agreement.

As of the effective date of the Southside Acquisition, each certificate
which prior to that time represented one or more outstanding shares of Southside
Stock will be deemed for all corporate purposes only to evidence the right to
receive the consideration which the holder of the certificate is entitled to
receive pursuant to the Acquisition Agreement. Until any such stock certificate
is surrendered (or suitable arrangements are made for any lost, stolen or
destroyed certificate according to the usual procedures of Southside), the
holder of the stock certificate (a) will not be paid the cash which such stock
certificate may entitle the shareholder to receive; (b) will not be issued a
certificate representing the shares of Holding Company Stock which such stock
certificate may entitle the shareholder to receive; (c) except to the extent
required by law, will not have any voting rights in respect of the shares of
Holding Company Stock which such stock certificate may entitle the shareholder
to receive; and (d) will not be paid dividends or other distributions in respect
of the shares of Holding Company Stock which such stock certificate may entitle
the shareholder to receive. Any dividends or distributions or other cash payable
to shareholders will be retained, without interest, for the shareholder's
account until surrender of his or her stock certificate.

REPRESENTATIONS AND WARRANTIES

The Acquisition Agreement contains customary representations and
warranties by the Holding Company, Newnan Savings, Southside, Citizens Bank and
Southside Acquisition Corp. Such representations and warranties relate to, among
other things, the corporate existence and capital structure of each party; the
accuracy and completeness of each party's financial statements delivered
pursuant to the Acquisition Agreement; the absence of certain changes and events
in the affairs of each party since September 30, 1995; the adequacy of loan loss
reserves maintained by each party; the absence of any delinquencies in the
payment of taxes; the compliance by each party with applicable environmental and
other governmental laws and regulations; the ownership by each party of valid
title to properties and assets reflected in its financial statements and to
properties and assets acquired after the date of its financial statements; the
absence of any litigation or proceedings that are reasonably expected to have a
material adverse effect on the financial condition or results of operations of
each party; the authority of each party to enter into the Acquisition Agreement;
and

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<PAGE>

the accuracy and completeness of the representations, warranties and covenants
made by each party in connection with the execution and delivery of the
Acquisition Agreement.

COVENANTS

GENERAL

The Acquisition Agreement also contains customary covenants and agreements
of the Holding Company, Newnan Savings and Southside with respect to the conduct
of the business of each prior to the effective date of the Southside Acquisition
or the termination of the Acquisition Agreement. Covenants given by Southside
include the obligation to operate its business only in the ordinary and usual
course; maintain satisfactory relationships with its customers and suppliers and
keep available the services of its employees; not dispose of any property or
incur any indebtedness except in the ordinary course of business; not make any
capital expenditure in excess of $25,000 except in the ordinary course of
business (except for the purchase of a future branch site in Fayette Pavilion);
not increase salaries, directors' fees, bonuses or employee benefits except to
the extent consistent with past practices; not make any commitments or enter
into any contracts (other than those in the ordinary course and other than those
for the acceptance of deposits and the making and selling of loans in the
ordinary course); not to issue any shares of its capital stock or any rights or
options with respect to its capital stock, except for the exercise of stock
options outstanding as of the date of the Acquisition Agreement; not to declare,
set aside or pay any dividends or make any other distributions with respect to
its capital stock; not to redeem, purchase or otherwise acquire any of its
capital stock; not to effect a stock split or reclassification of its stock; nor
to amend its Articles of Incorporation or Bylaws. Newnan Savings and the Holding
Company covenant to continue to conduct their businesses in a manner designed to
enhance long-term value and business prospects and to use all reasonable efforts
to preserve their core businesses and goodwill. Newnan Savings is further
obligated to cause a meeting of its shareholders to be held for the purpose of
considering the approval of the Newnan Savings Reorganization so that the
Southside Acquisition can be consummated, and Southside is further obligated to
cause a meeting of its shareholders to be held for the purpose of considering
the approval of the Southside Acquisition. Southside is not permitted to make,
solicit, initiate or encourage proposals or offers from any person who is not a
party to the Acquisition Agreement, relating to any recapitalization, merger,
consolidation, acquisition or purchase of all or substantially all of the assets
of, or any equity interest in Southside. Notwithstanding this provision, the
directors of Southside are not obligated under the Acquisition Agreement to take
(or not to take) any action that they are advised in writing by counsel that
their fiduciary duties, as directors, under applicable law require them to take
(or not to take).

The Holding Company, Newnan Savings and Southside will each pay its own
expenses incident to preparing for, entering into, and executing the Acquisition
Agreement and consummating the Southside Acquisition.

CONDITIONS

The obligations of the parties to the Acquisition Agreement to effect the
Southside Acquisition are subject to the fulfillment or waiver at or prior to
the effective date of the Southside Acquisition of, among others, the following
conditions: (a) the receipt of all approvals and authorizations of, and

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<PAGE>

the making of all filings and registrations with, all federal and state
authorities required for consummation of the Southside Acquisition; (b) the
taking by the parties to the Acquisition Agreement of all corporate action
necessary to effect the Southside Acquisition; (c) the approval by the Newnan
Savings shareholders of the Newnan Savings Reorganization and the approval by
the Southside shareholders of the Southside Acquisition; (d) the accuracy and
completeness in all material respects of the representations and warranties of
the parties to the Acquisition Agreement and the performance or compliance by
each of them of all of its covenants and agreements under the Acquisition
Agreement; (e) the absence of any action, suit, proceeding or claim with respect
to the Southside Acquisition; (f) the receipt by the parties to the Acquisition
Agreement of satisfactory opinions of counsel to the other parties with respect
to legal matters involved in the Southside Acquisition; (g) the execution of
covenants not to compete by the directors of Southside and Gary D. McGaha; (h)
the exercise or termination of all Southside Stock Options; and (i) the
aggregate number of shares of Southside Stock dissenting to the Southside
Acquisition shall not exceed 10% of the outstanding shares, unless the Holding
Company agrees to a larger number.

The status of all conditions to the merger are as follows: (a) the
Office of Thrift Supervision approved the Newnan Savings Reorganization on
March 25, 1996, the Federal Reserve Bank of Atlanta approved the Southside
Acquisition on May 23, 1996, and the Georgia Department of Banking and
Finance approved both transactions on May 31, 1996; (b) parties to the
Acquisition Agreement have taken all corporate action necessary to effect the
Southside Acquisition; (c) Newnan Savings shareholders will vote on the Newnan
Savings Reorganization and Southside shareholders will vote on the Southside
Acquisition at special meetings to be held on August 21, 1996; and (d) the
other conditions to the Southside Acquisition Agreement will be fulfilled
prior to closing, but after the special meeting of Southside shareholders.

TERMINATION, AMENDMENT AND WAIVER

The Acquisition Agreement may be terminated at any time prior to its
effective date, whether before or after approval of the Southside Acquisition,
by the Southside shareholders (a) by mutual consent of the parties to the
Acquisition Agreement; (b) by any of the parties to the Acquisition Agreement
if, without the fault of such terminating party, the effective date of the
Southside Acquisition shall not have occurred on or before September 30, 1996
(unless the parties have agreed to extend to a later date); (c) by any of the
parties to the Acquisition Agreement if any regulatory application is deemed
withdrawn or affirmatively denied by the applicable regulatory agency; or (d) by
any party to the Acquisition Agreement if the other party to the agreement
breaches its representations, warranties or covenants thereunder in any material
respect and such breach remains uncured for a period of thirty (30) days after
notice of such breach is given to the breaching party, or if the other party
does not meet the closing conditions set forth in the Acquisition Agreement.

At any time before or after approval of the Acquisition Agreement by the
shareholders of Southside, the Acquisition Agreement may be amended by an
agreement among the parties; after such approval, however, no amendment
decreasing the consideration to be received by Southside shareholders may be
made without the further approval by the shareholders of Southside.

ACCOUNTING TREATMENT

The Southside Acquisition, if completed as proposed, will be treated as a
"purchase" for accounting purposes. Accordingly, under generally accepted
accounting principles, the assets and liabilities of Southside will be recorded
at their fair market values in the financial statements of the Holding Company.
Costs of the acquisition in excess of the fair market value of net assets
acquired will be recorded as goodwill in the financial statements of the Holding
Company, and the goodwill and other purchase adjustments will be recorded on
the books of Citizens Bank.

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TAX CONSEQUENCES

THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE SOUTHSIDE ACQUISITION. THIS SUMMARY IS BASED ON THE FEDERAL
INCOME TAX LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE
INTO ACCOUNT POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING
AMENDMENTS TO APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR
ADMINISTRATIVE RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX
CONSEQUENCES OF THE SOUTHSIDE ACQUISITION, BUT DOES ADDRESS ALL MATERIAL FEDERAL
INCOME TAX CONSEQUENCES TO THE SOUTHSIDE SHAREHOLDERS WITHOUT TAKING INTO
ACCOUNT THE FEDERAL INCOME TAX CONSEQUENCES OF THE SOUTHSIDE ACQUISITION TO
SHAREHOLDERS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE,
AS FOREIGN PERSONS, TAX-EXEMPT ENTITIES, DEALERS IN SECURITIES, INSURANCE
COMPANIES, OR CORPORATIONS, AMONG OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY
CONSEQUENCES OF THE SOUTHSIDE ACQUISITION UNDER ANY STATE, LOCAL, ESTATE, OR
FOREIGN TAX LAWS. SHAREHOLDERS, THEREFORE, SHOULD CONSULT THEIR OWN TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE SOUTHSIDE
ACQUISITION, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.

As special counsel to the Holding Company, Powell, Goldstein, Frazer &
Murphy, Atlanta, Georgia, has delivered a written opinion to the respective
boards of directors of the Holding Company and Southside that if the Newnan
Savings Reorganization and the Southside Acquisition are treated as part of a
single transaction, Acquisition Corp.'s transitory existence, most likely, will
be disregarded and the transaction will be treated as an exchange by Southside
shareholders of their Southside Stock for Holding Company Stock and cash
pursuant to Section 351 of the Code. Special counsel's opinion further states
that, in such event, the federal income tax consequences will be as follows:

(a) No gain or loss will be recognized for federal income tax
purposes by Southside shareholders upon the exchange of their shares of
Southside Stock for Holding Company Stock.

(b) The aggregate basis of the shares of Holding Company Stock to
be received by Southside shareholders will be the same as the aggregate
basis of Southside Stock surrendered in exchange therefor.

(c) The holding period of the Holding Company Stock to be received
by each Southside shareholder will include the period during which the
shares of Southside Stock surrendered in exchange therefor had been held,
provided such shares were held by such shareholder as a capital asset at
the effective time of the Southside Acquisition.

(d) To the extent the Southside shareholders receive merger
consideration in the form of cash from the Holding Company or receive
cash from the Holding Company in lieu of fractional shares of Holding
Company Stock, Southside shareholders will be treated as having
received such payments as taxable distributions in redemption, as
provided in Section 302(a) of the Code, of shares of Southside Stock.
Each affected Southside shareholder will be required to consult

24
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such shareholder's own tax advisor for the tax effect of such redemption
(i.e., exchange treatment with basis recovery or dividend) in light of
such shareholder's particular facts and circumstances.

(e) Southside shareholders who exercise their statutory right to
dissent and receive solely cash in exchange for their shares of Southside
Stock will be treated as having received such payments as taxable
distributions in redemption, as provided in Section 302(a) of the Code, of
shares of Southside Stock. Each affected Southside shareholder will be
required to consult such shareholder's own tax advisor for the tax effect
of such redemption (i.e., exchange treatment with basis recovery or
dividend) in light of such shareholder's particular facts and
circumstances.

(f) To the extent the Southside shareholders receive merger
consideration in the form of cash from the Holding Company or receive cash
from the Holding Company in lieu of fractional shares of Holding Company
Stock, gain will be recognized on the lesser of the amount of (1) such
cash received or (2) the amount by which the fair market value of the
merger consideration received in the exchange exceeds the shareholder's
basis in Southside Stock. The character of such gain will be capital gain
provided the Southside Stock constitutes a capital asset in the hands of
the Southside shareholder. No loss may be recognized.

(g) No gain or loss will be recognized by the Holding Company or
Acquisition Corp. as a consequence of the Acquisition.

(h) No gain or loss will be recognized by Southside as a
consequence of the Acquisition, except for deferred gain or loss
recognized pursuant to Treasury Regulations issued under Section 1502 of
the Code.

If the Newnan Savings Reorganization and the Southside Acquisition are not
treated as part of a single transaction, the Southside Acquisition will not
qualify as an exchange pursuant to Section 351 of the Code, but will be treated
as a taxable transaction. Special counsel's opinion further states that, in
such event, the federal income taxes will be as follows:

(a) To the extent the Southside shareholders receive merger
consideration from the Holding Company in the form of cash or Holding
Company Stock, or cash from the Holding Company in lieu of fractional
shares of Holding Company Stock, gain or loss will be recognized for
federal income tax purposes by Southside shareholders equal to the
difference between the basis in their Southside Stock and the fair market
value of the merger consideration and other cash received in the exchange.
The character of such gain or loss will be capital gain or loss provided
the Southside Stock constitutes a capital asset in the hands of the
Southside shareholder.

(b) The aggregate basis of the shares of Holding Company Stock to
be received by Southside shareholders will be equal to the fair market
value of the Southside Stock exchanged for Holding Company Stock.

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(c) To the extent the Southside shareholders receive merger
consideration in the form of cash from the Holding Company or cash from
the Holding Company in lieu of fractional shares of Holding Company
Stock, Southside shareholders will be treated as having received such
payments as taxable distributions in redemption, as provided in Section
302(a) of the Code, of shares of Southside Stock. Each affected
Southside shareholder will be required to consult such shareholder's
own tax advisor for the tax effect of such redemption (i.e., exchange
treatment with basis recovery or dividend) in light of such
shareholder's particular facts and circumstances.

(d) Southside shareholders who exercise their statutory right to
dissent and receive solely cash in exchange for their shares of Southside
Stock will be treated as having received such payments as taxable
distributions in redemption, as provided in Section 302(a) of the Code, of
shares of Southside Stock. Each affected Southside shareholder will be
required to consult such shareholder's own tax advisor for the tax effect
of such redemption (i.e., exchange treatment with basis recovery or
dividend) in light of such shareholder's particular facts and
circumstances.

(e) No gain or loss will be recognized by the Holding Company or
Acquisition Corp. as a consequence of the Acquisition.

(f) No gain or loss will be recognized by Southside as a
consequence of the Acquisition, except for deferred gain or loss
recognized pursuant to Treasury Regulations issued under Section 1502 of
the Code.

While special counsel is of the opinion that there is substantial
authority for the position that the Reorganization and the Acquisition will
be viewed as a single transaction and, thus subject to Section 351, the
matter is not free from doubt. Special counsel cannot opine that it is more
likely than not that if the case were litigated, it would prevail in its
position that this is a Section 351 transaction.

THE TAX CONSEQUENCES TO THE SOUTHSIDE SHAREHOLDERS MAY VARY SUBSTANTIALLY
DEPENDING ON WHETHER THE SOUTHSIDE ACQUISITION QUALIFIES FOR SECTION 351
TREATMENT. LEGAL COUNSEL'S OPINION DOES NOT STATE WHETHER THE SOUTHSIDE
ACQUISITION QUALIFIES FOR SECTION 351 TREATMENT, AND DOES NOT ADDRESS ANY STATE,
LOCAL OR OTHER TAX CONSEQUENCES OF THE SOUTHSIDE ACQUISITION. SOUTHSIDE
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES OF THE SOUTHSIDE ACQUISITION TO THEM INDIVIDUALLY.

COMPARATIVE RIGHTS OF SHAREHOLDERS

COMMON STOCK

AUTHORIZATION AND ISSUANCE OF SHARES

The Holding Company is authorized by its Articles of Incorporation to
issue a maximum of 8,000,000 shares of common stock, $1.00 par value, and
8,000,000 shares of preferred stock. As of the Record Date, there was one share
of Holding Company Stock issued and outstanding. Upon issuance in the Newnan
Savings Reorganization or in the Southside Acquisition, the then outstanding
shares of Holding Company Stock will be fully paid and nonassessable.

<PAGE>

Newnan Savings is authorized by its Federal Stock Charter to issue a
maximum of 8,000,000 shares of common stock, $1.00 par value ("Newnan Savings
Stock"). As of the Record Date, there were 1,459,407 shares of Newnan Savings
Stock issued and outstanding. The outstanding shares of Newnan Savings Stock are
fully paid and nonassessable.

Southside is authorized by its Articles of Incorporation to issue a
maximum of 5,000,000 shares of common stock, $10.00 par value. As of the Record
Date, there were 382,232 shares of Southside Stock issued and outstanding. The
outstanding shares of Southside Stock are fully paid and nonassessable.

The issuance of stock by the Holding Company generally will not be subject
to regulatory or shareholder approval, and such stock may be issued for cash or
other property.

DIVIDENDS

The holders of shares of Holding Company Stock are entitled to dividends
and other distributions as and when declared by the Board of Directors of the
Holding Company out of assets legally available therefor. Dividends may be paid
in cash, property or shares of Holding Company Stock, unless the Holding Company
is insolvent or the dividend payment would render it insolvent. The same
provisions regarding dividends apply to Southside Stock. The Holding Company
cannot predict with any certainty to what extent dividends will be paid. The
Holding Company's ability to pay dividends will depend upon the dividends that
it receives from Newnan Savings and Citizens Bank, both of which are subject to
the regulatory restrictions discussed below.

As a federally chartered savings bank with capital in excess of the amount
of its fully phased-in capital requirements, Newnan Savings is authorized,
without the need for regulatory approval, to make capital distributions,
including the payment of dividends, during a calendar year up to 100% of its net
income to date during that calendar year, plus the amount that would reduce by
one-half its surplus capital ratio at the beginning of that calendar year.
Newnan Savings would, however, be required to notify OTS prior to making the
capital distribution.

Under Georgia law, a state-chartered bank must obtain regulatory approval
before a cash dividend may be paid if (1) the total classified assets at the
most recent examination of such bank exceeded 80% of the equity capital, (2) the
aggregate dividends declared or anticipated to be declared in a calendar year
exceeds 50% of the net profits, after taxes but before dividends, for the
previous calendar year or (3) the ratio of equity capital to adjusted assets is
less than 6%.

VOTING RIGHTS

The holders of Holding Company Stock, Newnan Savings Stock and Southside
Stock are entitled to one vote per share on all matters presented for action by
shareholders, including elections of directors. For additional information
concerning supermajority vote requirements, see "Comparative Rights of
Shareholders - Antitakeover Provisions.

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PREEMPTIVE RIGHTS

Shareholders of Newnan Savings and Southside do not have preemptive rights
and shareholders of the Holding Company will not have preemptive rights. This
means that upon a proposed sale of additional shares, shareholders do not have
the right to acquire such shares in proportion to their present holdings of
stock. This will permit the Board of Directors of the Holding Company to utilize
the authorized and unissued shares of Holding Company Stock as it determines to
be in the best interests of the Holding Company and its shareholders. Apart from
the transactions discussed in this Joint Proxy Statement/Prospectus, management
of the Holding Company does not have any plans to issue additional shares of
Holding Company Stock at the present time.

LIQUIDATION RIGHTS

Upon the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Holding Company, Newnan Savings or Southside, after the
payment in full of debts and other liabilities, the remaining assets, if any,
are to be distributed ratably among the shareholders.

OTHER

Neither Holding Company Stock, Newnan Savings Stock nor Southside Stock
(a) is subject to liability for further calls or to assessments by the Holding
Company, Newnan Savings or Southside, as applicable, or (b) is subject to
redemption, sinking fund or conversion provisions.

PREFERRED STOCK

The Holding Company is authorized to issue 8,000,000 shares of preferred
stock in series, and in connection with such issuance, the Board of Directors is
authorized without further vote of shareholders to fix the rights and
qualifications, limitations or restrictions of any series of the preferred
stock, including the number of shares constituting any such series and the
designation thereof, the voting rights, rights and terms of redemption, dividend
rights, liquidation preferences, and the rights and terms of conversion into
shares of any other class or series of the same or other class of stock of the
Holding Company. Currently there are no shares of preferred stock outstanding,
and the Holding Company has no current plans to issue any shares of preferred
stock. Newnan Savings has a similar charter provision for issuance of preferred
stock, but has no shares outstanding. Southside's Articles do not provide for
the issuance of preferred stock.

ANTITAKEOVER PROVISIONS

The following description of the antitakeover provisions included in the
Holding Company's Articles of Incorporation is qualified in its entirety by
reference to the Holding Company's Articles of Incorporation which are filed as
an exhibit to the Registration Statement. The antitakeover provisions included
in the Holding Company's Articles do not differ significantly from those
currently available under the Federal Stock Charter of Newnan Savings, but do
give the Board of Directors more specific guidance in the evaluation of an
acquisition proposal.

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CLASSIFICATION OF THE BOARD OF DIRECTORS

Article 7 of the Holding Company's Articles of Incorporation divides the
Board of Directors of the Holding Company into three classes, Class I, Class II
and Class III, each of which is equal in number. The directors in each class
will hold office for staggered terms of three years each, after initial terms of
one year, two years and three years, respectively. Each director also serves
until his successor is elected and qualified or until his earlier death,
resignation or removal. If the number of directors is modified, any increase or
decrease in directorships would be apportioned among the classes so as to make
all classes as nearly equal in number as possible. Newnan Savings currently has
the same provision for a staggered board. The directors of Southside, however,
are elected annually by the shareholders to serve until the next annual meeting
of shareholders and until their successors are elected and qualified.

CHANGE IN NUMBER OF DIRECTORS

Article 8 of the Articles of Incorporation of the Holding Company provides
that any change in the number of directors of the Holding Company, as set forth
in its Bylaws, would have to be made by the affirmative vote of two-thirds of
the entire Board of Directors or by the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Holding Company Stock.

The applicable provisions of the Georgia Business Corporation Code provide
that, in the absence of a provision such as Article 8, the number of directors
may be increased or decreased from time to time as provided in the Bylaws unless
the number of directors is otherwise fixed by the shareholders. Southside has no
such provision in its Articles.

The Federal Stock Charter of Newnan Savings currently provides that its
Board of Directors shall consist of not less than seven nor greater than fifteen
directors with the authorized number to be stated in the Bylaws. The Board of
Directors may amend the Bylaws to increase or decrease this number.

REMOVAL OF DIRECTORS

Article 9 of the Articles of Incorporation of the Holding Company provides
that directors of the Holding Company may be removed during their terms for
"cause" only by the affirmative vote of the holders of a majority of the
outstanding shares of Holding Company Stock; or without cause only by the
affirmative vote of the holders of at least two-thirds of the outstanding
shares. "Cause" for this purpose is defined as final conviction of a felony,
request or demand for removal by any bank regulatory authority having
jurisdiction over the Holding Company, or determination by at least two-thirds
of the incumbent directors of the Holding Company that the conduct of the
director to be removed has been inimical to the best interests of the Holding
Company.

In the absence of a provision dealing with the removal of directors, such
as Article 9, the Georgia Business Corporation Code provides that if the
directors have staggered terms, then the shareholders may remove directors only
for cause, unless the articles of incorporation or a bylaw adopted by the
shareholders provides otherwise. Southside has no such provision in its
Articles.

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<PAGE>

The Bylaws of Newnan Savings currently provide that the Board of Directors
or any individual director may be removed from office with cause only by the
affirmative vote of the holders of a majority of the shares entitled to vote in
an election of directors. There is no provision for removal of a director
without cause.

ADVANTAGES AND DISADVANTAGES OF ARTICLES 7, 8 AND 9

Articles 7, 8 and 9 of the Holding Company's Articles of Incorporation
would make it more difficult for shareholders of the Holding Company, including
those holding a majority of the outstanding shares of Holding Company Stock, to
force an immediate change in the composition of a majority of the Board of
Directors, even if the reason for the change were the performance of the present
directors. Under Article 7, the terms of only one-third of the incumbent
directors will expire each year, provided no new directorships are created and
no directors resign or are removed from office. Under Article 8, it will be more
difficult to create new directorships, and under Article 9, it will be more
difficult to remove directors without cause. Accordingly, two annual
shareholders' meetings will be required to change a majority of the directors of
the Holding Company instead of one such meeting.

Although there have been no difficulties in the past due to lack of
continuity of management, the Board believes that Articles 7, 8 and 9 will help
to assure continuity and stability in the leadership and policies of the Holding
Company and its financial institution subsidiaries. Management also believes
that such Articles will enable the Holding Company to protect the interests of
its shareholders in the event that another party, through a takeover bid or
otherwise, obtains a substantial number of shares of Holding Company Stock.

It would be impossible, assuming that no new directorships were created,
no directors resigned and no directors were removed from office, for
shareholders to change a majority of the directors at any one annual meeting
should they consider such a change desirable unless the shareholders controlled
sufficient votes to amend Articles 7, 8 or 9 (two-thirds of the outstanding
shares). Although Articles 7, 8 and 9 will make it more difficult to acquire
operating control of the Holding Company in an unfriendly manner, directors who
oppose or who are discouraged by new controlling shareholders might resign,
thereby allowing directors elected by the new controlling shareholders to fill
the vacancies created by such resignations.

SUPERMAJORITY VOTING ON CERTAIN TRANSACTIONS

Article 13 of the Articles of Incorporation of the Holding Company
provides, with certain exceptions, that any merger or consolidation involving
the Holding Company or any sale or other disposition of all or substantially all
of its assets will require the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Holding Company Stock. However,
exceptions to this rule exist (a) where no party to the merger, consolidation,
sale or other disposition of assets is the beneficial owner of 5% or more of the
outstanding shares of Holding Company Stock (taking into account the application
of certain aggregation and beneficial ownership provisions set forth in the
Articles), or (b) where two-thirds of the Board has approved a memorandum of
understanding with the other party to the transaction before such party became
the beneficial owner of 5% or more of the outstanding shares of Holding Company
Stock, or (c) where the Board of Directors of the Holding Company has approved
the particular transaction by the affirmative vote of two-thirds of

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<PAGE>

the entire Board. In cases where one of these exceptions applies, the applicable
provisions of the Georgia Business Corporation Code govern, and shareholder
approval of the transaction would require a favorable vote by a majority of all
votes entitled to be cast.

The primary purpose of this Article is to discourage any party from
attempting to acquire control of the Holding Company through the acquisition of
a substantial number of shares of Holding Company Stock followed by a forced
merger or sale of assets without negotiation with management. Such a merger or
sale might not be in the best interests of the Holding Company or its
shareholders. This provision may also serve to reduce the risk of a potential
conflict of interest between a substantial shareholder on the one hand and the
Holding Company and its other shareholders on the other.

It should be recognized that the foregoing provision could enable the
holders of a minority of the shares of Holding Company Stock to prevent a
transaction favored by the holders of a majority of such shares. Also, in some
circumstances, the Board of Directors could, by withholding its consent to such
a transaction, cause a two-thirds vote to be required to approve the
transaction, thereby enhancing the ability of management to retain control over
the affairs of the Holding Company and its financial institution subsidiaries
and their positions with the Holding Company and its bank subsidiary. However,
of the three persons who will be directors of the Holding Company at the
effective date of the Newnan Savings Reorganization and the Southside
Acquisition, only one is affiliated with Newnan Savings in a full-time
management position.

Presently, the affirmative vote of two-thirds of the outstanding shares of
Newnan Savings' and Southside's Stock is required by the regulations of the OTS
and the Georgia Financial Institutions Code, respectively, to approve a merger
or consolidation (except that in the case of Newnan Savings, the affirmative
vote of only a majority of the shares is required if the merger involves an
interim institution).

EVALUATION OF ACQUISITION PROPOSAL

Article 14 of the Holding Company's Articles of Incorporation provides
that the response of the Holding Company to any acquisition proposal made by
another party will be based on the Board's evaluation of the best interests of
the Holding Company and its shareholders. As used herein, the term "acquisition
proposal" refers to any offer of another party (a) to make a tender offer or
exchange offer for any equity security of the Holding Company, (b) to merge or
consolidate the Holding Company with another corporation or (c) to purchase or
otherwise acquire all or substantially all of the properties and assets owned by
the Holding Company.

Article 14 charges the Board, in evaluating an acquisition proposal, to
consider all relevant factors, including (a) the expected social and economic
effects of the transaction on the employees, customers and other constituents
(e.g., suppliers of goods and services) of the Holding Company and its bank
subsidiary; (b) the expected social and economic effects on the communities
within which the Holding Company operates; and (c) the consideration being
offered by the other corporation in relation (i) to the then current value of
the Holding Company as determined by a freely negotiated transaction and (ii) to
the Board of Directors' then estimate of the Holding Company's future value as
an independent entity. The enumerated factors are not exclusive, and the Board
may consider other relevant factors.

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<PAGE>

This Article has been included in the Holding Company's Articles of
Incorporation because banks are charged with providing support to and being
involved with the communities they serve, and the Board believes its obligations
in evaluating an acquisition proposal extend beyond evaluating merely the
consideration being offered in relation to the then market or book value of
Holding Company Stock. Neither the Georgia Business Corporation Code nor the
regulations of the OTS specifically enumerates the factors the board of
directors of a corporation or a bank, respectively, should consider in the event
the corporation or the bank is presented with an acquisition proposal.

While the value of the consideration offered to shareholders is the main
factor when weighing the benefits of an acquisition proposal, the Board believes
it appropriate also to consider all other relevant factors. For example, this
Article directs the Board to evaluate the consideration being offered in
relation to the then current value of the Holding Company determined in a freely
negotiated transaction and in relation to the Board's then estimate of the
future value of the Holding Company as an independent concern. The Board
believes that frequently the consideration offered in a takeover bid, even
though it may be in excess of the then market value (i.e., the value at which
shares are then currently trading), is less than that which could be obtained in
a freely negotiated transaction. In a freely negotiated transaction, management
would have the opportunity to seek a suitable partner at a time of its choosing
and to negotiate for the most favorable price and terms which reflect not only
the current value, but also the future value of the Holding Company.

One effect of this Article may be to discourage a tender offer in advance.
Often an offeror consults the board of a target corporation prior to or after
commencing a tender offer in an attempt to avoid a contest from developing. In
the opinion of the Board, this provision will strengthen its position in dealing
with any potential offeror which might attempt to acquire the Holding Company
through a hostile tender offer. Another effect of this Article may be to
dissuade shareholders who might be displeased with the Board's response to an
acquisition proposal from engaging the Holding Company in costly litigation.
This provision, however, does not affect the right of a shareholder displeased
with the Board's response to an acquisition proposal to institute litigation
against the Holding Company and to allege that the Board breached an obligation
to shareholders by not limiting its evaluation of an acquisition proposal to the
value of the consideration being offered in relation to the then market or book
value of Holding Company Stock.

Article 14 would not make an acquisition proposal regarded by the Board as
being in the best interests of the Holding Company more difficult to accomplish.
It would, however, permit the Board to determine that an acquisition proposal
was not in the best interests of the Holding Company (and thus to oppose it) on
the basis of the various factors deemed relevant. In some cases, such opposition
by the Board might have the effect of maintaining the positions of incumbent
management.

AMENDMENT OF ANTITAKEOVER PROVISIONS

Any amendment of Articles 7, 8, 9, 13 and 14 of the Holding Company's
Articles of Incorporation requires the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Holding Company Stock, unless
two-thirds of the entire Board of Directors approves the amendment. If
two-thirds of the Board approves the amendment, the applicable provisions of the
Georgia Business Corporation Code would govern, and the amendment would be
approved if the votes cast in favor of the amendment exceed the votes cast in
opposition to the amendment where a quorum is present.

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LIMITATION OF LIABILITY

Article 11 of the Holding Company's Articles of Incorporation, subject to
certain exceptions, adopts the Georgia statutory provisions eliminating the
potential personal liability of a director for monetary damages to the Holding
Company or its shareholders for certain breaches of a duty as a director. There
is no elimination of liability for (a) a breach of duty involving appropriation
of a business opportunity of the Holding Company; (b) an act or omission not in
good faith or involving intentional misconduct or a knowing violation of law;
(c) a transaction from which the director derives an improper material tangible
personal benefit; or (d) as to the types of liability set forth in Section
14-2-832 of the Georgia Business Corporation Code dealing with unlawful
distribution of corporate assets to shareholders. Article 11 does not eliminate
or limit the right of the Holding Company or its shareholders to seek injunctive
or other equitable relief not involving monetary damages.

Section 14-2-202 of the Georgia Business Corporation Code provides that a
corporation may limit the personal liability of its directors for monetary
damages for the breach of duty of care or other duty as a director so long as
there is no elimination of liability for appropriation of any business
opportunity of the corporation, for acts or omissions involving intentional
misconduct or knowing violation of the law, for unauthorized distributions of
corporate assets to shareholders, or for any transaction from which the director
derived an improper personal benefit. This provision was added to the Georgia
Code to protect directors who have acted in good faith from frivolous and
harassing claims.

Article 11 has been recommended by the Board to encourage qualified
individuals to serve and remain as directors of the Holding Company. The
Holding Company has not experienced any problems in locating and retaining
directors to date. It could experience difficulty in the future if the Holding
Company's business activities increase and diversify. Article 11 was included
also to enhance the Holding Company's ability to maintain liability insurance
for its directors at a reasonable cost. The Board of Directors believes that
Article 11 will enable the Holding Company to secure such insurance on terms
more favorable than if such a provision were not included in the Articles of
Incorporation.

The Articles of Incorporation of Southside include a comparable provision
limiting the liability of directors, but no comparable provision is included in
the Federal Stock Charter or Bylaws of Newnan Savings.

INDEMNIFICATION

The Bylaws of the Holding Company contain certain provisions which provide
indemnification to directors and officers of the Holding Company that is broader
than the protection expressly mandated in Section 14-2-850, ET SEQ. of the
Georgia Business Corporation Code. These sections expressly allow the Holding
Company to provide these broader indemnification rights to its directors and
officers, subject to shareholder approval. The broader indemnification rights
were adopted to encourage qualified individuals to serve and remain as directors
and officers of the Holding Company. Indemnification available to institutions
with federal charters is governed by 12 C.F.R. Section 545.121. A federally
chartered institution may adopt a more specific indemnification

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bylaw if it does not conflict with this regulation. Indemnification available
under Georgia law would, with only minor modifications to provide for OTS
approval before certain indemnification payments are made, also be allowed to
federally chartered institutions that adopted an appropriate indemnification
bylaw.

The indemnification provisions in the Holding Company's Bylaws require the
Holding Company to indemnify under certain circumstances persons who are parties
to any civil, criminal, administrative or investigative action, suit or
proceeding, by reason of the fact that such person was or is a director,
officer, employee or agent of the Holding Company. Except as noted below, these
persons would be indemnified against expenses (including, but not limited to,
attorney's fees and court costs) and against any judgments, fines and amounts
paid in settlement, actually and reasonably incurred by them. These persons may
also be entitled to have the Holding Company advance any such expenses prior to
the final disposition of the proceeding, upon an undertaking to repay the
Holding Company if it is ultimately determined that they are not entitled to
indemnification. In general, the Holding Company will indemnify a director,
officer, employee or agent if the Board of Directors determines the individual
acted in a manner he or she believed in good faith to be in or not opposed to
the best interests of the Holding Company and, in the case of a criminal
proceeding, if he or she had no reasonable cause to believe his or her conduct
was unlawful.

No indemnification will be provided to any person for liability resulting
from (a) any appropriation in violation of his or her duties of any business
opportunity of the Holding Company, (b) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) the
types of liability set forth in Section 14-2-832 of the Georgia Business
Corporation Code dealing with unlawful distribution of corporate assets to
shareholders, or (d) any transaction from which the director derived an improper
material tangible personal benefit.

The Holding Company, Newnan Savings and Southside are not aware of any
pending or threatened action, suit or proceeding involving any of their
directors, officers, employees or agents for which indemnification from the
Holding Company, Newnan Savings or Southside may be sought.

Insofar as indemnification for liabilities (primarily relating to public
distribution of securities) arising under the Securities Act of 1933, as amended
(the "1933 Act"), may be permitted to directors, officers and controlling
persons of the Holding Company, or to an affiliate of the Holding Company
pursuant to the Holding Company's Bylaws or otherwise, the Board of Directors
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the 1933 Act and
is therefore unenforceable. Accordingly, it is possible that the indemnification
provisions of the Bylaws may not apply to liabilities arising under the 1933 Act
unless the person to be indemnified is successful on the merits of the
proceeding.

STATUTORY AND REGULATORY PROVISIONS FOR DISSENTING SHAREHOLDERS

NEWNAN SAVINGS REORGANIZATION

Pursuant to 12 C.F.R. Section 552.14, holders of Newnan Savings Stock have
dissenters' rights with respect to the Newnan Savings Reorganization. Such
rights entitle shareholders to receive the fair or appraised value of their
shares of Newnan Savings Stock rather than having such shares

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converted into Holding Company Stock. Newnan Savings shareholders who exercise
such rights must carefully follow the procedures described herein.

In order to exercise dissenters' rights, a shareholder must deliver to
Newnan Savings, prior to voting on the Newnan Savings Reorganization, a written
demand that identifies the shareholder and requests appraisal of and payment for
his or her shares. Such demand must be submitted in addition to and separate
from any proxy or vote against the Newnan Savings Reorganization. Provided that
such shareholder does not thereafter vote in favor of the Newnan Savings
Reorganization, a shareholder who submits such a demand will be offered payment
for his shares within ten days after the effective date of the Newnan Savings
Reorganization. The price offered to such shareholder for the shares will be a
price deemed by the Holding Company to be their fair value. Such shareholder may
either accept the offered price or seek a determination of the fair value of the
shares by the OTS.

If, within 60 days after the effective date of the Newnan Savings
Reorganization, the Holding Company and any holder of Newnan Savings Stock who
has complied with the foregoing requirements do not agree as to the fair value,
then such shareholder may file a petition with the OTS, 1700 G Street, N.W.,
Washington, D.C. 20552, Attn: Director, with a copy sent by registered or
certified mail to the Holding Company, demanding a determination of the fair
value of his or her stock. A shareholder who fails to file such petition within
60 days after the effective date of the Newnan Savings Reorganization will be
deemed to have accepted Holding Company Stock in exchange for the shareholder's
Newnan Savings Stock pursuant to the terms of the Plan of Reorganization. Within
60 days after the effective date of the Newnan Savings Reorganization, each
shareholder demanding appraisal and payment must submit to the Holding Company
his or her share certificate(s) for notation thereon that an appraisal and
payment have been demanded with respect to such shares and that appraisal
proceedings are pending. Any shareholder who fails to submit his or her share
certificate(s) for such notation will no longer be entitled to appraisal rights
and will be deemed to have accepted Holding Company Stock in exchange for the
shareholder's Newnan Savings Stock pursuant to the terms of the Plan of
Reorganization. At any time within 60 days after the effective date of the
Newnan Savings Reorganization, any shareholder will have the right to withdraw
his or her demand for appraisal and accept the fair value payment for his or her
shares offered by the Holding Company.

The Director of the OTS will, as he may elect, either appoint one or more
independent persons or direct appropriate staff to appraise the shares to
determine their fair market value, as of the effective date of the Newnan
Savings Reorganization, exclusive of any element of value arising from the
accomplishment or expectation of the Newnan Savings Reorganization. The Director
after consideration of the appraisal report and the advice of appropriate staff
will, if he concurs in the valuation of the shares, direct payment by the
Holding Company of the appraised fair market value of the shares, upon surrender
of the certificates representing such stock. The cost of obtaining such a
determination may be assessed by the OTS as it deems equitable. After the
effective date of the Newnan Savings Reorganization, shareholders who exercise
their dissenters' rights will no longer be entitled to vote or to receive
dividends with respect to their shares.

One of the conditions to the Plan of Reorganization is that the holders of
no more than 145,941 shares of Newnan Savings Stock shall have filed notice
of election to dissent. If this

35
<PAGE>

condition is not satisfied, the parties to the Plan of Reorganization will not
be required to consummate the Newnan Savings Reorganization, in which event the
dissenters' rights described in this section would also terminate.

The foregoing does not purport to be a complete statement of the
provisions of 12 C.F.R. Section 552.14, and it is qualified in its entirety by
reference to said Section, which is reproduced in full as Appendix C to this
Proxy Statement. However, the foregoing does describe all material provisions of
the OTS regulations with which dissenting shareholders must comply in order to
preserve their dissenters' rights.

SOUTHSIDE ACQUISITION

Pursuant to Section 14-2-1301, ET SEQ. of the Georgia Business
Corporation Code, any holder of record of Southside Stock who objects to the
Southside Acquisition, and who fully complies with all of the provisions of
Section 14-2-1301, ET SEQ. (but not otherwise) shall be entitled to demand and
receive payment for all (but not less than all) of his or her shares of
Southside Stock if the proposed Southside Acquisition is consummated.

A shareholder of Southside who objects to the Southside Acquisition and
desires to receive payment of the "fair value" of his or her Stock:

(a) Must file a written objection to the Southside Acquisition with
Southside either prior to the meeting or at the meeting but before the vote is
taken, and the written objection must contain a statement that the shareholder
intends to demand payment for his or her shares if the Southside Acquisition is
approved; AND

(b) Must either abstain from voting or vote against approval of the
Southside Acquisition; AND

(c) Must demand payment and deposit his or her certificate(s) in
accordance with the terms of the dissenters' notice sent to the dissenting
shareholder following approval of the Southside Acquisition.

A vote against the Southside Acquisition alone will not constitute the
separate written notice and demand for payment referred to in (a) and (c) above;
dissenting shareholders must separately comply with all three conditions. Any
notice required to be given to Southside must be forwarded to Southside
Financial Group, Inc., 675 North Jeff Davis Drive, Fayetteville, Georgia 30214,
Attention: Corporate Secretary.

If the Southside Acquisition is approved, Southside will mail no later
than 10 days after the approval by certified mail to each shareholder who has
complied with conditions (a) and (b) above, written notice of such approval,
addressed to the shareholder at such address as the shareholder has furnished
Southside in writing, or, if none, at the shareholder's address as it appears on
the records of Southside. Southside will set a date by which it must receive the
payment demand, which date may not be fewer than 30 nor more than 60 days after
the date the dissenters' notice is delivered.

36
<PAGE>

The shareholder must make the written election to dissent and demand for payment
described in condition (c) above by the payment demand date as set by Southside.

If all conditions in (a), (b) and (c) above are satisfied in full, the
Holding Company is required to make a written offer within ten days of receiving
the payment demand, or within ten days after the consummation of the Southside
Acquisition, whichever is later, to each dissenting shareholder to purchase all
of such shareholder's shares of Southside Stock at a specific price. If the
Holding Company and any dissenting shareholder are unable to agree on the fair
value of the shares within sixty days, the Holding Company will commence a
proceeding in the Superior Court of Fayette County to determine the rights of
the dissenting shareholder and the fair value of his or her shares. The court
may appoint appraisers to receive evidence and to recommend a decision on fair
value. If the Holding Company does not commence the proceeding within the
sixty-day period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.

Upon compliance with the statutory procedures, dissenting shareholders
will not have any rights as shareholders of either Southside or of the Holding
Company, including, among other things, the right to receive dividends and the
right to vote on matters submitted for shareholder consideration.

The foregoing does not purport to be a complete statement of the
provisions of Section 14-2-1301, ET SEQ. of the Georgia Business Corporation
Code, and it is qualified in its entirety by reference to said sections, which
are reproduced in full as Appendix D to this Joint Proxy Statement/Prospectus.
However, the foregoing does describe all material provisions of Georgia law with
which dissenting shareholders must comply in order to preserve their dissenters'
rights.

MANAGEMENT

DIRECTORS

The Board of Directors of the Holding Company will consist of three
current Newnan Savings directors, J. Littleton Glover, Jr., Tom Moat and Ellis
A. Mansour.

Pursuant to the Holding Company's Articles of Incorporation, its directors
are divided into three classes, Class I, Class II and Class III. The initial
term of the Class I directors expires in 1999, that of the Class II directors
expires in 1998 and that of the Class III directors expires in 1997. At each
annual meeting of shareholders, the directors elected to succeed those in the
class whose terms then expire will be elected for three-year terms, so that the
term of one class of directors will expire each year.

The table below sets forth for each such person (a) the person's name and
his Class designation, (b) his or her age at March 31, 1996, (c) the year he was
first elected as a director of Newnan Savings, and (d) his position with Newnan
Savings and his other business experience for the past five years.

37
<PAGE>

<TABLE>
<CAPTION>
First
Year
Name Age Elected Business Experience
- ---- --- ------- -------------------
<S> <C> <C> <C>
J. Littleton Glover, Jr.(1) 53 1992 Chairman of the Board of the Holding
Company and Newnan Savings; Attorney,
Glover & Davis, P.A.

Tom Moat(2) 48 1992 President and Chief Executive Officer
of the Holding Company and Newnan
Savings; previously Regional Manager,
Federal Home Loan Mortgage Corporation

Ellis A. Mansour(3) 57 1979 President, Treasurer and majority
stockholder of Brothers Limited
(retail apparel store)
</TABLE>
______________
(1) Class I director.

(2) Class II director.

(3) Class III director

OFFICERS

The officers of the Holding Company will be as follows:

Name Title
---- -----
J. Littleton Glover, Jr. Chairman

Tom Moat President

Ellis A. Mansour Secretary, Treasurer

EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table provides certain summary information concerning
compensation paid or accrued by Newnan Savings to or on behalf of its Chief
Executive Officer for the last three fiscal years ended March 31, 1996, 1995 and
1994:

38
<PAGE>

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Annual Compensation
- --------------------------------------------------------- ----------------------------------
Other Long-term
Name and Annual Compensation All Other
Principal Position Year Salary Bonus Compensation Awards(3) Compensation(2)
- ------------------ ---- -------- ------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Tom Moat 1996 $126,376 $25,101 (1) 15,000 $3,198

1995 110,346 10,262 (1) -- 4,051

1994 108,000 7,112 (1) 16,500 3,696
</TABLE>

- ----------------
(1) Does not include perquisites which did not exceed the lesser of $50,000 or
10% of salary and bonus.

(2) Represents premiums paid by Newnan Savings on a disability insurance policy
and contributions made to 401(k) Plan.

(3) Mr. Moat was awarded an option to purchase the number of shares of Newnan
Savings Stock set forth under this column for the applicable years.

STOCK OPTIONS

The following table sets forth all option exercises for the fiscal year
ended March 31, 1996:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
- ------------------------------------------------------------------------------
Value of
Number of Unexercised
Shares Unexercised In-the-Money
Acquired Options at Options at
on Value FY-End (#) FY-End ($)(1)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------
Tom Moat -- -- 39,000/9,000 $353,220/5,625
- ------------------------------------------------------------------------------

- -----------------
(1) Assuming market price per share of $17.00 at March 31, 1996.

If the Newnan Savings Reorganization is consummated, all outstanding
options to purchase shares of Newnan Savings Stock will become options to
purchase shares of Holding Company Stock, without change to number of shares
subject to the options or to the exercise prices of the options, and the plans
pursuant to which such options were granted will become plans of the Holding
Company.

CERTAIN OTHER TRANSACTIONS

Newnan Savings' directors and executive officers, their immediate family
members and certain companies and other entities associated with them, have been
customers of and have had banking transactions with Newnan Savings and are
expected to continue such relationships in the

39
<PAGE>

future. The same is true for Citizens Bank's directors and executive officers,
their immediate family and certain companies and other entities associated with
them. In the opinion of each bank's management, the extensions of credit made by
the applicable bank to such individuals, companies and entities (a) were made in
the ordinary course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and (c) did not involve more than a
normal risk of collectibility or present other unfavorable features.

J. Littleton Glover, Jr., Chairman of the Board and a director of Newnan
Savings, is an attorney and President of the law firm of Glover & Davis, P.A.,
which firm serves as legal counsel for Newnan Savings and its subsidiaries. The
firm furnishes title opinions on parcels of land and improvements thereon in
Coweta County and adjacent counties which collateralize certain loans granted by
Newnan Savings. Newnan Savings accepts title opinions on properties located in
Coweta County from all local practicing attorneys provided they furnish evidence
of a $1 million lawyers' title insurance errors and omissions policy or in lieu
of such coverage, furnish Newnan Savings with a title policy with each title
opinion.

Title examination fees are paid by Newnan Savings from the loan proceeds
of the borrowing member or paid directly by the borrower. The fee charged for
this opinion is negotiable between the borrower and his attorney. The gross fees
paid to Glover & Davis, P.A. for title opinions required for loan closings as
described above during the fiscal year ended March 31, 1996 were $48,586.

As counsel to Newnan Savings during the fiscal year ended March 31, 1996,
Glover & Davis, P.A. received from Newnan Savings and its subsidiaries $44,874
in legal fees. Fees paid by Newnan Savings to Glover & Davis, P.A. for all
services rendered by Glover & Davis, P.A. to Newnan Savings are comparable to
those paid by Newnan Savings in similar transactions with nonaffiliates.

INTERESTS OF MANAGEMENT IN THE TRANSACTIONS

No director or officer of Newnan Savings or Southside, nor any of their
associates, has any direct or indirect material interest in the Newnan Savings
Reorganization or the Southside Acquisition other than an interest resulting
solely from ownership of Newnan Savings Stock or Southside Stock or from his or
her proposed position as a director or executive officer of the Holding Company,
Newnan Savings or Citizens Bank.

Each director or officer of Newnan Savings will receive, as will all
Newnan Savings shareholders, one share of Holding Company Stock for each share
of Newnan Savings Stock that he or she currently owns. In addition, all
outstanding options to purchase shares of Newnan Savings Stock will, without any
changes in the terms of the options, become options to purchase shares of
Holding Company Stock. Also see "Executive Compensation" and "Ownership of
Stock -- Newnan Savings Stock Owned by Management."

Three directors of Newnan Savings, J. Littleton Glover, Jr., Ellis A.
Mansour, and Tom Moat, will serve as the directors and officers of the Holding
Company. They will receive no additional compensation for their service as
such.

40
<PAGE>

Each director or officer of Southside will receive, as will all
Southside shareholders, merger consideration in the amount of $41.00 per
share of Southside Stock, less a pro rata portion of the Special Reserve.
Also, as will all Southside shareholders, each director or officer of
Southside who owns or controls 5,000 or more shares may elect to receive 50%
of his or her merger consideration in the form of Holding Company Stock,
provided that the number of shares of Holding Company Stock exchanged
accordingly will not exceed 145,000 shares. See "Terms of the Southside
Acquisition - Consideration to Southside Shareholders." All the Southside
directors and executive officers own or control more than 5,000 shares of
Southside Stock. As of June 30, 1996, Southside directors and executive
officers would receive merger consideration in the aggregate amount of
$6,651,265.

OWNERSHIP OF STOCK

PRINCIPAL HOLDERS OF NEWNAN SAVINGS STOCK

The following table sets forth the persons who beneficially owned, at
June 30, 1996, more than 5% of the outstanding shares of Newnan Savings
Stock to the best information and knowledge of Newnan Savings. If the Newnan
Savings Reorganization is consummated, the persons named in the table will
own the same number of shares of Holding Company Stock as they now own of
Newnan Savings Stock. Unless otherwise indicated, each person is the record
owner of and has sole voting and investment powers over his shares.

Name and Address Newnan Savings Stock Percent of Shares
of Beneficial Owner Beneficial Ownership(1) Outstanding
------------------- ----------------------- ------------------
J.Littleton Glover, Jr. 120,722(2) 8.18%
10 Brown Street
Newnan, Georgia 30264

Ellis A. Mansour 103,450(3) 6.97%
6 East Court Square
Newnan, Georgia 30263

Dennis H. McDowell 134,695(4) 9.24%
P.O. Box 858
Carrollton, Georgia 30117

Rollins Financial Counseling, Inc. 82,301(5) 5.64%
1201 Peachtree Street, Suite 1500
Atlanta, Georgia 30361

- -------------
(1) Includes certain shares owned by spouses, or as custodian or trustee for
minor children, over which shares officers and directors effectively
exercise sole or shared voting and investment power, unless otherwise
indicated.

(2) Consists of (a) 104,092 shares owned of record by Mr. Glover and (b)
options to purchase 16,630 shares.

(3) Consists of (a) 78,180 shares owned of record by Mr. Mansour and (b)
options to purchase 25,270 shares.

<PAGE>

(4) Based on records maintained by Newnan Savings and information from a
Schedule 13D filed by Mr. McDowell on November 15, 1991. There have been no
amended filings received by Newnan Savings. According to the Schedule 13D,
Mr. McDowell exercises sole voting and investment authority over these
shares.

(5) Based on records maintained by Newnan Savings and information from a
Schedule 13G filed by Rollins on March 24, 1996. There have been no amended
filings received by Newnan Savings. According to the Schedule 13G, Rollins
shares voting and investment authority over these shares.

NEWNAN SAVINGS STOCK OWNED BY MANAGEMENT

The following table sets forth the number and percentage ownership of
shares of Newnan Savings Stock beneficially owned by each director of Newnan
Savings and by all directors and executive officers as a group, at June 30,
1996. If the Newnan Savings Reorganization is consummated, the persons named
in the table will own the same number of shares of Holding Company Stock as
they now own of Newnan Savings Stock. Unless otherwise indicated, each person
is the record owner of and has sole voting and investment powers over his or
her shares.

Name and Address Newnan Savings Stock Percent of Shares
of Beneficial Owner Beneficial Ownership(1) Outstanding
------------------- ----------------------- ------------------
Thomas W. Barron 28,805(2) 1.94%
8 Featherston Drive
Newnan, Georgia

LouAnne A. Connell 24,393(3) 1.65%
12 Atkinson Street
Newnan, Georgia

Clifford A. Cranford, Jr. 13,400(4) 0.91%
139 Pickens Drive
Newnan, Georgia

J. Littleton Glover, Jr. 120,722(5) 8.18%
10 Brown Street
Newnan, Georgia

Ellis A. Mansour 103,450(6) 6.97%
6 East Court Square
Newnan, Georgia

Tom Moat 47,060(7) 3.14%
3 Brookwood Drive
Newnan, Georgia

H. Pickens Parks, Jr. 28,045(8) 1.89%
255 Mary Freeman Road
Newnan, Georgia

<PAGE>

Name and Address Newnan Savings Stock Percent of Shares
of Beneficial Owner Beneficial Ownership(1) Outstanding
------------------- ----------------------- ------------------
Jack M. Reeves 73,620(9) 4.97%
6 Briar Ridge Road
Newnan, Georgia

Holland M. Ware 37,326(10) 2.52%
212 Maple Drive
Hogansville, Georgia

All Executive Officers 520,209 31.34%
and Directors as a
Group (13 persons)
- ------------------
(1) Includes certain shares owned by spouses, or as custodian or trustee for
minor children, over which shares officers and directors effectively
exercise sole or shared voting and investment power, unless otherwise
indicated.

(2) Consists of (a) 5,060 shares owned of record by Mr. Barron and (b)
presently exercisable options to purchase 23,745 shares.

(3) Consists of (a) 8,373 shares owned of record by Ms. Connell and (b)
presently exercisable options to purchase 16,020 shares.

(4) Consists of (a) 200 shares owned of record by Mr. Cranford and (b)
presently exercisable options to purchase 13,200 shares.

(5) Consists of (a) 104,092 shares owned of record by Mr. Glover and (b)
presently exercisable options to purchase 16,630 shares.

(6) Consists of (a) 78,180 shares owned of record by Mr. Mansour and (b)
presently exercisable options to purchase 25,270 shares.

(7) Consists of (a) 8,060 shares owned of record by Mr. Moat and (b)
presently exercisable options to purchase 39,000 shares.

(8) Consists of (a) 6,435 shares owned of record by Mr. Parks and (b)
presently exercisable options to purchase 21,610 shares.

(9) Consists of (a) 52,250 shares owned of record by Mr. Reeves and (b)
presently exercisable options to purchase 21,370 shares.

(10) Consists of (a) 13,896 shares owned of record by Mr. Ware and (b)
presently exercisable options to purchase 23,430 shares.

<PAGE>

PRINCIPAL HOLDERS OF SOUTHSIDE STOCK

The following table sets forth the persons who beneficially owned, at
June 30, 1996, more than 5% of the outstanding shares of Southside Stock to
the best information and knowledge of Southside. Unless otherwise indicated,
each person is the record owner of and has sole voting and investment powers
over his or her shares.

Name and Address Southside Stock Percent of Shares
of Beneficial Owner Beneficial Ownership(1) Outstanding
------------------- ----------------------- ------------------
M.D. Waldrop, Sr. 24,750 6.48%
185 Cedar Creek Court
Fayetteville, Georgia

- -------------------
(1) Includes certain shares owned by spouses, or as custodian or trustee for
minor children, over which shares officers and directors effectively
exercise sole or shared voting and investment power, unless otherwise
indicated.

SOUTHSIDE STOCK OWNED BY MANAGEMENT

The following table sets forth the number and percentage ownership of
shares of Southside Stock beneficially owned by each director of Southside
and by all directors and executive officers as a group, at June 30, 1996.
Unless otherwise indicated, each person is the record owner of and has sole
voting and investment powers over his or her shares.

Name and Address Southside Stock Percent of Shares
of Beneficial Owner Beneficial Ownership(1) Outstanding
------------------- ----------------------- ------------------
Jack C. Bowdoin 15,671 4.10%
105 Runnymede Road
Griffin, Georgia 30223

Huie L. Bray 5,290 1.39%
136 New Hope Road
Fayetteville, Georgia

Thomas B. Chandler 10,552 2.76%
165 Dawn Drive
Fayetteville, Georgia

R.B. Dixon, Jr. 6,974(2) 1.82%
140 Thornridge Trail
Fayetteville, Georgia

Samuel L. Jones 7,874 2.06%
1943 Highway 85 S.
Fayetteville, Georgia

<PAGE>

Name and Address Southside Stock Percent of Shares
of Beneficial Owner Beneficial Ownership(1) Outstanding
------------------- ----------------------- ------------------
Jackie L. Mask 13,646 3.57%
420 Rising Star Road
Brooks, Georgia

Gary D. McGaha 10,550(3) 2.75%
187 Grooms Road
Fayetteville, Georgia

B.D. Murphy, III 8,415 2.20%
510 White Oak Drive
Newnan, Georgia

Herschel W. Pearce 10,500 2.75%
130 Forrest Hall Lane
Fayetteville, Georgia

Thomas D. Reese 7,674 2.01%
152 Hampton Road
Fayetteville, Georgia

Mike Reid 14,376 3.76%
100 Donasha Todd Court
Fayetteville, Georgia

Dr. James C. Sams 5,250 1.37%
508 Antioch Road
Fayetteville, Georgia

Joseph M. Snowden 7,894 2.07%
227 County Line Road
Fayetteville, Georgia

M.D. Waldrop, Sr. 24,750 6.48%
185 Cedar Creek Court
Fayetteville, Georgia

Barnard W. Walker 14,489(4) 3.79%
145 Mary Lynn Lane
Fayetteville, Georgia

All Directors and 163,905 41.77%
Executive Officers
as a Group
(15 persons)
- ------------------
(1) Includes certain shares owned by spouses, or as custodian or trustee for
minor children, over which shares officers and directors effectively
exercise sole or shared voting and investment power, unless otherwise
indicated.

<PAGE>

(2) Includes 5,250 shares held by Bob Dixon Builders Profit-Sharing Plan.

(3) Consists of (a) 450 shares owned of record by Mr. McGaha and (b) options
to purchase 10,100 shares.

(4) Includes 2,625 shares held by Walker Concrete.

BUSINESS

COMPANY

The Holding Company was incorporated as a Georgia corporation on October
26, 1995 for the initial purpose of acquiring all of the issued and
outstanding shares of Newnan Savings Stock pursuant to the Newnan Savings
Reorganization and acquiring all of the issued and outstanding shares of
Southside pursuant to the Southside Acquisition. As a savings and loan
holding company and a bank holding company, the Holding Company will have the
power to acquire banks and savings institutions and other companies engaged
in certain businesses deemed to be closely related to banking. The Holding
Company's Board of Directors may consider additional acquisitions in the
future. Any acquisitions of additional banks would be subject to prior
regulatory approval.

Management of the Holding Company is currently reviewing permissible
nonbanking activities for the Holding Company, but has no specific plans with
respect to such nonbanking activities. The Holding Company's future
nonbanking activities may include financial and other activities permitted by
law, and such activities could be conducted by subsidiary corporations that
have not yet been organized. Commencement of nonbanking operations by
subsidiaries, if they are organized, will be contingent upon approval by the
Board of Directors of the Holding Company and by appropriate regulatory
authorities.

Except for three directors of Newnan Savings who presently serve as the
directors and Chairman of the Board, President and Secretary/Treasurer of the
Holding Company, the Holding Company does not have any employees.

The Holding Company's main office is located at Newnan Savings' main
office, 19 Jefferson Street, Newnan, Georgia 30263. At the present, time the
Holding Company does not have any plans to establish additional offices.

NEWNAN SAVINGS

GENERAL

Newnan Savings was originally chartered by the State of Georgia in 1927
and converted to a federal mutual savings and loan association in 1955. Since
that time, Newnan Savings has been a member of the Federal Home Loan Bank
System and its savings deposits have been federally insured. In 1986, Newnan
Savings converted from a federal mutual savings and loan association to a
federal stock savings and loan association through the sale and issuance of
capital stock. In 1988, Newnan Savings converted to a federal stock savings
bank.

<PAGE>

Newnan Savings has as its primary business the solicitation of savings
accounts from the general public and the origination of mortgage loans for
the purpose of constructing, financing or refinancing one- to four- family
dwellings and other improved residential properties. Newnan Savings' income
is derived largely from interest and fees in connection with its lending
activities. Its principal expenses are interest paid on savings deposits and
operating expenses.

As of June 30, 1996, Newnan Savings had 67 full-time and part-time
employees. Newnan Savings is not a party to any collective bargaining
agreement and, in the opinion of management, Newnan Savings enjoys excellent
relations with its employees.

PROPERTIES

Newnan Savings' executive offices are located at 19 Jefferson Street,
Newnan, Coweta County, Georgia. Newnan Savings maintains its main office and
three branch offices in Newnan, as well as branches in Peachtree City,
Hogansville and LaGrange, Georgia. The addresses of the branch offices are as
follows: 71 Bullsboro Drive, Newnan, Georgia; Highway 34 East (White Oak),
Newnan, Georgia; 14 Hospital Road, Newnan, Georgia; 705 Highway 54 East,
Peachtree City, Georgia; 310 Broad Street, LaGrange, Georgia; and 410 East
Main Street, Hogansville, Georgia. Newnan Savings also has an operations
center located at 10 Olive Street, Newnan, Georgia and a mortgage origination
office located at 1874 Washington Street, Jefferson, Georgia. All of these
properties are owned (with no liens) by Newnan Savings except for the
following two offices which are leased: the branch located at Highway 34
East, Newnan, Georgia (lease expires August 1, 1999) and the mortgage
origination office located at 1874 Washington Street, Jefferson, Georgia
(lease expires April 30, 1997).

LENDING ACTIVITIES

GENERAL. The principal lending activity of Newnan Savings is the
origination of single-family conventional first mortgage loans (i.e., loans
that are neither insured nor partially guaranteed by government agencies),
mortgage loans insured or partially guaranteed by government agencies (i.e.,
FHA and VA loans), and construction loans. To a lesser extent, Newnan Savings
also makes home equity lines of credit, second mortgage loans, commercial
real estate loans and consumer loans.

In an effort to make the yields on its loan portfolio and investments
more interest rate sensitive, Newnan Savings has implemented a number of
measures. Those measures include either (a) the origination of mortgage loans
with adjustable interest rates, including adjustable mortgage loans on
residential properties and construction loans to builders, (b) the adoption
of a policy under which Newnan Savings generally originates long-term fixed
rate mortgage loans written to specifications promulgated by the Federal Home
Loan Mortgage Corporation ("FHLMC") and the Federal National Mortgage
Association ("FNMA"), and (c) maintenance of an investment portfolio of bonds
and mortgage-backed securities having maturities and average lives of five
years or less. Newnan Savings estimates that approximately 32% of its loans
as of December 31, 1995 have fixed rates of interest and 68% have maturities
or interest rates which adjusted in one year or less. The new lending and
investment policies were adopted to shorten the term of Newnan Savings'
assets and make them less susceptible to interest rate volatility.

<PAGE>

REAL ESTATE LOANS. The primary lending activity of Newnan Savings has
been the granting of conventional loans to enable borrowers to purchase
existing homes. At March 31, 1996, approximately 71% of Newnan Savings' total
loan portfolio consisted of permanent mortgages secured by residential
dwellings.

Newnan Savings' lending policies generally limit the maximum
loan-to-value ratio on residential mortgage loans to 95% of the lesser of the
appraised value or purchase price, with the condition that private mortgage
insurance be required on any home loans with loan-to-value ratios in excess
of 80%. Non-owner occupied residential loans are made up to 80% of the lesser
of the appraised value or purchase price. Multi-family residential and
commercial real estate loans and unimproved real estate loans generally do
not exceed 75% of value.

The loan-to-value ratio, maturity and other provisions of the loans made
by Newnan Savings have generally reflected the policy of making less than the
maximum loan permissible under applicable regulations, in accordance with
sound lending practices, market conditions, and underwriting standards
established by Newnan Savings. Mortgage loans made by Newnan Savings are
generally long-term loans, amortized on a monthly basis, with principal and
interest due each month. The initial contractual loan payment period for
residential loans typically ranges from 15 to 30 years. Newnan Savings'
experience indicates that real estate loans remain outstanding for
significantly shorter periods than their contractual terms. Borrowers may
refinance or prepay loans at their option.

Since 1982, Newnan Savings has offered renegotiable rate mortgages and
mortgages with five year balloons. Since early 1985, Newnan Savings has also
emphasized adjustable rate mortgages that have rate adjustments each year
based upon one-year Treasury securities. The interest rates on these
mortgages are adjustable once a year with limitations on upward adjustments
of 2% per year and 5% to 6% over the life of the loan. In 1995, Newnan
Savings offered loans which adjust a maximum 1% per year and 4% over the life
of the loan with an option in which the borrower can convert to a 30-year
fixed-rate loan at 5/8% above the market rate at the time of conversion.

Commercial property loans, including loans secured by multi-family
apartment projects with more than four units, constituted approximately
$10,808,000 or approximately 8% of Newnan Savings' loan portfolio at March
31, 1996. These loans are typically secured by improved real estate located
in Newnan Savings' primary lending area. Permanent commercial loans are made
up to 75% of the appraised value of the property and generally have a 20-year
amortization and five-year balloon payment or interest rates that adjust
annually. Although commercial real estate loans typically have shorter terms
to maturity and higher interest rates than residential mortgage loans, they
also involve greater credit risks than certain residential mortgage loans.
Commercial real estate and construction mortgage loans may involve large loan
balances to single borrowers or to groups of related borrowers. In addition,
payment experience on loans secured by income producing properties is
typically dependent on the successful operation of the properties and thus
may be subject to a greater extent to adverse conditions in the real estate
market or in the economy generally. Although adjustable rate commercial real
estate loans provide certain benefits to Newnan Savings' asset/liability
management policy, they also pose potential credit risks. Specifically, as
interest rates rise, the underlying payment by the borrower rises, increasing
the potential for default. At the same time, the marketability of the
underlying property may be adversely affected by higher interest rates.

<PAGE>

CONSTRUCTION LOANS. Newnan Savings provides interim (construction)
financing for single-family dwellings and nonresidential property. At March
31, 1996, Newnan Savings had $19,473,000 (net of undisbursed amounts
totalling $16,179,000) or 15% of total loans outstanding in interim
construction loans. Of this total, $17,533,000 (net of undisbursed amounts
totalling $13,983,000) or 13% of total loans outstanding were for residential
construction loans while $1,940,000 (net of undisbursed amounts totalling
$2,196,000) or 2% of total loans were for nonresidential or development loans.

Newnan Savings' general practice is to provide construction loan
financing for a relatively small number of builder-developers. Newnan
Savings' policy is to grant single-family construction loans up to 80% of the
appraised value for an individual's personal residence and up to 75% for
builders. Construction loans generally are made for a six-month to one-year
term. This period may be extended, subject to negotiation and the payment of
an extension fee. Interest rates are tied to a published prime rate.

Construction financing is generally considered to involve a higher
degree of credit risk than long-term financing of residential properties. The
risk of loss on a construction loan is dependent largely upon the accuracy of
the initial estimate of the property's value at completion of construction or
development and the estimated cost (including interest) of construction. If
the estimate of construction cost and the salability of the property upon
completion of the project proves to be inaccurate, the lender may be required
to advance funds beyond the amount originally committed to permit completion
of the development. If the estimate of value proves to be inaccurate, the
lender may be confronted, at or prior to the maturity of the loan, with a
project with a value that is insufficient to assure full repayment. Newnan
Savings addresses these risks by providing advances on construction loans
only after the project has been inspected by a party independent of the
lending function. These advances are computed as a percentage of the loan
amount (rather than the builder's out-of-pocket costs) and are dependent on
the completion of certain phases of construction.

Newnan Savings' underwriting criteria are designed to evaluate and
minimize the risks of each construction loan. Among other things, Newnan
Savings considers evidence of the availability of permanent financing or a
takeout commitment to the borrower, the reputation of the borrower and his or
her financial condition, the amount of the borrower's equity in the project,
an independent appraisal and review of cost estimates, pre-construction sale
and leasing information, and cash flow projections of the borrower.

CONSUMER AND OTHER LOANS. Federal regulations permit federally chartered
thrift institutions to make secured and unsecured consumer loans up to 30% of
the institution's assets. In addition, a federal thrift institution has
lending authority above the 30% category for certain consumer loans, such as
home equity loans, property improvement loans, mobile home loans, and homes
secured by savings accounts. Newnan Savings began offering consumer loans in
1981. The consumer loans granted by Newnan Savings have included loans on
automobiles and other consumer goods, as well as education loans and loans
secured by savings accounts. Newnan Savings generally limits the
loan-to-value ratios on its secured consumer loans to 80%. Newnan Savings
also originates second mortgage loans for home improvement and other
purposes. These loans generally have a 15-year amortization and are
renegotiable in five years or have a seven-year term with a fixed rate of
interest. Newnan Savings limits the loan-to-value ratios on its second
mortgage loans to 80%. As of

49
<PAGE>

March 31, 1996, second mortgage loans (which include home improvement loans)
and other secured consumer loans amounted to approximately $3,141,000 or
approximately 2% of Newnan Savings' total loan portfolio. Newnan Savings
believes that the shorter term and the normally higher interest rates
available on these types of loans have been helpful in maintaining profitable
spread between Newnan Savings' average loan yield and its cost of funds.

INVESTMENT ACTIVITIES

Interest income from cash deposits and investment securities generally
provide the second largest source of income for Newnan Savings after interest
payments on loans. At March 31, 1996, Newnan Savings' interest-bearing
deposits and investment securities portfolio of $32,451,000 consisted
primarily of Federal Home Loan Bank ("FHLB") overnight and fixed term
deposits, U.S. government and agency obligations, and mortgage-backed
securities.

Newnan Savings is required under federal regulations to maintain a
minimum amount of liquid assets which may be invested in specified short-term
securities and is also permitted to make certain other investments. It has
been Newnan Savings' policy in the past to maintain a liquidity portfolio
well in excess of federal regulatory requirements.

SAVINGS ACTIVITIES AND OTHER SOURCES OF FUNDS

Deposits are the major source of Newnan Savings' funds for lending and
other investment purposes. In addition to deposits, Newnan Savings derives
funds from loan principal repayments, interest payments, advances from the
FHLB of Atlanta and repurchase agreements. Loan repayments and interest
payments are a relatively stable source of funds, while deposit inflows and
outflows are significantly influenced by general interest rates and money
market conditions. Borrowings, including repurchase agreements, may be used
on a short-term basis to compensate for reductions in the availability of
funds from other sources. They may also be used on a longer term basis for
general business purposes.

ASSET/LIABILITY MANAGEMENT

It is the objective of Newnan Savings to manage its assets and
liabilities to provide a satisfactory, consistent level of profitability
within the framework of established cash, loan, investment, borrowing and
capital policies. Certain officers of Newnan Savings are charged with the
responsibility for developing and monitoring policies and procedures that are
designed to ensure acceptable composition of the asset/liability mix. It is
the overall philosophy of management to support asset growth primarily
through growth of deposits. In addition to deposits, Newnan Savings derives
funds from loan principal repayments, interest payments, advances from FHLB
of Atlanta, and repurchase agreements.

Newnan Savings' asset/liability mix is monitored on a timely basis with
a report reflecting the interest-sensitive assets and interest-sensitive
liabilities being prepared and presented to Newnan Savings' Board of
Directors on a monthly basis. The objective of this policy is to control
interest-sensitive assets and liabilities so as to minimize the impact of
substantial movements in interest rates on Newnan Savings' earnings.

<PAGE>

SUBSIDIARIES

Newnan Savings has a wholly-owned service corporation, Newnan Financial
Services, Inc., which provides appraisal and inspection services both to its
parent and third parties. Newnan Financial Services, Inc. owns Jefferson
Ventures, Inc., which owns the White Oak residential development in Coweta
County that was acquired in July, 1984. Originally, Jefferson Ventures, Inc.
developed and sold this property. However, since 1991, Jefferson Ventures,
Inc. has had a strategy of selling off the remaining land in an orderly
manner and has ceased all development activities.

Newnan Savings also has an operating subsidiary, Citizens Mortgage
Group, Inc., which originates loans which would qualify for sale in the
secondary market for both government and conventional programs.

RECENT DEVELOPMENTS

On July 12, 1996, Jefferson Ventures, Inc. entered into an agreement
with Peachtree City Holdings, Inc. to sell approximately 1,400 acres of the
White Oaks residential development at a price of $10,000 per usable acre.
Under the terms of the agreement, the purchaser has 120 days to cause
appropriate surveys to be made delineating the usable acreage and to complete
its due diligence. Subject to due diligence, the initial purchase of 400
acres under the contract is scheduled to occur by late December 1996. The
purchaser will have eight years within which to purchase the balance of the
property. However, the price of the property will escalate 1.75% per calendar
quarter over that period. The purchase agreement futher provides that
Jefferson Ventures, Inc. has the right to cause the purchaser to purchase the
balance of the property on an accelerated basis, provided that the price will
be discounted 16% during the first two years of the contract, 12% during
years 3 through 5, and 6% after the fifth year of the contract.

COMPETITION

Newnan Savings competes for both deposits and loan customers with other
financial institutions with equal or greater resources than are available to
Newnan Savings. Newnan Savings' market area is part of the Atlanta banking
market. Currently there are approximately 81 different commercial banks and
federal savings banks located in the Atlanta banking market, making the
banking business in this market highly competitive.

LEGAL PROCEEDINGS

There are no material pending legal proceedings to which Newnan Savings
is a party or of which any of its properties are subject; nor are there
material proceedings known to Newnan Savings to be contemplated by any
governmental authority; nor are there material proceedings known to Newnan
Savings, pending or contemplated, in which any director, officer or affiliate
or any principal security holder of Newnan Savings, or any associate of any
of the foregoing, is a party or has an interest adverse to Newnan Savings.

SOUTHSIDE

GENERAL

Southside was organized in 1993 for the purpose of acquiring all of the
issued and outstanding common stock of Citizens Bank. Pursuant to a Plan of
Reorganization effective August 31, 1994, Southside acquired all of the
issued and outstanding shares of Citizens Bank. As a result of this
transaction, the former shareholders of Citizens Bank became the shareholders
of Southside and Citizens Bank became a wholly owned subsidiary of Southside.
Citizens Bank was organized in 1989 and opened for business on August 6,
1990. Citizens Bank operates a full-service commercial banking business based
in Fayette County, Georgia, providing such customary banking services as
checking and savings accounts, various types of time deposits, money
transfers, safe deposit facilities and individual retirement accounts. It
also finances commercial transactions, makes secured and unsecured loans and
provides other financial services to its customers.

<PAGE>

As of June 30, 1996, Southside had two full-time and part-time
employees and Citizens Bank had 48 full-time and part-time employees. Neither
Southside nor Citizens Bank is a party to any collective bargaining agreement
and, in the opinion of management, both enjoy excellent relations with its
employees.

PROPERTIES

Southside's main office is located at 675 North Jeff Davis Drive,
Fayetteville, Georgia, the main office of Citizens Bank. This is the only
banking office of Citizens Bank. Citizens Bank owns this property and there
are no liens on the property.

LENDING ACTIVITIES

REAL ESTATE LOANS. Citizens Bank offers loans for the purpose of
construction, acquisition and/or development of raw land or improved
properties. These loans are typically less than one year in duration, carry
an adjustable interest rate, and have a maximum loan-to-value ratio of 80%.
Properties under this type of loan may be single family residential homes,
commercial buildings and residential or commercial subdivisions.

Citizens Bank also offers traditional first mortgage loans, almost all
of which are sold to the secondary market. Any conventional mortgage
retained by Citizens Bank requires a first lien position and either an
adjustable rate or balloon payment. Risks involved with real estate lending
include, but are not limited to, title defects, fraud, general real estate
market deterioration, inaccurate appraisals, violation of banking and
consumer protection laws, and interest rate fluctuations.

CONSUMER LOANS. Citizens Bank's consumer loans consist primarily of
installment loans to individuals for personal, family and household purposes,
including loans for automobiles, home improvements and investments. Risks
associated with these loans include, but are not limited to, fraud,
deteriorated or non-existing collateral, general economic downturn and
customer financial problems.

COMMERCIAL LOANS. Commercial lending is directed principally toward
businesses whose demand for funds falls within Citizens Bank's legal lending
limits and who are located in the Fayette County market. This category of
loans includes loans made to individual, partnership, or corporate borrowers,
and obtained for a variety of business purposes. Risks associated with these
loans can be significant. Risks include, but are not limited to, fraud,
bankruptcy, economic downturn, deteriorated or nonexisting collateral and
changes in interest rates.

Citizens Bank also makes commercial loans to small businesses with
respect to which the SBA guarantees repayment of 65% to 85% of the loan
amount, subject to other limitations. At its election, the Bank may sell the
guaranteed portion of these loans to institutional investors in the secondary
markets. On such loans, Citizens Bank retains the servicing rights and
obligations on the guaranteed portions sold. Risks associated with these
loans include, but are not limited to, credit risk, e.g., fraud, bankruptcy,
economic downturn, deteriorated or non-existing collateral and changes in
interest rates, and operational risk, e.g., failure of Citizens Bank to
adhere to SBA funding and servicing requirements in order to secure and
maintain the SBA guarantees and servicing rights.

<PAGE>

INVESTMENT ACTIVITIES

After establishing necessary cash reserves and funding loans, Citizens
Bank invests its remaining liquid assets in investments allowed under banking
laws and regulations. Citizens Bank invests primarily in obligations of the
United States or obligations guaranteed as to principal and interest by the
United States, in other taxable securities and in certain obligations of
states and municipalities. Risks associated with these investments include,
but are not limited to, mismanagement in terms of interest rate, maturity and
concentration. Traditionally, losses associated with the investment portfolio
have been minimal.

ASSET/LIABILITY MANAGEMENT

It is the objective of Citizens Bank to manage its assets and
liabilities to provide a satisfactory, consistent level of profitability
within the framework of established cash, loan, investment, borrowing and
capital policies. Certain officers of Citizens Bank are charged with the
responsibility for developing and monitoring policies and procedures that are
designed to ensure acceptable composition of the asset/liability mix. It is
the overall philosophy of management to support asset growth primarily
through growth of core deposits, which include deposits of all categories
made by individuals, partnerships and corporations. Management of Citizens
Bank seeks to invest the largest portion of its assets in
consumer/installment, commercial and real estate-related loans.

Citizens Bank's asset/liability mix is monitored on a timely basis with
a report reflecting the interest-sensitive assets and interest-sensitive
liabilities being prepared and presented to Citizens Bank's Board of
Directors on a monthly basis. The objective of this policy is to control
interest-sensitive assets and liabilities so as to minimize the impact of
substantial movements in interest rates on Citizens Bank's earnings.

COMPETITION

Citizens Bank competes for both deposits and loan customers with other
financial institutions with equal or greater resources than are available to
Citizens Bank. Citizens Bank's market area is part of the Atlanta banking
market. Currently, there are approximately 81 different commercial banks
located in the Atlanta banking market, making the banking business in this
market highly competitive.

LEGAL PROCEEDINGS

There are no material pending legal proceedings to which Southside or
Citizens Bank is a party or of which any of its properties are subject; nor
are there material proceedings known to Southside or Citizens Bank to be
contemplated by any governmental authority; nor are there material
proceedings known to Southside or Citizens Bank, pending or contemplated, in
which any director, officer or affiliate or any principal security holder of
Southside or Citizens Bank, or any associate of any of the foregoing, is a
party or has an interest adverse to Southside or Citizens Bank.

<PAGE>
SUPERVISION AND REGULATION

Both bank holding companies and savings and loan holding companies, as well
as their subsidiary banks and thrifts, are extensively regulated under both
Federal and state law. The following is a brief summary of certain statutes and
rules and regulations affecting the Holding Company, Newnan Savings, Southside
and Citizens Bank. This summary is qualified in its entirety by reference to
the particular statute and regulatory provision referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to the business of the Holding Company, Newnan Savings, Southside and
Citizens Bank. Supervision, regulation and examination of the Holding Company,
Newnan Savings, Southside and Citizens Bank by the regulatory agencies are
intended primarily for the protection of depositors rather than shareholders of
the Holding Company.

SAVINGS AND LOAN HOLDING COMPANY REGULATION

The Holding Company will be a registered holding company under the Savings
and Loan Holding Company Act set forth in Section 10 of the Home Owners Loan Act
(the "SLHCA") and the Georgia Bank Holding Company Act and is regulated under
such acts by the OTS and by the Georgia Department of Banking and Finance (the
"Georgia Department"), respectively. As a savings and loan holding company, the
Holding Company will be required to file with the OTS an annual report and such
additional information as the OTS may require pursuant to the SLHCA. The OTS
may also conduct examinations of the Holding Company and each of its
subsidiaries.

Savings and loan holding companies and their subsidiaries are prohibited
from engaging in any activity or rendering any services for or on behalf of
their savings institution subsidiaries for the purpose or with the effect of
evading any law or regulation applicable to the institution. This restriction
is designed to prevent the use of holding company affiliates to evade
requirements of the SLHCA that are designed to protect the holding company's
savings institution subsidiaries. A unitary holding company, that is, a holding
company that owns only one insured institution whose subsidiary institution
satisfies the qualified thrift lender test, is not restricted to the statutorily
prescribed list of permissible activities, and the SLHCA imposes no limits on
direct or indirect non-savings institution subsidiary operations.

The SLHCA makes it unlawful for any savings and loan holding company,
directly or indirectly, or through one or more subsidiaries or one or more
transactions, to acquire control of another savings association or another
savings and loan holding company without prior approval from the OTS. An
acquisition by merger, consolidation or purchase of assets of such an
institution or holding company or of substantially all of the assets of such an
institution or holding company is also prohibited without prior OTS approval.
When considering an application for such an acquisition, the OTS takes into
consideration the financial and managerial resources and future prospects of the
prospective acquiring company and the institution involved. This includes
consideration of the competence, experience and integrity of the officers,
directors and principal shareholders of the acquiring company and savings
institution. In addition, the OTS considers the effect of the acquisition on
the institution, the insurance risk to the Savings Association Insurance Fund
("SAIF") or the Bank Insurance Fund ("BIF"), as the case may be, and the
convenience and needs of the community to be served.

<PAGE>

The OTS may not approve an acquisition that would result in the formation
of certain types of interstate holding company networks. The OTS is precluded
from approving an acquisition that would result in the formation of a multiple
holding company controlling institutions in more than one state unless the
acquiring company or one of its savings institution subsidiaries is authorized
to acquire control of an institution or to operate an office in the additional
state pursuant to a supervisory acquisition authorized under Section 13(k) of
the Federal Deposit Insurance Act or unless the statutes of the state in which
the institution to be acquired is located permits such an acquisition.

The Georgia legislature adopted the "Georgia Interstate Banking Act,"
effective July 1, 1995, which provides that (1) interstate acquisitions by
institutions located in Georgia are permitted in states which also allow
national interstate acquisitions, and (2) interstate acquisitions of
institutions located in Georgia are permitted by institutions located in states
which also allow national interstate acquisitions; provided, however, that if
the board of directors of a Georgia savings and loan institution adopts a
resolution to except such thrift or holding company from being acquired pursuant
to the provisions of the Georgia Interstate Banking Act and properly files a
certified copy of such resolution with the Georgia Department, such savings and
loan institution or holding company may not be acquired by an institution
located outside of the State of Georgia.

Savings and loan holding companies are allowed to acquire or to retain as
much as 5% of the voting shares of a savings institution or savings and loan
holding company without regulatory approval.

As of the date of this filing, the Holding Company believes it is in
compliance with all statutes, regulations and rules promulgated or enforced by
the OTS and the Georgia Department.

BANK HOLDING COMPANY REGULATION

Southside is and, after the Southside Acquisition, the Holding Company will
be a registered holding company under the Bank Holding Company Act of 1956, as
amended (the "Federal Bank Holding Company Act"), and the Georgia Bank Holding
Company Act (the "Georgia Bank Holding Company Act") and is regulated under such
acts by the Board of Governors of the Federal Reserve System (the "Federal
Reserve") and by the Georgia Department of Banking and Finance (the "Georgia
Department"), respectively.

As a bank holding company, Southside is and the Holding Company will be
required to file annual reports with the Federal Reserve and the Georgia
Department and such additional information as the applicable regulator may
require pursuant to the Federal and Georgia Bank Holding Company Acts. The
Federal Reserve and the Georgia Department may also conduct examinations of a
bank holding company to determine whether the institution is in compliance with
both Bank Holding Company Acts and the regulations promulgated thereunder.

The Federal Bank Holding Company Act also requires every bank holding
company to obtain prior approval from the Federal Reserve before acquiring
direct or indirect ownership or control of more than 5% of the voting shares of
any bank which is not already majority owned or controlled by that bank holding
company. Acquisitions of any additional banks would also require prior approval
from the Georgia Department.

<PAGE>

On September 29, 1994, the President of the United States signed the
"Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994" (the
"Interstate Branching Act"). The Interstate Branching Act amends Federal law to
permit bank holding companies to acquire existing banks in any state effective
September 29, 1995, subject to certain deposit - percentage, aging requirements
and other restrictions. In addition, the Interstate Branching Act provides that
any interstate bank holding company is permitted to merge its various bank
subsidiaries into a single bank with interstate branches effective June 1, 1997.
By adopting legislation prior to that date, a state has the authority either to
"opt in" and accelerate the date after which interstate branching is permissible
or to "opt out" and prohibit interstate branching altogether. See "Savings and
Loan Holding Company Regulation" above for a discussion of the Georgia
Interstate Banking Act.

In addition to the Georgia Interstate Banking Act, in February 1996, the
Georgia legislature adopted the "Georgia Interstate Branching Act," which when
signed by the Governor, will permit Georgia-based banks and bank holding
companies owning or acquiring banks outside of Georgia and all non-Georgia banks
and bank holding companies owning or acquiring banks in Georgia the right to
merge any lawfully acquired bank into an interstate branch network. The Georgia
Interstate Branching Act also allows banks to establish de novo branch banks on
a limited basis beginning July 1, 1996. Beginning July 1, 1998, the number of
de novo bank branches which may be established will no longer be limited.

In addition to having the right to acquire ownership or control of other
banks, a bank holding company is authorized to acquire ownership or control of
nonbanking companies, provided the activities of such companies are so closely
related to banking or managing or controlling banks that the Federal Reserve
considers such activities to be proper to the operation and control of banks.
Regulation Y, promulgated by the Federal Reserve, sets forth those activities
which are regarded as closely related to banking or managing or controlling
banks and, thus, are permissible activities for bank holding companies, subject
to approval by the Federal Reserve in individual cases.

Federal Reserve policy requires a bank holding company to act as a source
of financial strength and to take measures to preserve and protect bank
subsidiaries in situations where additional investments in a troubled bank may
not be warranted. Under these provisions, a bank holding company may be
required to loan money to its subsidiaries in the form of capital notes or other
instruments which qualify for capital under regulatory rules. Any loans by the
holding company to such subsidiary banks are likely to be unsecured and
subordinated to such bank's depositors and perhaps to its other creditors.

The Holding Company will be and Southside is also subject to various
federal securities laws, including the Securities Act of 1933 (the "1933 Act")
and the Securities Exchange Act of 1934 (the "1934 Act"). The 1933 Act
regulates the distribution or public offering of securities, while the 1934 Act
regulates trading in securities that are already issued and outstanding. Both
Acts provide civil and criminal penalties for misrepresentations and omissions
in connection with the sale of securities, and the 1934 Act also prohibits
market manipulation and insider trading. Pursuant to the 1934 Act, the Holding
Company files annual, quarterly and current reports with the Securities and
Exchange Commission. In addition, the Holding Company and its directors,
executive officers and 5% shareholders will be subject to certain additional
reporting requirements, including requirements governing the submission of proxy
statements and reports of beneficial ownership of the Holding Company's
securities (just as Southside currently is).

<PAGE>
REGULATION FOR FEDERAL SAVINGS BANKS

Newnan Savings is a savings bank organized under the laws of the United
States subject to examination by the OTS. The OTS regulates all areas of the
Bank's banking operations including reserves, loans, mergers, payment of
dividends, interest rates, establishment of branches, and other aspects of
operations.

Newnan Savings is also insured and regulated by the Federal Deposit
Insurance Corporation (the "FDIC"). The major functions of the FDIC with
respect to insured thrift institutions include paying depositors to the extent
provided by law in the event an insured bank is closed without adequately
providing for payment of the claims of depositors and preventing the continuance
or development of unsound and unsafe banking practices.

Subsidiary institutions of a savings and loan holding company are subject
to certain restrictions imposed by the Federal Reserve Act on any extension of
credit to the holding company or any of its subsidiaries, on investment in the
stock or other securities thereof, and on the taking of such stock or securities
as collateral for loans to any borrower. In addition, a holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit or provision of any property or
services.

REGULATION FOR STATE BANKS

Citizens Bank operates as a bank organized under the laws of the State of
Georgia subject to examination by the Georgia Department. The Georgia
Department regulates all areas of Citizens Bank's commercial banking operations
including reserves, loans, mergers, payment of dividends, interest rates,
establishment of branches, and other aspects of operations.

Citizens Bank is also insured and regulated by the Federal Deposit
Insurance Corporation (the "FDIC"). The major functions of the FDIC with
respect to insured banks include paying depositors to the extent provided by law
in the event an insured bank is closed without adequately providing for payment
of the claims of depositors, acting as a receiver of state banks placed in
receivership when so appointed by state authorities, and preventing the
continuance or development of unsound and unsafe banking practices. In
addition, the FDIC is authorized to examine insured banks which are not members
of the Federal Reserve to determine the condition of such banks for insurance
purposes. The FDIC also approves conversions, mergers, consolidations and
assumption of deposit liability transactions between insured banks and
noninsured banks or institutions to prevent capital or surplus diminution in
such transactions where the resulting, continued or assumed bank is an insured
nonmember state bank.

Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Bank Holding Company Act on any extension of
credit to the bank holding company or any of its subsidiaries, on investment in
the stock or other securities of the bank holding company or its subsidiaries,
and on the taking of such stock or securities as collateral for loans to any
borrower. In addition, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit or provision of any property or services.

<PAGE>
Under Georgia law, a bank must obtain the approval of the Georgia
Department before cash dividends may be paid if (1) the total classified assets
at the most recent examination of such bank exceeded 80% of the equity capital,
(2) the aggregate amount of dividends declared or anticipated to be declared in
the calendar year exceeds 50% of the net profits, after taxes but before
dividends, for the previous calendar year or (3) the ratio of equity capital to
adjusted assets is less than 6%.

Citizens Bank is also subject to the provisions of the Community
Reinvestment Act of 1977, which requires the appropriate Federal bank regulatory
agency, in connection with its regular examination of a bank, to assess the
bank's record in meeting the credit needs of the communities served by the bank,
including low- and moderate-income neighborhoods.

CAPITAL REQUIREMENTS

CAPITAL REQUIREMENTS FOR FEDERAL SAVINGS BANKS AND THEIR HOLDING COMPANIES

The FDIC has adopted or currently proposes to adopt other rules pursuant to
the FDIC Act that include: (1) real estate lending standards for banks, which
would provide guidelines concerning loan-to-value ratios for various types of
real estate loans; (2) revision to the risk-based capital rules to account for
interest rate risk, concentration of credit risk and the risks proposed by
"non-traditional activities"; (3) rules requiring depository institutions to
develop and implement internal procedures to evaluate and control credit and
settlement exposure to their correspondent banks; (4) a rule restricting the
ability of depository institutions that are not well capitalized from accepting
brokered deposits; (5) rules addressing various "safety and soundness" issues,
including operations and managerial standards for asset quality, earnings and
stock valuations, and compensation standards for the officers, directors,
employees and principal shareholders of the depository institutions; (6) rules
mandating enhanced financial reporting and audit requirements; and (7) rules
restricting the ability of a state bank, or a subsidiary thereof, to engage as
principal in activities not permissible for a national bank or make any
investment not permissible for a national bank.

Pursuant to 12 C.F.R. Part 567, there are three measures of capital
adequacy for federal institutions: the tangible ratio, the core ratio, and the
risk-based capital requirements. Tangible and core capital consist of Tier 1
capital, while Tier 2 is included in the risk-based requirement. Savings and
loan holding companies and their subsidiary institutions must maintain a minimum
Tier 1 leverage ratio of 4%. However, consistent with an agreement among the
various Federal banking agencies to lower the leverage ratio requirement once
the risk-based capital framework is modified to address interest rate risk, the
leverage ratio requirement applicable to savings associations is 3%. These are
minimum requirements, however, and institutions experiencing internal growth or
making acquisitions, as well as institutions with supervisory or operational
weaknesses, will be expected to maintain capital positions well above these
minimum levels. The OTS does not impose any capital requirements on savings and
loan holding companies. However, the Georgia Department requires savings and
loan holding companies to maintain a 5% Tier 1 leverage ratio on a consolidated
basis.

<PAGE>

CAPITAL REQUIREMENTS FOR BANKS

Regulatory agencies measure capital adequacy within a framework that makes
capital requirements sensitive to the risk profile of the individual banking
institutions. The guidelines define capital as either Tier 1 capital (primarily
shareholders' equity) or Tier 2 capital (certain debt instruments and a portion
of the reserve for loan losses). There are two measures of capital adequacy for
bank holding companies and their subsidiary banks: the Tier 1 leverage ratio and
the risk-based capital requirements. Bank holding companies and their
subsidiary banks must maintain a minimum Tier 1 leverage ratio of 4%. In
addition, Tier 1 capital must equal 4% of risk-weighted assets, and total
capital (Tier 1 plus Tier 2) must equal 8% of risk-weighted assets. These are
minimum requirements, however, and institutions experiencing internal growth or
making acquisitions, as well as institutions with supervisory or operational
weaknesses, will be expected to maintain capital positions well above these
minimum levels.

PROMPT CORRECTIVE ACTION

The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDIC Act") imposes a regulatory matrix which requires the Federal banking
agencies to take prompt corrective action to deal with depository institutions
that fail to meet their minimum capital requirements or are otherwise in a
troubled condition. The prompt corrective action provisions require
undercapitalized institutions to become subject to an increasingly stringent
array of restrictions, requirements and prohibitions, as their capital levels
deteriorate and supervisory problems mount. Should these corrective measures
prove unsuccessful in recapitalizing the institution and correcting its
problems, the FDIC Act mandates that the institution be placed in receivership.

Pursuant to regulations promulgated under the FDIC Act, the corrective
actions that the banking agencies either must or may take are tied primarily to
an institution's capital levels. In accordance with the framework adopted by
the FDIC Act, the banking agencies have developed a classification system,
pursuant to which all banks and thrifts will be placed into one of five
categories: well-capitalized institutions, adequately capitalized institutions,
undercapitalized institutions, significantly undercapitalized institutions and
critically undercapitalized institutions. The capital thresholds established
for each of the categories are as follows:

<PAGE>

<TABLE>
<CAPTION>
RISK-BASED TIER 1 RISK-
CAPITAL CATEGORY TIER 1 CAPITAL CAPITAL BASED CAPITAL OTHER
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Well-Capitalized 5% or more 10% or more 6% or more Not subject to
a capital
directive
- -----------------------------------------------------------------------------------------
Adequately Capitalized 4% or more 8% or more 4% or more ---
- -----------------------------------------------------------------------------------------
Undercapitalized less than 4% less than 8% less than 4% ---
- -----------------------------------------------------------------------------------------
Significantly
Undercapitalized less than 3% less than 6% less than 3% ---
- -----------------------------------------------------------------------------------------
Critically 2% or less
Undercapitalized tangible equity --- --- ---
- -----------------------------------------------------------------------------------------
</TABLE>

The undercapitalized, significantly undercapitalized and critically
undercapitalized categories overlap; therefore, a critically undercapitalized
institution would also be an undercapitalized institution and a significantly
undercapitalized institution. This overlap ensures that the remedies and
restrictions prescribed for undercapitalized institutions will also apply to
institutions in the lowest two categories.

The down-grading of an institution's category is automatic in two
situations: (1) whenever an otherwise well-capitalized institution is
subject to any written capital order or directive, and (2) where an
undercapitalized institution fails to submit or implement a capital
restoration plan or has its plan disapproved. The Federal banking agencies
may treat institutions in the well-capitalized, adequately capitalized and
undercapitalized categories as if they were in the next lower capital level
based on safety and soundness considerations relating to factors other than
capital levels.

All insured institutions regardless of their level of capitalization are
prohibited by the FDIC Act from paying any dividend or making any other kind
of capital distribution or paying any management fee to any controlling
person if following the payment or distribution the institution would be
undercapitalized. While the prompt corrective action provisions of the FDIC
Act contain no requirements or restrictions aimed specifically at adequately
capitalized institutions, other provisions of the FDIC Act and the agencies'
regulations relating to deposit insurance assessments, brokered deposits and
interbank liabilities treat adequately capitalized institutions less
favorably than those that are well-capitalized.

At March 31, 1996, Newnan Savings and Citizens Bank had the requisite
capital levels to qualify as well-capitalized.

60
<PAGE>

a rule restricting the ability of depository institutions that are not well
capitalized from accepting brokered deposits; (5) rules addressing various
"safety and soundness" issues, including operations and managerial standards
for asset quality, earnings and stock valuations, and compensation standards
for the officers, directors, employees and principal shareholders of the
depository institutions; (6) rules mandating enhanced financial reporting and
audit requirements; and (7) rules restricting the ability of a state bank, or
a subsidiary thereof, to engage as principal in activities not permissible
for a national bank or make any investment not permissible for a national
bank.

FDIC INSURANCE ASSESSMENTS

In July 1993, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks
attributable to different categories and concentrations of assets and
liabilities. The new system, which went into effect on January 1, 1994, and
replaced a transitional system that the FDIC had used for the 1993 calendar
year, assigns an institution to one of three capital categories: (1)
well-capitalized; (2) adequately capitalized; and (3) undercapitalized.
These three categories are substantially similar to the prompt corrective
action categories described above, with the undercapitalized category
including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective
action purposes. An institution is also assigned by the FDIC to one of three
supervisory subgroups within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation
provided to the FDIC by the institution's primary federal regulator and
information which the FDIC determines to be relevant to the institution's
financial condition and the risk posed to the deposit insurance funds (which
may include, if applicable, information provided by the institution's state
supervisor). An institution's insurance assessment rate is then determined
based on the capital category and supervisory category to which it is
assigned. Under the final risk-based assessment system, as well as the prior
transitional system, there are nine assessment risk classifications (i.e.,
combinations of capital groups and supervisory subgroups) to which different
assessment rates are applied. Assessment rates for members of both the Bank
Insurance Fund ("BIF") and the Savings Association Insurance Fund ("SAIF")
for the first half of 1995, as they had during 1994, ranged from 23 basis
points (0.23% of deposits) for an institution in the highest category (i.e.,
"well capitalized" and "healthy") to 31 basis points (0.31% of deposits) for
an institution in the lowest category (i.e., "undercapitalized" and
"substantial supervisory concern"). These rates were established for both
funds to achieve a designated ratio of reserves to insured deposits (i.e.,
1.25%) within a specified period of time.

Once the designated ratio for the BIF was reached, which appears to have
occurred some time during May 1995, the FDIC was authorized to reduce the
minimum assessment rate below 23 basis points and to set future assessment
rates at such levels that would maintain a fund's reserve ratio at the
designated level. In August 1995, the FDIC adopted final regulations
reducing the assessment rates for BIF-member banks. Under the revised
schedule, BIF-member banks, starting with the second half of 1995, will now
pay assessments ranging from 4 basis points to 31 basis points, with an
average assessment rate of 4.5 basis points. Refunds, with interest, were
paid for assessments for the month(s) after the month in which the designated
reserve ratio for the BIF was reached, as well as for the quarterly payment
made on September 30, 1995, assuming that the designated reserve ratio was
achieved prior to June 30, 1995. At the same time, the FDIC elected to
retain the existing assessment rate of 23 to 31 basis points for SAIF members
for the foreseeable

<PAGE>

future given the undercapitalized nature of that insurance fund. More
recently, on November 14, 1995, the FDIC announced that, beginning in 1996,
it would further reduce the deposit insurance premiums for 92% of all BIF
members that are in the highest capital and supervisory categories to $2,000
per year, regardless of deposit size.

On July 28, 1995, the FDIC, the Treasury Department, and the OTS
released statements outlining a proposed plan to recapitalize the SAIF,
certain features of which were subsequently agreed upon by members of the
Banking Committees of the U.S. House of Representatives and the Senate on
November 7, 1995 in negotiations to reconcile differences in bills on the
issue that had been introduced or partially adopted by each body. Under the
agreement, all SAIF-member institutions would pay a special assessment to the
SAIF of approximately 80 basis points, the amount that would enable the SAIF
to attain its designated reserve ratio of 1.25%. The special assessment would
be payable on January 1, 1996, based on the amount of deposits held as of
March 31, 1995. BIF-insured institutions holding SAIF-assessed deposits
would receive a 20% reduction in the assessment rate and would pay a one-time
assessment of 64 basis points. The agreement also provides that the
assessment base for the bonds issued in the late 1980s by the Financing
Corporation to recapitalize the now defunct Federal Savings and Loan
Insurance Corporation would be expanded to include deposits of both BIF- and
SAIF-insured institutions, with BIF members paying approximately 75% of the
interest on such obligations. The committee members further agreed that the
BIF and SAIF should be merged on January 1, 1998, with such merger being
conditioned upon the prior elimination of the thrift charter. At this time,
the Holding Company is not able to predict if the recapitalization will take
place, the timing or exact amount of any SAIF special assessment that might
be required.

Under the Federal Deposit Insurance Act, insurance of deposits may be
terminated by the FDIC upon a finding that the institution has engaged in
unsafe and unsound practices, is in an unsafe or unsound condition to
continue operations, or has violated any applicable law, regulation, rule,
order, or condition imposed by the FDIC.

CRA

On April 19, 1995, the Federal bank regulatory agencies adopted
revisions to the regulations promulgated pursuant to the Community
Reinvestment Act (the "CRA"), which are intended to set distinct assessment
standards for financial institutions. The revised regulation contains three
evaluation tests: (1) a lending test which will compare the institutions's
market share of loans in low- and moderate-income areas to its market share
of loans in its entire service area and the percentage of a bank's
outstanding loans to low- and moderate-income areas or individuals, (2) a
services test which will evaluate the provision of services that promote the
availability of credit to low- and moderate-income areas, and (3) an
investment test, which will evaluate an institution's record of investments
in organizations designed to foster community development, small- and
minority-owned businesses and affordable housing lending, including state and
local government housing or revenue bonds. The regulation is designed to
reduce the paperwork requirements of the current regulations and provide
regulators, institutions and community groups with a more objective and
predictable manner with which to evaluate the CRA performance of financial
institutions. The rule became effective on January 1, 1996, at which time
evaluation under streamlined procedures

<PAGE>

began for institutions with assets of less than $250 million that are owned
by a holding company with total assets of less than $1 billion.

FAIR LENDING

Congress and various Federal agencies (including, in addition to the
bank regulatory agencies, the Department of Housing and Urban Development,
the Federal Trade Commission and the Department of Justice) (collectively the
"Federal Agencies") responsible for implementing the nation's fair lending
laws have been increasingly concerned that prospective home buyers and other
borrowers are experiencing discrimination in their efforts to obtain loans.
In recent years, the Department of Justice has filed suit against financial
institutions which it determined had discriminated, seeking fines and
restitution for borrowers who allegedly suffered from discriminatory
practices. Most, if not all, of these suits have been settled (some for
substantial sums) without a full adjudication on the merits.

On March 8, 1994, the Federal Agencies, in an effort to clarify what
constitutes lending discrimination and to specify the factors the agencies
will consider in determining if lending discrimination exits, announced a
joint policy statement detailing specific discriminatory practices prohibited
under the Equal Credit Opportunity Act and the Fair Housing Act. In the
policy statement, three methods of proving lending discrimination were
identified: (1) overt evidence of discrimination, when a lender blatantly
discriminates on a prohibited basis, (2) evidence of disparate treatment,
when a lender treats applicants differently based on a prohibited factor even
where there is no showing that the treatment was motivated by prejudice or a
conscious intention to discriminate against a person, and (3) 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 on their face and are applied equally, unless the
practice can be justified on the basis of business necessity.

FUTURE REQUIREMENTS

Statutes and regulations are regularly introduced which contain
wide-ranging proposals for altering the structures, regulations and
competitive relationships of the nation's financial institutions. It cannot
be predicted whether or what form any proposed statute or regulation will be
adopted or the extent to which the business of the Holding Company, Newnan
Savings, Southside and Citizens Bank may be affected by such statute or
regulation.

MONETARY POLICY

The earnings of the Holding Company will be affected by domestic and
foreign economic conditions, particularly by the monetary and fiscal policies
of the United States government and its agencies.

The Federal Reserve has had, and will continue to have, an important
impact on the operating results of commercial banks through its power to
implement national monetary policy in order, among other things, to mitigate
recessionary and inflationary pressures by regulating the national money
supply. The techniques used by the Federal Reserve include setting the
reserve requirements

<PAGE>

of member banks and establishing the discount rate on member bank borrowings.
The Federal Reserve also conducts open market transactions in United States
government securities.

OTHER REGULATIONS APPLICABLE FOR FEDERAL SAVINGS BANKS

QUALIFIED THRIFT LENDER TEST

On March 13, 1993, the OTS amended its qualified thrift lender ("QTL")
regulations to implement revisions made to the QTL test by Subtitle G of
Title IV of the FDIC Act, known as the "QTL Reform Act." The QTL Reform Act
provides that savings associations which fail to satisfy the QTL test are
subject to various penalties, including limitations on the types of
activities they may conduct, restrictions on their Federal Home Loan Bank
advances, and loss of the savings association's holding company of the
activities flexibility it enjoyed as a thrift holding company. The QTL
Reform Act amended the QTL test by (1) lowering the actual thrift investment
percentage of housing-related investments a thrift must hold in its
investment portfolio from 70% to 65%; (2) changing the computation period
from weekly to monthly; (3) increasing the amount of regulatory liquidity
excludable from portfolio assets; (4) authorizing certain shares of stock of
certain government-sponsored enterprises to be included in the computation of
qualified thrift investments; and (5) increasing certain percentages in the
computation of qualified thrift investments. In general, these changes will
reduce the regulatory burden on savings associations. The OTS' amendments
were made effective retroactively to January 1, 1992.

EQUITY INVESTMENTS

The OTS has revised its risk-based capital regulation to modify the
treatment of certain equity investments and to clarify the treatment of other
equity investments. Equity investments that are permissible for both savings
banks and national banks will no longer be deducted from savings
associations' calculations of total capital over a five-year period.
Instead, permissible equity investments will be placed in the 100%
risk-weight category, mirroring the capital treatment prescribed for those
investments when made by national banks under the regulations of the OCC.
Equity investments held by savings associations that are not permissible for
national banks must still be deducted from assets and total capital. The
revisions became effective April 19, 1993.

INTEREST RATE RISK

On August 31, 1993, the OTS issued its final rule adding an interest
rate risk ("IRR") component to its risk-based capital rule (however,
implementation of this regulation has been delayed indefinitely). Under this
rule, savings associations with a greater than "normal" level of interest
rate exposure will be subject to a deduction from total capital for purposes
of calculating their risk-based capital requirement. Specifically, interest
rate exposure will be measured as the decline in net portfolio value due to a
200 basis point shock in market interest rates. The IRR component to be
deducted from total capital is equal to one-half the difference between an
institution's measured exposure and the "normal" level of exposure which is
defined as 2% of the estimated economic value of its assets.

<PAGE>

The rule also adjusts the risk-weighting for certain mortgage derivative
securities. Mortgage pass-through securities that are issued or guaranteed
by government-sponsored agencies are currently placed in the 20% risk-weight
category under the OTS risk-based capital rule, while stripped
mortgage-backed securities and mortgage derivatives with "residual
characteristics" that are created from these securities are placed in the
100% risk-weight category even though they have the same degree of credit
risk as the securities from which they are derived. The addition of an IRR
component to the OTS' risk-based capital framework removes the need for this
risk-weighting disparity. Accordingly, the final rule amends the risk-based
capital rule to place all high-quality mortgage-derivatives, except for
collateralized mortgage obligations and real estate mortgage investment
conduit residuals, in the 20% risk-weight category.

Consistent with an agreement among the various Federal banking agencies
to lower the leverage ratio requirement once the risk-based capital framework
is modified to address IRR, the OTS lowered the leverage ratio requirement
applicable to savings associations to 3%, from the earlier level of 4%,
effective July 1, 1994.

CAPITAL TREATMENT OF INTANGIBLE ASSETS

On February 2, 1994, the OTS issued its final regulation making its
capital treatment of intangible assets consistent with rules previously
adopted by the other federal banking agencies. As a result of the new rule,
purchased mortgage servicing rights and purchased credit card relationships
can be included in a thrift's Tier 1 or Core capital. The rule limits the
aggregate of these rights and relationships that can be included to 50% of
Core capital. Purchased credit card relationships alone may not exceed 25%
of Core capital. A grandfather clause, however, allows core deposit
intangibles that are firmly contracted by the effective date of the rule
(March 5, 1994) to be counted as Core capital. The new rule also implements
a statutory requirement on the valuation of purchased mortgage servicing
rights mandated by the FDIC Act.

ACQUISITION OF CONTROL

The Acquisition of Control Regulations found at 12 C.F.R. Part 574
govern the outright acquisition of ownership of a specified percentage of
securities of a savings institution or a holding company thereof, and also
any arrangements or events that, although not characterized as outright
transfers, may serve to vest a party with the attributes of ownership or
control of securities and thereby enable that party to control a savings
institution. The control regulations provide that no company (or any
director or officer of a savings and loan holding company or any individual
who owns, controls or holds with power to vote more than 25% of the voting
stock of a savings and loan holding company) may acquire control of a savings
association except upon the receipt of written approval of the OTS. The
regulations further provide that no person shall acquire control of a savings
association until written notice has been provided to the OTS and the OTS
indicates in writing its intent not to disapprove the notice or 60 days (or
such longer period of time if the OTS may specify if the review period had
been extended) have passed since OTS' receipt of a notice deemed sufficient
under the regulations.

<PAGE>

MERGERS AND CHARTER CONVERSIONS

The OTS issued a final rule, effective September 29, 1994, that
clarifies how thrifts can merge or change charters. The rule (1) streamlines
and simplifies conversion of federal savings institutions to national or
state banks; (2) permits commercial banks or other stock-form depository
institutions that are members of (or qualify for membership in) the Federal
Home Loan Bank to convert to federal stock savings institutions; (3) allows
federal mutual associations to combine with FDIC-insured stock depository
institutions, but only if the surviving entity remains a mutual savings
association (otherwise, the mutual must first convert to a stock
institution); (4) allows federal savings institutions to merge with
depository institutions not insured by the FDIC, including credit unions; (5)
establishes procedures to expedite the processing of such merger or charter
change transactions; (6) outlines the steps a non-thrift must take to become
a federal savings institution via merger or charter change; and (6) permits
well-capitalized thrifts to change charters by prior notice to the OTS,
rather than requiring a detailed application.

MISCELLANEOUS

AVAILABLE INFORMATION

The Holding Company has filed a Registration Statement under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission (the "Commission"). This Joint Proxy Statement/Prospectus does not
contain all of the information set forth in the Registration Statement and
the exhibits thereto. For further information with respect to Newnan Savings,
Southside and the Holding Company, and the Holding Company Stock offered
hereby, reference is made to the Registration Statement including the
exhibits thereto. The Registration Statement can be inspected and copied at
the public reference facilities of the Commission, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the following regional offices of
the Commission: 75 Park Place, 14th Floor, New York, New York 10007; 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 5757 Wilshire
Boulevard, Suite 500 East, Los Angeles, California 90036-3648; and copies of
such materials can be obtained from the public reference section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Additional copies of this Joint Proxy Statement/Prospectus may be
obtained from the Office of Thrift Supervision, 1700 G Street, N.W.,
Washington, D.C. 20552.

LEGAL MATTERS

Certain federal income tax consequences of the Newnan Savings
Reorganization and the Southside Acquisition and the legality of the
authorization and issuance under Georgia law of the Holding Company Stock to
be issued in the Newnan Savings Reorganization and the Southside Acquisition
will be passed upon by special counsel to the Holding Company and Newnan
Savings, Powell, Goldstein, Frazer & Murphy, Sixteenth Floor, 191 Peachtree
Street, N.E., Atlanta, Georgia 30303. A representative of Powell, Goldstein,
Frazer & Murphy is expected to be present at the Newnan Savings and Southside
meetings to respond to appropriate questions and to make a statement if the
representative desires to do so.

<PAGE>

EXPERTS

The consolidated financial statements of Newnan Savings and subsidiaries
as of March 31, 1996 and 1995, and for each of the years in the three-year
period ended March 31, 1996, included in this Joint Proxy
Statement/Prospectus and elsewhere in the Registration Statement, have been
included herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.

The report of KPMG Peat Marwick, LLP refers to a change in the method of
accounting for investment securities on April 1, 1994 to adopt the provisions
of Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," and a change in the
method of accounting for income taxes on April 1, 1993 to adopt the
provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."

The consolidated financial statements of Southside as of December 31,
1995 and 1994 included in this Joint Proxy Statement/Prospectus and elsewhere
in the Registration Statement, have been included herein and elsewhere in the
Registration Statement in reliance upon the report of Mauldin & Jenkins,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing.

OTHER MATTERS

The Boards of Directors of Newnan Savings and Southside do not know of
any other matters to be presented for action at the Shareholders Meetings.
However, if any other matter requiring a vote of the shareholders is properly
presented at either meeting or any adjournment thereof, it is intended that
votes will be cast pursuant to proxies with respect to such matters in
accordance with the best judgment of the persons acting under the proxies.

EXPENSES

Newnan Savings and Southside will each bear its own expenses in
connection with the Newnan Savings Reorganization and the Southside
Acquisition, whether or not such transactions are consummated. Each will also
pay the cost of soliciting proxies from its own shareholders.

67
<PAGE>

PART 2

FINANCIAL INFORMATION

The following financial information is an integral part of the Joint Proxy
Statement/Prospectus.

NEWNAN SAVINGS BANK, FSB

Management's Discussion and Analysis of Financial Condition
and Results of Operations for the Three Year Period Ended
March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

SOUTHSIDE FINANCIAL GROUP, INC.

Management's Discussion and Analysis of Financial Condition
and Results of Operations for the Two Year Period Ended
December 31, 1995 and for the Quarter Ended March 31, 1996 . . . . . . . F-31

PRO FORMA FINANCIAL INFORMATION
FOR NEWNAN HOLDINGS, INC.

Pro Forma Condensed Combined Balance Sheet . . . . . . . . . . . . . . . . F-57

Pro Forma Condensed Combined Statement of Income . . . . . . . . . . . . . F-60

Notes to Unaudited Pro Forma Condensed Combined Balance
Sheet and Statements of Income . . . . . . . . . . . . . . . . . . . . . F-61

FINANCIAL STATEMENTS

NEWNAN SAVINGS BANK, FSB

Consolidated Statements of Financial Condition as of March 31, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-64

Consolidated Statements of Earnings for the Years Ended
March 31, 1996, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . F-66

Consolidated Statements of Stockholders' Equity for the Years Ended
March 31, 1996, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . F-67

Consolidated Statements of Cash Flows for the Years Ended
March 31, 1996, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . F-68

F-i

<PAGE>

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . F-70

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . F-87

SOUTHSIDE FINANCIAL GROUP, INC.

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . F-91

Consolidated Balance Sheets as of December 31, 1995 and 1994 . . . . . . . F-92

Consolidated Statements of Income for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-93

Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-94

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-95

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . F-96

Consolidated Balance Sheet as of March 31, 1996 . . . . . . . . . . . . . F-119

Consolidated Statement of Income for the Three Months Ended
March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-120

Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-122

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . F-124

F-ii

<PAGE>

NEWNAN SAVINGS BANK, FSB

MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE YEAR PERIOD ENDED MARCH 31, 1996

F-1
<PAGE>

NEWNAN SAVINGS BANK, FSB

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following is a discussion of Newnan Savings' financial condition at March
31, 1996 and 1995 and the results of operations for the three year period ended
March 31, 1996. The purpose of this discussion is to focus on information
about Newnan Savings' financial condition and results of operations which are
not otherwise apparent from the audited financial statements included in the
Registration Statement. Reference should be made to those statements and the
selected financial data presented elsewhere in this report for an understanding
of the following discussion and analysis.

BALANCE SHEET REVIEW

1996 COMPARED TO 1995. Total assets increased $12,533,000 or 7.48% to
$182,010,300. Investment securities increased $12,976,555 to $22,794,000. Net
loans receivable declined $1,577,152 to $123,072,970 due primarily to a $1.1
million reduction in student loans, the result of the sale in fiscal 1996 of
the Bank's portfolio of such loans. Real estate held for development and sale
declined $1,330,839 or 26.25% to $3,739,572 due to sales at White Oak (see
"Real Estate Activities" on page F-11). Real estate acquired in settlement of
loans ("REO") declined $13,335 or 10.71% to $111,150. At March 31, 1996 REO
consisted of four residential building lots and one single family dwelling.

Deposit accounts increased $12,816,894 or 10.88% to $130,635,333. Interest
bearing checking accounts increased $2.40 million while noninterest bearing
checking accounts (which includes commercial accounts, loan servicing custodial
accounts, and the Bank's outstanding official checks) increased $2.51 million.
Certificates of deposit increased $9.5 million while money market and passbook
accounts declined $0.77 million and $0.83 million, respectively. The increase
in certificates of deposit was mainly attributable to an increase in one year
certificates, which grew $10.8 million as a result of a marketing effort
conducted during the fiscal year in which the Bank offered a premium rate of
6.00% to attract new accounts. Federal Home Loan Bank advances declined
$4,023,686 or 12.03% to $29,433,626. At March 31, 1996, $8.1 million of these
advances had original maturities of more than a year while $21.3 million had
original maturities of less than a year.

Stockholders' equity increased $3,663,333 to $20,265,997 as a result of net
earnings retained.

1995 COMPARED TO 1994. Total assets increased $25,177,132 or 17.45% to
$169,477,300. Net loans receivable grew $27,056,102, or 27.72%, to $124,650,122,
the result of an increase of $5,462,823 in construction loans (net of
undisbursed proceeds) and $21,812,753 in permanent adjustable rate mortgage
loans. As interest rates rose in 1995, borrowers chose adjustable rate
mortgages, which the Bank traditionally holds in portfolio, over fixed rate
mortgages, which the Bank typically sells due to the interest rate risk exposure
of holding long-term fixed rate mortgages. Real estate acquired in settlement
of loans ("REO") declined $283,897 or 69.52% to $124,485. At March 31, 1995,
REO consisted of nine residential building lots. Real estate held for
development and sale declined $955,752 or 15.86% due to sales at White Oak (see
"Real Estate Sales").

F-2
<PAGE>

Investment securities increased $4,462,953 or 83.35% to $9,817,445 while
mortgage-backed securities increased $1,222,115 or 14.52% to $9,638,640. Stock
in Federal Home Loan Bank increased $802,800 or 92.27% to $1,672,900 which was
necessitated due to increased borrowing. The Federal Home Loan Bank requires
minimum stock ownership of 5% of outstanding advances.

FHLB advances grew $22,896,760 or 216.81% to $33,457,312. These advances are
used on both a short-term basis for loan funding needs and a long-term basis as
a means of managing fixed rate mortgages. At March 31, 1995, $24.0 million had
original maturities of less than a year while $9.4 million had maturities in
excess of a year.

Deposit accounts increased $619,702 or 0.53% to $117,818,439. Interest bearing
checking accounts increased $3.64 million, noninterest bearing checking accounts
(including commercial accounts and the Bank's outstanding official checks)
declined $113,000 due to a decline of $1.39 million in official checks
outstanding. Money market accounts declined $2.18 million.

LIQUIDITY AND CAPITAL RESOURCES

Newnan Savings Bank has traditionally maintained levels of liquidity in excess
of levels required by regulatory authorities. As a member of the Federal Home
Loan Bank system, the Bank is required to maintain a daily average balance of
cash and eligible liquidity investments in an amount equal to a monthly average
of 5% of withdrawable savings and short-term borrowings. Newnan Savings Bank's
liquidity level was 25.22% and 14.11% at March 31, 1996 and 1995, respectively.

The Bank's operational needs, demand for loan disbursements, and savings
withdrawals can be met by loan principal and interest payments, the sale of
fixed-rate long-term mortgages in the secondary market, new deposits, and excess
liquid assets. While significant loan demand and deposit withdrawal could alter
this condition, the Bank has sufficient borrowings capacity through Federal Home
Loan Bank advances and other short-term borrowing to manage such an occurrence.
At March 31, 1996, the Bank's remaining borrowing capacity with the Federal Home
Loan Bank totaled $15.6 million.

Newnan Savings Bank is subject to OTS regulations that impose certain minimum
regulatory capital requirements. As of March 31,1996, the standards were:
(1) tangible capital composed of stockholders' equity less certain intangible
assets and investments in "nonincludable" subsidiaries of 1.5% of total
assets; (2) core capital representing tangible capital plus supervisory
goodwill and other intangible assets of 3.0% of total assets; and
(3) risk-based capital composed of tangible capital plus general loan loss
reserves of 8.0% of the value of risk-weighted assets. In calculating its
regulatory capital, the Bank must deduct from its capital certain intangible
assets plus its investment (which includes contributed capital and any loans,
extensions of credit, or guarantees) in its real estate subsidiary, Jefferson
Ventures, Inc. This investment is subject to a transition rule whereby the
deduction of the investment is phased-in over a period of time. At March 31,
1996, 60% of this investment is deducted. After July 1, 1996, the entire
amount is deducted at which time the regulatory requirement is said to be
"fully phased-in." As a result of land sales at Jefferson Ventures, Inc., the
Bank has reduced its investment in real estate subsidiaries from $2,991,000
at March 31,

F-3
<PAGE>

1995 to $150,000 at March 31, 1996, and as such, the required capital amounts
under the current regulatory requirements are not significantly different
from the required amounts under the fully phased-in requirements.

The following is a reconciliation (dollars in thousands) at March 31, 1996 and
1995 of the Bank's equity capital under generally accepted accounting principles
to regulatory capital (fully phased-in requirements are on a pro forma basis
using rules effective July 1, 1996).

RECONCILIATION OF STOCKHOLDERS' EQUITY TO REGULATORY CAPITAL
<TABLE>
<CAPTION>
1996 1995
------------------- -------------------
Fully Fully
Current Phased-in Current Phased-in
-----------------------------------------
<S> <C> <C> <C> <C>
Stockholders' equity per consolidated statements of
financial condition $20,266 $20,266 $16,603 $16,603
Less:
Investments in and advances to subsidiaries 90 150 1,196 2,991
Goodwill and other intangible assets 117 117 143 143
-----------------------------------------
Tangible and core capital 20,059 19,999 15,264 13,469
Plus: General allowance for loan losses 1,151 1,151 1,162 1,162
-----------------------------------------
Risk-based capital $21,210 $21,150 $16,426 $14,631
-----------------------------------------
-----------------------------------------
Percentage of subsidiary investment deducted 60% 100% 40% 100%
-----------------------------------------
-----------------------------------------
</TABLE>

The following Table sets forth the Bank's capital levels at March
31,1996 relative to the regulatory minimums under the fully phased-in
requirements.

FULLY PHASED-IN REGULATORY CAPITAL

As of March 31, 1996

Tangible Core Risk-Based
------------------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Bank Capital $19,999 $19,999 $21,150
Regulatory requirement 2,672 5,345 8,255
------------------------------
Excess Amount $17,327 $14,654 $12,895
------------------------------
------------------------------
Required Ratio 1.5% 3.0% 8.0%
------------------------------
------------------------------
Actual Ratios 11.2% 11.2% 20.5%
------------------------------
------------------------------
Proforma ratios after payment of special dividend to
Newnan Holdings (see below) 5.9% 5.9% 11.2%
------------------------------
------------------------------
</TABLE>

As of March 31, 1996 the Bank exceeds all current and fully phased-in
regulatory capital requirements as set forth by the Office of Thrift
Supervision.

In conjunction with the proposed merger with Southside, Newnan Savings will
pay a special dividend to Newnan Holdings. These funds will be used to
purchase shares of Southside acquired with cash. After payment of such
dividend, Newnan Savings will meet all regulatory capital requirements.
Proforma regulatory capital ratios are shown in the above table.

F-4

<PAGE>

The OTS has delayed indefinitely the implementation of an interest rate risk
component of the risk-based capital standard which was scheduled to be
effective September 30, 1994. If implemented, the Bank does not expect that
it would have any additional capital requirement under this rule. The OTS has
also proposed a rule to revise the core capital standard to three percent for
institutions having the strongest financial and managerial condition. All
other institutions would be required to maintain a core capital of four or
five percent. The level of additional capital required will be determined
based on the OTS's supervisory judgment of an institution's capital adequacy
and their assessment of relevant factors present in each institution.

Management is not aware of any other current recommendations by the
regulatory authorities, events, or trends, which, if they were to be
implemented, would have a material effect on the Bank's liquidity, capital
resources or operations.

EFFECTS OF INFLATION

Newnan Savings Bank's consolidated financial statements and related data
presented herein have been prepared in accordance with generally accepted
accounting principles which require the measure of financial position and
operational results in terms of historical dollars, without considering
changes in the relative purchasing power of money over time due to inflation.

Unlike most industrial companies, virtually all of the assets and liabilities
of a financial institution are monetary in nature. As a result, interest
rates have a more significant impact on a financial institution's performance
than the effects of inflation. Interest rates do not necessarily move in the
same direction or in the same magnitude as the price of goods and services,
since such prices are affected by inflation. The yield and maturity structure
of the institution's assets and liabilities is critical to the maintenance of
acceptable performance levels.

RESULTS OF OPERATIONS FOR THE YEARS ENDED
MARCH 31, 1996, 1995 AND 1994

NET EARNINGS

1996 COMPARED TO 1995. For 1996, Newnan Savings Bank earned record net
profits of $4,049,955, or $2.71 per share compared to $1,620,064 or $1.14 per
share for 1995, an increase of 150%. The most significant item contributing
to the improvement was a pretax increase of $2,451,601 in gain on sale of
real estate held for development and sale, resulting from the sale of
commercial tracts of land through Jefferson Ventures, Inc., the Bank's real
estate subsidiary. Additionally, net interest income increased $561,764, the
result of an increase in the Bank's interest earning assets; gain on sale of
loans increased $348,716 due to an increase in the volume of loans sold of
$6.4 million and to higher profit margins on loans sold; a decline of
$181,111 in compensation costs resulted from closing of several of its
mortgage origination offices in the latter part of fiscal 1995; and other
operating

F-5
<PAGE>

expenses declined $88,053.

1995 COMPARED TO 1994. For 1995, the Bank recorded net earnings of
$1,620,064, an increase of $532,606 over the previous year. The most
significant contribution to the increase in earnings was a $1,024,055
increase in net interest income, the result of an increase in the balance of
the Bank's earning assets. In addition, earnings increased due to a decline
in the provision for loan losses of $167,000, due to management's assessment
of the adequacy of its reserves; an increase of $233,484 in loan servicing
and other loan fees, the result of a decline of $299,146 in amortization of
excess servicing fees receivable; and a decline of $250,811 in the writedown
of premises and equipment recorded in 1994 in connection with the closing of
a branch facility. These items were offset by a $440,191 decline in the gain
on sale of loans, the result of a decline in the volume of loans sold and
tighter margins received on such loans due to the rising interest rate
environment which existed during the fiscal year; and a $250,000
extraordinary item recorded in 1994 as a credit to earnings, representing the
cumulative effect of the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 109 which changed the method of accounting for income
taxes.

NET INTEREST INCOME

1996 COMPARED TO 1995. Net interest income increased $561,764 or 10.52%, from
$5,338,225 for 1995 to $5,899,989 for 1996. Table 1 analyzes the Bank's
average balance sheet along with average yields and rates for the pertinent
categories of interest earning assets and interest bearing liabilities. As
shown in the table, the average balance of interest earning assets increased
by $7.6 million. While average interest earning assets increased by $7.6
million, virtually all of the increase came in the Bank's loan portfolio,
which normally earns higher rates of interest than do investments and
interest bearing deposits. Average balances, interest income and average
yields for mortgage backed securities, investment securities and Federal Home
Loan Bank stock did not vary materially from 1995 to 1996. A decline in
average balance of interest bearing deposits was offset by an increase in
average rate, such that interest income amounts did not vary significantly.

The $7.6 million increase in earning assets was primarily funded by growth in
noninterest bearing deposits, whose average balance increased $2.5 million,
and certificates of deposit, whose average balance increased $7.1 million.
While the average yield on interest earning assets increased 67 basis points
to 8.32%, the average rate on interest bearing liabilities increased 72 basis
points to 5.00%. The interest rate spread for 1996 was consistent with that
for 1995, declining slightly from 3.37% to 3.32%. However, the growth in
noninterest bearing deposits enabled the net interest margin to increase from
3.77% in 1995 to 3.95% in 1996.

The average balance of certificates of deposit increased $7.06 million as a
result of a marketing effort by the Bank to gather new deposits. The focus of
the marketing program was a one year certificate bearing an interest rate of
6.00%. As a result of this, average rates on certificates increased from
4.74% in 1995 to 5.90% in 1996. Due to the growth in certificates, the Bank
was able to reduce the level of its FHLB advances, which declined from an
average balance of $20.3 million in 1995 to $16.7 million in 1996.

F-6
<PAGE>

Table 2 on page F-22 analyzes the changes in interest income and expense to
provide an estimate of the amount of such changes resulting from changes in
volume (average balance) of interest earning assets and interest bearing
liabilities, and the amount resulting from changes in the average yields
earned and rates paid on those amounts. As shown in the table, the growth in
the average balances resulted in an increase of $575,000 in net interest
income while changes in yields and rates resulted in a decline of $14,000.
Interest income on loans increased $1.6 million of which $761,000 was
attributable to increases in volume and $871,000 was due to increases in
yield. All other items of interest income did not vary materially. Interest
expense on certificates of deposit increased $1.20 million of which $361,000
was due to increase in volume while $837,000 was due to increase in rates.
Interest on FHLB advances declined $181,000. The reduction in volume resulted
in a decline of $212,000 in interest paid on these funds, while an increase
in the average rate resulted in an increase in interest of $31,000.

1995 COMPARED TO 1994. Net interest income increased $1,024,055, or 23.74%,
to $5,338,225. During the year, the average balance of the Bank's interest
earning assets increased by $22.0 million, or 18.39%, to $141.6 million.
Within the portfolio of average interest earning assets, loans receivable
increased $30.6 million while interest bearing deposits, investments, and
mortgage backed securities declined by $8.6 million. The growth in average
loans outstanding consisted mainly of an $8 million increase in construction
loans and an $18 million increase in adjustable rate mortgages ("ARMs"). The
ARMs were originated in 1994 and have interest rates which adjust annually
based upon one-year Treasury securities. The annual and lifetime interest
rate adjustment limitations associated with these are either 2% and 6%, or 1%
and 4%, respectively. In addition to its volume growth, the average yield on
loans receivable increased from 7.77% in 1994 to 7.95% in 1995. The increase
in yields was the result of increased construction lending, whose rates are
based on prime, and the increased portfolio of ARMs. The starting rates for
the ARMs at the time of origination varied from approximately 5.00 - 6.25%
compared to existing fully indexed rates of 6.25 - 8.60%. These rates were in
excess of the Bank's cost of funds which approximated 4.00 - 4.25%. All
subsequent interest rate adjustments are subject to limitations noted
immediately above. During fiscal 1995, the rates for these loans began to
adjust upward. These loans were primarily obtained by individuals purchasing
homes.

Average mortgage backed securities declined $5.7 million resulting in a
decline in income from $972,000 in 1994 to $516,000 in 1995. During 1994,
mortgage backed securities (primarily Collateralized Mortgage Obligations
("CMOs") purchased in 1991 at yields of 6.00% - 6.50% were repaid, and a
portion of the funds were reinvested in 1994 and 1995 at lower rates. This
resulted in a reduction of yield on such securities from 6.23% in 1994 to
5.24% in 1995. All other components of interest income did not vary
materially from 1994 to 1995.

The growth in the loan portfolio was funded primarily by an increase in FHLB
advances, whose average balances grew from $5.9 million in 1994 to $20.3
million in 1995. Interest paid on these advances grew from $318,000 in 1994
to $1,166,000 in 1995, while the average rate paid increased from 5.40% to
5.74%. Average balance of passbook accounts increased from $16.8 million to
$19.1 million. Average balances, interest expense, and average rates paid on
other interest bearing deposits did not vary materially from 1994 to 1995.
Average balances on noninterest bearing deposits and stockholders' equity
increased by $5.06 million and $1.05 million, respectively. Use of these
noninterest bearing deposits enabled net interest margin to increase from
3.61% in 1994 to 3.77%

F-7
<PAGE>

in 1995. The Bank's interest rate spread increased slightly from 3.34% in
1994 to 3.37% in 1995. Net interest income increased $1.02 million due almost
entirely to the growth in the Bank's average interest earning assets.
Interest income from loans increased $2,598,000 of which $2,427,000 was due
to increases in volume of loans while $171,000 was due to increases in
yields. Income from mortgage backed securities declined $456,000 of which
$319,000 was due to the decline in volume of these securities while $137,000
was due to declines in yields. Interest on investment securities and Federal
Home Loan Bank stock declined $102,000 due almost entirely to declines in
average balances due to maturities.

Interest paid on FHLB advances increased $848,000 of which $827,000 was due
to increases in the average amounts outstanding. Interest on certificates of
deposit increased $122,000 of which $101,000 was due to growth in such
deposits. All other items of interest bearing liabilities did not differ
materially from 1994 to 1995.

PROVISION FOR LOAN LOSSES

The provision for loan losses is based on management's evaluation of economic
conditions, size and composition of the loan portfolio, the historical charge
off experience, the level of nonperforming and past due loans and other
indicators derived from reviewing the loan portfolio. Management performs
such reviews quarterly and determines the level of loan loss allowances
needed. At March 31, 1996 management believes that its allowance for loan
losses was adequate to provide for inherent losses.

Generally, asset quality has improved since 1993. Nonaccruing loans as a
percentage of total loans declined from 2.01% in 1993 to 0.54% in 1996, and
declined as a percentage of total assets from 1.33% to 0.39% during the same
period. Total nonperforming assets have declined as a percentage of total
assets from 2.05% in 1993 to 0.45% in 1996 due to declines in nonaccruing
loans and increases in total assets. The ratio of the Allowance for Loan
Losses to nonaccruing loans has increased from 67.19% in 1993 to 192.29% in
1996, due to declines in past due loans and an increase in the level of
reserves. The ratio of the allowance to total loans and REO has declined from
1.37% in 1993 to 1.05% in 1996 due to the growth in the loan portfolio.

F-8

<PAGE>

At March 31, 1996 and March 31, 1995, nonperforming assets were as follows:

<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
<S> <C> <C>
Nonaccruing and past due loans
Real estate
Construction $ -- $ 210,200
First mortgage 543,120 472,324
Second mortgage 26,976 2,967
Consumer 142,869 186,976
-------- ---------
Total nonaccruing and past due loans $712,965 $ 872,467
-------- ---------
-------- ---------
Percentage of total loans 0.54% 0.67%
---- ----
---- ----
Percentage of total assets 0.39% 0.52%
---- ----
---- ----
Real estate acquired through foreclosure and repossessed
assets $113,268 $ 124,485
-------- ---------
-------- ---------
Total nonperforming assets $826,233 $ 996,952
-------- ---------
-------- ---------
Percentage of total assets 0.45% 0.59%
---- ----
---- ----
Potential problem loans $982,383 $1,982,955
-------- ---------
-------- ---------
</TABLE>

1996 COMPARED TO 1995. Provision for loan losses was $10,000 compared to
$108,000 for 1995. For 1996, net chargeoffs were $73,277 compared to a net
recovery of $12,119 in 1995. At March 31, 1996, the allowance for loan losses
was $1,371,416, or 192.35% of nonaccruing loans compared to 164.44% at March 31,
1995. Nonaccruing loans declined from $872,462 at March 31, 1995 to $712,965 at
March 31, 1996 while potential problem loans declined from $1,982,955 to
$982,383 for the same period.

At March 31, 1996, past due and nonaccruing loans included six mortgage loans
totaling $543,120 secured by single family dwellings, three second mortgage
loans totaling $26,976, and 37 consumer loans totaling $142,869. The largest
single loan past due is a mortgage loan in the amount of $161,697.

Potential problem loans were $982,383 at March 31, 1996 and consisted mainly of
three loans outstanding to a single group of borrowers totaling $895,079. These
loans are secured by various rental properties and tracts of commercial and farm
land, and were classified as potential problem loans at March 31, 1995. The
value of these properties exceeds the balances of the respective loans.

1995 COMPARED TO 1994. Provision for loan losses was $108,000 compared to
$275,000 for 1994.

F-9
<PAGE>

The Bank had improvement in the quality of its loan portfolio during 1995
which led to a lesser provision for loan losses than in 1994. Furthermore, of
the $108,000 provided in fiscal 1995, $103,000 was provided in the first six
months of the year.

For the year, the Bank's recoveries exceeded loans charged off by $12,119,
compared to a net chargeoff level of $105,715 for 1994. At March 31, 1995 the
allowance for loan losses was $1,434,693, or 164.44% of past due and
nonaccruing loans compared to 92.09% at March 31, 1994. Management believes
that the year-end allowance was adequate in light of the collateral position
of past due and nonaccruing loans and potential problem loans.

At March 31, 1995, nonaccruing loans included three loans to one borrower
totaling $225,766, or 26% of nonaccruing loans, secured by one triplex and two
duplexes used for rental property whose value management believed was sufficient
to cover the outstanding loan balance. Other nonaccruing loans consisted of
seven loans totaling $431,721 secured by 1-4 family dwellings and 28 consumer
and second mortgage loans totaling $189,943.

Potential problem loans were $1,982,985 at March 31, 1995, the largest of which
was a single first mortgage loan in the amount of $1,078,164 net of capitalized
interest of $191,873 which was classified as nonaccrual in 1994. This loan was
restructured in February 1995 such that all previous unpaid interest was
capitalized as a part of the outstanding principal balance of the new note and
reserved as a component of deferred income. This was secured by a single family
dwelling on Sea Island, Georgia whose value exceeds the balance of the loan.
The remaining potential problem loans consisted of three loans outstanding to a
single group of borrowers totaling $904,791 which were classified as potential
problem loans at March 31, 1994. These loans were secured by various rental
properties and tracts of commercial and farm land. The value of these
properties exceeds the balances of the loans.

OTHER INCOME

1996 COMPARED TO 1995. Other income increased $2,891,235, or 122.69%, to
$5,247,826. The significant component was a $2,451,601 increase in the gain on
sale of real estate held for development and sale (see "Real Estate Activities"
below). Gain on sale of loans increased $348,716, or 123.67% to $630,684. The
volume of loan sales increased from $37.7 million in fiscal 1995 to $44.2
million in 1996. In addition to the volume growth, profit margins received on
loans sold increased due to a falling interest rate environment which existed
throughout the year. Furthermore, during fiscal 1995 the Bank began to broker
its originations to other investors under which it receives a service release
premium at the time of sale. Since this strategy was in place during the
entirety of fiscal 1996 versus a portion of fiscal 1995, resulting gains were
higher in 1996.

1995 COMPARED TO 1994. Other income declined $190,574, or 7.48% to
$2,356,591. The primary reason for the decline was a $440,191 reduction in
gain on sale of loans. For fiscal 1995, the volume of loans sold declined
$29.5 million, from $67.2 million in 1994 to $37.7 million in 1995. In fiscal
1995, a higher interest rate environment brought about reduced originations
of long-term fixed-rate mortgages (which the bank has traditionally sold in
the secondary market) and much of the refinance market ended and customers
purchasing homes opted for ARMs due to their low introductory rates.
Additionally, as the refinance market ended, the large number of mortgage
brokers remaining brought increased competition for originations. In response
to this, in fiscal 1995 the Bank began to broker

F-10
<PAGE>

its originations to other investors, using service release premiums received
on the sale of these loans to offset lower gains on sale of these loans due
to lower interest rates offered to the customer so that the Bank's rates
would be competitive in the marketplace. Gain on sale of real estate held for
development and sale declined $65,870 or 7.94%, to $763,403. For a discussion
of this, see "Real Estate Activities" below.

These declines were offset by a $233,484 increase in loan servicing and other
loan fees. This increase was caused by a decline of $299,146 in the
amortization of excess servicing fees receivable from 1994 to 1995. The
excess servicing fees receivable related to loans sold before 1991 (with
servicing retained) in which the servicing fee spread (the difference between
the rate paid by the borrower to the Bank and the rate at which the bank in
turn paid interest to the investor in the loans) exceeded the normal
servicing fee rate of 0.25%. During 1994, the remaining balance of the excess
servicing fees receivable was fully amortized.

REAL ESTATE ACTIVITIES

The Bank engages in real estate development through its second tier subsidiary,
Jefferson Ventures, Inc. which owns the White Oak residential development. The
table below summarizes real estate sales for the periods in review.

SUMMARY OF REAL ESTATE SALES

For The Years Ended March 31,
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Number of lots sold 40 21 60
Acres of land sold 71 165 143
Net sales proceeds $4,496,834 $1,715,503 $2,413,214
Less: Basis of land sold 1,336,081 972,909 1,593,887
Less: Gains deferred 13,241 71,445 173,702
Add: Recognition of gains previously
deferred 67,492 92,254 183,648
---------------------------------
---------------------------------
Gain on sale of real estate $3,215,004 $ 763,403 $ 829,273
---------------------------------
---------------------------------
</TABLE>
NOTE: The above table represents gains from real estate sales. Condensed
consolidated financial statements for Jefferson Ventures, Inc. and its parent
company, Newnan Financial Services, Inc., can be found in Note 16 of the
Notes to Consolidated Financial Statements.

The White Oak development was pruchased in 1984. The Bank, through its
subsidiary, began to develop the property into residential building lots
shortly thereafter. Total purchase price of the property was allocated to
specific parcels according to their proportional estimated market value. As
specific parcels were developed, construction costs were capitalized directly
to the parcel's basis as were interest costs related to the construction costs.
Upon completion, the basis of the developed parcel was allocated to the
resulting lots based on the relative sales price of the lots. In 1991, due to
regulatory restrictions on investing in real estate development activities,
the Bank ceased development activity and has followed a strategy of selling
off in an orderly manner remaining developed lots to builders and undeveloped
parcels to other developers. As a result, only minimal costs have been added
to the basis of the property since 1991.

1996 COMPARED TO 1995. For 1996, the net gain on sale of real estate held
for development and sale increased $2,451,601 to $3,215,004. This increase is
due to 1996 sales including tracts of undeveloped commercial property which
carries a higher sales price than land sold for residential development. The
number of lots sold increased from 21 in 1995 to 40 in 1996 due to a bulk
sale of lots occurring in 1996.

F-11
<PAGE>

At March 31, 1996, the White Oak development consisted of 15 residential
building lots and approximately 1,660 acres of open land. The estimated
market value of the property exceeds its carrying value of $3.7 million. At
March 31, 1996, deferred income from real estate gains totalled $21,315.

1995 COMPARED TO 1994. The net gain on sale of real estate held for
development and sale declined $65,870 to $763,403 due to a decline in lot
sales. During the year, the number of lots sold declined from 60 in 1994 to
21 in 1995. Since 1991, rather than developing open land into buildable
lots, the Bank (through its subsidiary) has emphasized liquidating its
remaining lot inventory while selling open tracts of land to other developers.

At March 31, 1995 White Oak consisted of 55 developed lots and approximately
1,731 acres of open land. The estimated market value of the property exceeds
its carrying value of $5.1 million. At March 31, 1995, deferred income from
real estate gains totalled $81,567.

GENERAL AND ADMINISTRATIVE EXPENSES

1996 COMPARED TO 1995. General and administrative expenses declined $425,283
or 8.39% to $4,645,964. Compensation costs declined $181,111 or 7.98% due to
a reduction of $299,031 in loan origination commissions and salaries
associated with Citizens Mortgage Group, Inc., the Bank's mortgage
origination subsidiary. This decline is attributable to the closing of
several mortgage origination offices in the fourth quarter of fiscal 1995.
This decline was offset in part by an increase of $115,005 in compensation
costs in connection with Bank operations. Of this increase, $42,570 was due
to an increase in accrued incentive compensation expense while $47,209 was
due to an increase in loan origination commissions, the result of increased
loan originations.

Office properties and equipment costs declined $76,224 or 8.61% to $809,277
primarily due to a reduction of $124,039 of such costs for Citizens Mortgage
Group, Inc as a result of the closing of several of its mortgage origination
offices. This reduction was offset by a $55,216 increase in costs associated
with Bank operations, primarily the result of depreciation expense incurred
as a result of computer equipment purchased in fiscal 1996. Data processing
charges declined $63,798 or 22.30% to $222,285 due to reduced fees negotiated
as a part of the Bank's contract renewal with its data processing provider.
Other operating expenses declined $88,053 or 6.57% to $1,251,800. The
majority of the reduction results from a reduction in administrative costs
associated with Citizens Mortgage Group, Inc

1995 COMPARED TO 1994. General and administrative expenses declined
$186,630, or 3.55% to $5,071,247. The most significant reason for this
decline relates to a $250,811 adjustment made in 1994 to write down to its
net realizable value the cost basis of a branch office closed in that year.
Premises and equipment costs declined $28,388 or 3.11% due to a reduction of
$77,458 in property costs at White Oak which relates specifically to declines
in property taxes and homeowner assessments caused by a reduction in the
inventory of developed lots and the remaining acreage of open land. This
decrease was partially offset by approximately $50,000 in increased costs for
repairs at branch facilities and maintenance of computer equipment used in
the Bank's check processing activities.

F-12
<PAGE>

Compensation, payroll taxes and fringe benefits increased $31,329 or 1.40% to
$2,269,250. Contributing to this increase for 1995 was a $63,168 decline in
the amount of direct loan origination costs deferred and matched with loan
fees, the result of reduced loan origination volume. Under Statement of
Financial Accounting Standards No. 91 ("SFAS 91"), banks are required to net
loan origination fees collected against direct loan costs (primarily
compensation costs) and amortize such amount over the life of the loans as an
interest component. As loan origination volume declines, the amount of such
offsets will also decline, causing reported compensation costs to increase.
Salary expense increased $101,109 of which $19,000 relates to an increase in
accrued incentive compensation expense while approximately $50,000 relates to
cost of living increases over the previous year. These increases were offset
by a $145,847 decline in commissions paid to loan originators, the result of
reduced loan volume. Other operating expenses increased $56,132 or 4.37% as a
result of a $16,979 increase in general expenses of the mortgage subsidiary;
and a $42,500 increase in legal and accounting costs.

FOURTH QUARTER RESULTS

Earnings for the fourth quarter of the year ended March 31, 1996 totaled $
1,731,916. During the quarter, the Bank recognized $ 1,918,428 in gains from
sales of real estate of which $1,835,668 related to previously deferred gains
from sales which took place in the first quarter of the year. As required
under SFAS 66, gains from these sales were deferred as the Bank financed the
sales without obtaining the minimum down payment required under SFAS 66.
During the fourth quarter, these loans were paid in full by the purchasers of
the properties, enabling the Bank to recognize in its earnings the previously
deferred gains from these sales.

SAIF ASSESSMENT

Legislation is currently being proposed in the United States Congress, which
among other things, would require members of the Savings Association
Insurance Fund (SAIF) to pay a special assessment to recapitalize the fund
and thereafter merge the SAIF into the Bank Insurance Fund (BIF). While
negotiation of specific provisions of the proposed legislation is ongoing
between the House and Senate Banking Committees, it is anticipated that the
SAIF recapitalization will occur in 1996. Under the proposed legislation,
SAIF members will pay the special assessment to recapitalize their fund based
on their insured deposits held on March 31, 1995. The amount of the
assessment is to be determined by the Federal Deposit Insurance Corporation
and is expected to be approximately 85 basis points per $100 of SAIF insured
deposits. Based on the proposed legislation and the Bank's level of insured
deposits held on March 31, 1995, the Bank anticipates that its potential
liability under this proposed legislation could result in a pretax charge to
earnings of approximately $998,000. Such charge will be determined by the
final legislation.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and For Long-Lived Assets to be Disposed Of," (SFAS 121). The
provisions of SFAS 121

F-13
<PAGE>

require that long-lived assets be reviewed for impairment whenever events or
changes in circumstance indicate that the carrying amount may not be
recoverable. In performing the review of long-lived assets that will be held
and used by the Bank, recoverability is based on the future cash flows
expected from the use of the asset and its eventual disposition. If the asset
is impaired, an impairment loss equal to the excess of the carrying value of
the asset over its fair value must be recorded. SFAS 121 is effective for
financial statements for fiscal years beginning after December 15, 1995. The
Bank does not believe the provisions of SFAS 121 will have a material impact
on the consolidated financial statements.

In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing
Rights" (SFAS 122). SFAS 122 requires that the Bank recognize as separate
assets rights to service mortgage loans for others, however those servicing
rights are acquired. SFAS 122 also requires that the Bank assess its
capitalized mortgage servicing rights for impairment based on the fair value
of those rights. SFAS 122 is effective for financial statements issued for
fiscal years beginning after December 15, 1995. The Bank does not believe the
provisions of SFAS 122 will have a material impact on the consolidated
financial statements.

In October 1995, the FASB issued SFAS 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 establishes financial accounting and
reporting standards for stock-based employee compensation plans. Those plans
include all arrangements by which employees receive shares of stock or other
equity instruments of the employer or the employer incurs liabilities to
employees in amounts based on the price of the employer's stock. Such
instruments include stock purchase plans, stock options, restricted stock,
and stock appreciation rights. SFAS 123 also applies to transactions in which
an entity issues its equity instruments to acquire goods or services from
nonemployees.

A new method of accounting for stock-based compensation arrangements with
employees is established by SFAS 123. The new method is a fair value based
method rather than the intrinsic value based method. However, SFAS 123 does
not require an entity to adopt the new fair value based method for purposes
of preparing its basic financial statements. Entities are allowed (1) to
continue to use their existing method or (2) adopt the SFAS 123 fair value
based method. The selected method would apply to all of an entity's
compensation plans and transactions.

SFAS 123 requires that an employer's financial statements include certain
disclosures about stock-based employee compensation arrangements regardless
of the method used to account for them. The accounting requirements of this
statement are effective for transactions entered into in fiscal years that
begin after December 15, 1995. The disclosure requirements are effective for
financial statements for fiscal years beginning after December 15, 1995. The
Bank has not determined the impact of adopting SFAS 123.

ASSET/LIABILITY MANAGEMENT

It is the Bank's objective to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the framework of
established cash, loan, investment, borrowing and capital

F-14
<PAGE>

policies. Certain officers are charged with the responsibility for monitoring
policies and procedures that are designed to ensure acceptable composition of
the asset/liability mix.

The Bank's asset/liability mix is monitored on a regular basis with a report
reflecting the interest rate sensitive assets and interest rate sensitive
liabilities being prepared and presented to the Board of Directors and
management's Asset/Liability Committee on a quarterly basis. The objective of
this policy is to monitor interest rate sensitive assets and liabilities so
as to minimize the impact of substantial movements in interest rates on
earnings. An asset or liability is considered to be interest rate-sensitive
if it will reprice or mature within the time period analyzed, usually one
year or less. The interest rate-sensitivity gap is the difference between the
interest-earning assets and interest-bearing liabilities scheduled to mature
or reprice within such time period. A gap is considered positive when the
amount of interest rate-sensitive assets exceeds the amount of interest
rate-sensitive liabilities. A gap is considered negative when the amount of
interest rate-sensitive liabilities exceeds the interest rate-sensitive
assets. During a period of rising interest rates, a negative gap would tend
to adversely affect net interest income, while a positive gap would tend to
result in an increase in net interest income. Conversely, during a period of
falling interest rates, a negative gap would tend to result in an increase in
net interest income, while a positive gap would tend to adversely affect net
interest income. If the Bank's assets and liabilities were equally flexible
and moved concurrently, the impact of any increase or decrease in interest
rates on net interest income would be minimal.

A simple interest rate "gap" analysis by itself may not be an accurate
indicator of how net interest income will be affected by changes in interest
rates. Accordingly, the Bank also evaluates how the repayment of particular
assets and liabilities is impacted by changes in interest rates. Income
associated with interest-earning assets and costs associated with
interest-bearing liabilities may not be affected uniformly by changes in
interest rates. In addition, the magnitude and duration of changes in
interest rates may have a significant impact on net interest income. For
example, although certain assets and liabilities may have similar maturities
or periods of repricing, they may react in different degrees to changes in
market interest rates. Interest rates on certain types of assets and
liabilities fluctuate in advance of changes in general market rates, while
interest rates on other types may lag behind changes in general market rates.
In addition, certain assets, such as adjustable rate mortgage loans, have
features (generally referred to as "interest rate caps") which limit changes
in interest rates. Prepayment and early withdrawal levels also could deviate
significantly from those assumed in calculating the interest rate gap. The
ability of many borrowers to service their debts also may decrease in the
event of an interest rate increase.

F-15
<PAGE>

ANALYSIS OF INTEREST SENSITIVITY
As of March 31, 1996
(Dollars in Thousands)

<TABLE>
<CAPTION>
0 - 3 3- 12 1 - 3 3 - 5 Over
Months Months Years Years 5 Years Total
<S> <C> <C> <C> <C> <C> <C>
Interest Bearing Deposits $ 524 $ -- $ -- $ -- $ -- $ 524
Investment Securities 20,491 2,004 299 -- -- 22,794
Mortgage Backed Securities 499 4,243 3,516 400 474 9,132
Loans receivable, net of deferred income (1) 26,634 51,193 28,464 8,080 17,953 132,324
------- ------- ------- ------ ------- --------
Total Interest Earning Assets $48,148 $57,440 $32,279 $ 8,480 $18,427 $164,774
------- ------- ------- ------ ------- --------
------- ------- ------- ------ ------- --------
Interest Bearing Liabilities
NOW Accounts $ 1,884 $ 4,558 $ 5,917 $ 1,583 $ 3,506 $ 17,448
Money Market Accounts 5,981 -- -- -- -- 5,981
Passbook Savings 764 2,073 4,300 2,803 6,719 16,659
Certificates of Deposit 19,512 30,786 22,364 4,699 -- 77,361
Federal Home Loan Bank Advances 21,317 1,229 2,534 2,534 1,820 29,434
Notes Payable 17 -- 37 -- -- 54
------- ------- ------- ------ ------- --------
Total Interest Bearing Liabilities $49,475 $38,646 $35,152 $11,619 $12,045 $146,937
------- ------- ------- ------ ------- --------
Interest Rate Sensitivity Gap $(1,327) $18,794 $(2,873) $(3,139) $ 6,382 $ 17,837
------- ------- ------- ------ ------- --------
------- ------- ------- ------ ------- --------
Cumulative Interest Rate Sensitivity Gap $(1,327) $17,467 $14,594 $11,455 $17,837
------- ------- ------- ------ -------
------- ------- ------- ------ -------
Cumulative Interest Rate Sensitivity Gap /
Total Interest Earning Assets (0.81) 10.60 8.86 6.95 10.83
------- ------- ------- ------ -------
------- ------- ------- ------ -------
</TABLE>

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

(1) Includes loans held for sale and nonaccrual loans.

The above table summarizes interest-sensitive assets and liabilities for
the Bank as of March 31, 1996. Adjustable rate loans are included in the
period In which their interest rates are scheduled to adjust. Fixed rate
loans are included in the periods in which they are anticipated to be
repaid based on scheduled maturities and anticipated prepayments.
Investment securities are included in their period of maturity while
mortgage backed securities are included according to expected repayment.
Certificates of deposit, Federal Home Loan Bank advances, and notes
payable are presented according to contractual maturity. Money market
accounts are considered to reprice in 0-3 months. NOW accounts and
passbook accounts are presented using estimated decay rates similar to
those used by the Office of Thrift Supervision. These assumed rates are
as follows (in percentages):

NOW Passbook
0-3 Months 10.91 4.55
3-12 Months 26.09 12.45
1-3 Years 33.87 25.82
3-5 Years 9.06 16.83
Over 5 Years 20.07 40.35
----------------
100.00 100.00

F-16
<PAGE>

Newnan Savings' cumulative one year interest rate sensitivity gap ratio was
10.60 at March 31, 1996. This indicates that for the one year period
following this date, the Bank's interest-earning assets would reprice at a
rate faster than its interest-bearing liabilities. The Bank's positive gap
position is attributable to its portfolio of construction loans, which
normally mature in six months, and adjustable rate mortgage loans, whose
rates reprice annually. A positve interest rate sensitivity ratio indicates
that a rising interest rate environment would have a positive impact on
earnings of the Bank, while a declining interest rate environment could have
a negative impact on earnings. The Bank has sought to limit its exposure to
changes in interest rates by originating short-term or adjustable rate
mortgages and construction loans to be held in portfolio while originating
fixed-rate mortgages underwritten to specifications such that they can be
sold in the secondary market or to private investors; and to maintain an
investment portfolio of bonds and mortgage backed securities having
maturities and average lives of less than five years.

On November 3, 1995, the Bank announced the signing of a definitive agreement to
merge with Southside Financial Group, Inc. ("Southside"), the parent of Citizens
Bank & Trust of Fayette County. In conjunction with the proposed business
combination, the Bank filed on May 3, 1996 an application with the Office of
Thrift Supervision for the purpose of effecting a Plan of Reorganization (the
Plan) such that a new entity, Newnan Holdings, Inc. would acquire all
outstanding shares of the Bank whereby each shareholder of the Bank receives one
share of Newnan Holdings, Inc. stock for each share of Bank stock. The plan
is subject to and conditioned upon the simultaneous consummation of the
agreement with Southside. Under the terms of the definitive agreement, each
shareholder of Southside will receive $41.00 in cash for each share of Southside
common stock. Any shareholder owning 5,000 or more common shares may elect to
receive up to, but not more than, fifty percent of their consideration in the
form of shares of Newnan Holdings, Inc. The aggregate number of common shares of
Newnan Holdings, Inc. which will be available for issuance to Southside
shareholders shall not exceed 145,000 shares. An oversubscription will result
in a pro rata reduction of the requested shares issued to Southside's electing
shareholders. The acquisition is subject to approval from various regulatory
authorities and Southside's shareholders. As of December 31, 1995 total assets
of Southside approximated $82,000,000 and stockholders' equity approximated
$9,800,000.

F-17

<PAGE>

Newnan Savings Bank, FSB

Selected Financial Information and Statistical Data

F-18

<PAGE>

SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA

The tables and schedules on the following pages set forth certain significant
financial information and statistical data of Newnan Savings Bank with
respect to : the distribution of assets, liabilities and shareholders'
equity, the interest rates and interest differentials; the investment
portfolio; the loan portfolio, including types of loans, maturities and
sensitivity to changes in interest rates and information on nonperforming
loans; summary of the loan loss experience and reserves for loan losses;
types of deposits; and the return on equity and assets.

DISTRIBUTION OF ASSETS, LIABILITIES, AND SHAREHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIALS

TABLE 1: AVERAGE BALANCES, INTEREST INCOME AND INTEREST EXPENSE

The following table contains condensed average balance sheets for the periods
indicated. In addition, the amount of Newnan Savings' interest income and
interest expense for each category of interest-earning assets and
interest-bearing liabilities and the related average interest rates, net
interest spread and net yield on average interest earning assets are included

F-19

<PAGE>

Table 1.

ANALYSIS OF NET INTEREST INCOME
For The Years Ended March 31,
(In Thousands)

<TABLE>
<CAPTION>
1996 1995 1994
Average Average Average
Average Income / Yield / Average Income / Yield / Average Income / Yield /
Balance Expense Rate Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Loans (1)(2)(7) $132,641 $11,449 8.63% $123,420 $ 9,817 7.95% $ 92,855 $7,219 7.77%
Mortgage-backed securities (2) 9,479 505 5.33% 9,856 516 5.24% 15,605 972 6.23%
Interest bearing deposits (2) 1,821 96 5.27% 2,814 115 4.09% 4,064 123 3.03%
Investment securities and Federal
Home Loan Bank Stock (2)(8) 5,296 362 6.84% 5,508 382 6.94% 7,082 484 6.83%
-------- -------- ------- -------- -------- ------- -------- -------- -------
Total interest earning assets $149,237 $12,412 8.32% $141,598 $10,830 7.65% $119,606 $8,798 7.36%
-------- ------- -------- ------- -------- -------
Cash and due from banks (3) 3,404 1,365 1,335
Real estate held for development
and sale (3) 4,249 5,661 6,899
Premises and equipment (3) 2,791 2,866 3,153
Other assets (3) 1,610 1,573 2,674
-------- -------- --------
Total assets $161,291 $153,063 $133,667
-------- -------- --------
-------- -------- --------

Interest Bearing Liabilities
NOW accounts (2) $ 15,629 $ 433 2.77% $ 14,328 $ 375 2.62% $ 15,856 $ 354 2.23%
Money Market Accounts (2) 7,454 248 3.33% 8,121 235 2.89% 8,796 257 2.92%
Passbook accounts (2) 16,811 493 2.93% 19,079 565 2.96% 16,805 505 3.01%
Certificates of deposit (2) 73,459 4,343 5.91% 66,399 3,145 4.74% 63,871 3,023 4.73%
Federal Home Loan Bank advances (2) 16,685 985 5.90% 20,307 1,166 5.74% 5,888 318 5.40%
Notes payable (3) 170 11 6.47% 73 6 8.22% 228 27 11.84%
-------- -------- ------- -------- -------- ------- -------- -------- -------
Total interest bearing liabilities $130,208 $ 6,513 5.00% $128,307 $ 5,492 4.28% $111,444 $4,484 4.02%
-------- ------- -------- ------- -------- -------
Noninterest-bearing deposits (2)(6) 10,052 7,516 2,460
-------- -------- --------
Total deposits and other borrowings $140,260 $135,823 $113,904
Other liabilities (3) 2,826 1,497 5,071
Stockholders equity (3) 18,205 15,743 14,692
-------- -------- --------
Total liabilities and stockholders'
equity $161,291 $153,063 $133,667
-------- -------- --------
-------- -------- --------
Interest rate spread (4) 3.32% 3.37% 3.34%
------- ------- ------
------- ------- ------
Net interest income / margin (5) $ 5,899 3.95% $ 5,338 3.77% $4,314 3.61%
-------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- -------

Note: The above information is prepared on a consolidated basis in which all loans and accounts with subsidiaries have been
eliminated.

- ----------------------
(1) Includes loans held for sale and nonaccrual loans.
(2) Daily average.
(3) Quarterly average.
(4) Interest rate spread is the weighted average yield on interest earning assets minus weighted average rate on interest bearing
liabilities.
(5) Net interest margin is net interest income divided by interest earning assets.
(6) Noninterest bearing deposits include official checks outstanding.
(7) Interest income from loans includes amortization of deferred loan fees totaling $549,000, $449,000, and $359,000 for the years
ended March 31, 1996, 1995, and 1994, respectively.
(8) All income on investment securities is taxable.
</TABLE>

<PAGE>

TABLE 2: RATE AND VOLUME ANALYSIS

The following table describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected Newnan Savings interest income and expense during the year
indicated. For each category of interest-earning asset and interest-bearing
liability, information is provided on changes attributable to (1) change in
volume (change in volume multiplied by old rate); (2) change in rate (change in
rate multiplied by old volume); and a combination of change in rate and change
in volume. The changes in interest income and interest expense attributable to
both volume and rate have been allocated proportionately to the change due to
volume and the change due to rate.

F-21
<PAGE>

TABLE 2.

ANALYSIS OF CHANGES IN NET INTEREST INCOME
FOR THE YEARS ENDED MARCH 31,
(In Thousands)

1996 Compared to 1995

Increase (Decrease) Due To
Changes In (1)
Increase
1996 1995 (Decrease) Volume Yield/Rate
<S> <C> <C> <C> <C> <C>
Interest Income
Loans $11,449 $9,817 $1,632 $ 761 $871
Mortgage-backed securities 505 516 (11) (20) 9
Interest bearing deposits 96 115 (19) (47) 28
Investment securities and Federal Home
Loan Bank Stock 362 382 (20) (14) (6)
-------------------------------------------------------
Total interest income $12,412 $10,830 $1,582 $ 680 $902
-------------------------------------------------------
Interest Expense
NOW accounts $ 433 $ 375 $ 58 $ 36 $ 22
Money Market Accounts 248 235 13 (20) 33
Passbook accounts 493 565 (72) (66) (6)
Certificates of deposit 4,343 3,145 1,198 361 837
Federal Home Loan Bank advances 985 1,166 (181) (212) 31
Notes payable 11 6 5 6 (1)
-------------------------------------------------------
Total interest expense $6,513 $ 5,492 $1,021 $ 105 $916
-------------------------------------------------------
Net interest income $5,899 $ 5,338 $ 561 $ 575 $(14)
-------------------------------------------------------
-------------------------------------------------------

1995 Compared to 1994

Increase (Decrease) Due To
Changes In (1)
Increase
1995 1994 (Decrease) Volume Yield/Rate
<S> <C> <C> <C> <C> <C>

Interest Income
Loans $9,817 $7,219 $2,598 $2,427 $ 171
Mortgage-backed securities 516 972 (456) (319) (137)
Interest bearing deposits 115 123 (8) (44) 36
Investment securities and Federal Home
Loan Bank Stock 382 484 (102) (110) 8
-------------------------------------------------------
Total interest income $10,830 $8,798 $2,032 $1,954 $ 78
-------------------------------------------------------
Interest Expense
NOW accounts 375 354 21 (36) 57
Money Market Accounts 235 257 (22) (19) (3)
Passbook accounts 565 505 60 68 (8)
Certificates of deposit 3,145 3,023 122 101 21
Federal Home Loan Bank advances 1,166 318 848 827 21
Notes payable 6 27 (21) (15) (6)
-------------------------------------------------------
Total interest expense $ 5,492 $4,484 $1,008 $ 926 $ 82
-------------------------------------------------------
Net interest income $5,338 $4,314 $1,024 $ 1,028 $ (4)
-------------------------------------------------------
-------------------------------------------------------
</TABLE>

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

(1) The rate volume variance has been allocated between rate and volume
variances in proportion to their percentage of the total volume and rate
change.

F-22
<PAGE>

INVESTMENT PORTFOLIO

TYPES OF INVESTMENTS

The carrying value of investment securities at the dates indicated are
summarized as follows

March 31,
1996 1995
(Dollars in Thousands)

U. S. Government and agency obligations $22,794 $ 9,817
Mortgage backed securities
and Collateralized Mortgage
Obligations 9,133 9,639
------- -------
Total $31,927 $19,456
------- -------
------- -------

MATURITIES

The amounts of investment securities in each category as of March 31, 1996
are shown in the following table according to contractual maturity
classification (U. S. Government agency bonds) and anticipated cash flow
(mortgage backed securities and collateralized mortgage obligations):

<TABLE>
<CAPTION>
After One Year After Five Years
One Year Or Less Through Five Years Through Ten Years Total

Amount Yield Amount Yield Amount Yield Amount Yield
------ ------ ------ ------ ------ ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
Agency $22,495 5.25% $ 299 5.40% $ -- --% $22,794 5.25%
Mortgage Backed
Securities and
Collateralized
Mortgage
Obligations 4,743 5.41% 3,917 5.18% 473 5.31% 9,133 5.31%
------- ---- ------ ---- --- ---- ------- ----
$27,238 5.28% $4,216 5.20% $473 5.31% $31,927 5.27%
------- ---- ------ ---- --- ---- ------- ----
------- ---- ------ ---- --- ---- ------- ----
</TABLE>

All securities are subject to taxation. Yields were computed using coupon
interest, adding discount accretion or subtracting premium amortization, as
appropriate, on a ratable basis over the life of each security. The weighted
average yield for each maturity range was computed using the carrying value

F-23
<PAGE>

of each security in that range.

LOAN PORTFOLIO

TYPES OF LOANS

The amount of loans outstanding, including held for sale, at the indicated
dates are shown in the following table according to the type of loan.

At March 31,
1996 1995
-------- --------
(Dollars in Thousands)
Real estate construction loans $ 35,652 $ 28,218
Permanent mortgage loans 103,490 103,091
Consumer and installment loans 10,404 10,824
Less:
Loans in process 16,179 9,235
Allowance for Loan Losses 1,371 1,435
Deferred Income 1,044 1,342
-------- --------
Total $130,952 $130,121
-------- --------
-------- --------

MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES

Total loans as of the indicated dates are shown in the following table according
to maturity classifications (1) one year or less, (2) after one year through
five years and (3) after five years (dollars in thousands).

F-24
<PAGE>

At March 31,
1996
Maturity:
One year or less
Real estate construction, net of loans in process $19,473
Permanent real estate 59,970
Consumer and installment 5,100
-------
84,543
-------
After one year through five years
Real estate construction, net --
Permanent real estate 4,869
Consumer and installment 4,668
-------
9,537
-------
After five years
Real estate construction, net --
Permanent real estate 38,859
Consumer and installment 428
-------
39,287
-------

Total 133,367
Less: Allowance for loan losses 1,371
Less: Deferred income 1,044
-------
$130,952
-------
-------

The following table summarizes loans at the indicated dates with the due
dates after one year which have predetermined and floating or adjustable
interest rates (dollars in thousands).

At March 31,
1996
-------
Predetermined interest rate $46,153
Floating or adjustable interest rate 2,671
-------
$48,824
-------
-------

NONPERFORMING LOANS

Information with respect to nonaccrual past due and restructured loans at the
indicated dates is as follows:

F-25
<PAGE>

At and For The Year Ended
March 31
1996 1995
------ ------
(Dollars in Thousands)
Nonaccrual Loans $712,695 $872,467
Loans contractually past due 90 days or
more and still accruing -- --
Restructured loans -- --
Interest income that would have been
recorded on nonaccrual and
restructured loans under original
terms 30,000 34,000

It is the policy of the Bank to discontinue the accrual of interest income
when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a
significant deterioration in the financial condition of the borrower and full
repayment of principal and interest is not expected and (2) the principal or
interest is more than ninety days past due.

Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not
represent or result from trends or uncertainties which management reasonably
expects will materially impact future operating results, liquidity or capital
resources. These classified loans do not represent material credits about
which management is aware of any information which causes management to have
serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.

COMMITMENTS AND LINES OF CREDIT

The Bank will, in the normal course of business, commit to extend credit in
the form of letters of credit or lines of credit. At March 31, 1996, the
amount of outstanding loan commitments totaled $5,480,000 while the amount of
outstanding lines of credit totaled $3,160,000.

SUMMARY OF LOAN LOSS EXPERIENCE

The following table summarizes average loan balances for each year determined
using the daily average balances during the year, changes in the allowance for
possible loan losses arising from loans charged off and recoveries on loans
previously charged off, additions to the allowance which have been charged to
operating expense, and the ratio of net charge-offs during the period to
average loans.

F-26

<PAGE>

Years Ended March 31,
1996 1995
-------- --------
(Dollars in Thousands)

Average amount of loans outstanding $132,641 $123,420
-------- --------
-------- --------
Beginning balance $1,435 $1,315
-------- --------

Loans charged off
Real estate loans 54 --
Consumer loans 38 37
-------- --------
Total charge-offs 92 37
-------- --------
Recoveries
Real estate loans 4 --
Consumer loans 14 49
-------- --------
Total recoveries 18 49
-------- --------
Net loans charged-off (recovered) 74 (12)
-------- --------
Provision for loan losses 10 108
-------- --------
Ending balance $1,371 $1,435
-------- --------
-------- --------
Ratio of net loans charged-off
(recovered) during the period to
average loans outstanding 0.06% .01%
-------- --------
-------- --------

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level that is deemed
appropriate by management to adequately cover all known and inherent risks in
the loan portfolio. Management's evaluation of the loan portfolio includes a
continuing review of loan loss experience, current economic conditions which
may affect the borrower's ability to pay and the underlying collateral value
of the loans.

The following table summarizes the allocation of the allowance for loan
losses to types of loans as of the indicated dates.

Years Ended March 31,
1996 1995
-------- ------
(Dollars in Thousands)
Dollars Pct(a) Dollars Pct(a)
Real estate loans - construction
and permanent $547 93% $597 92%
Consumer and installment loans 824 7% 838 8%
------ ---- ------ ----
Total $1,371 100% $1,435 100%
------ ---- ------ ----
------ ---- ------ ----
(a) Percent of total loan balances outstanding.

F-27
<PAGE>

DEPOSITS

Average amount of deposits and average rates paid thereon, classified as to
noninterest-bearing demand deposits, interest-bearing demand and savings
deposits and time deposits, for the years indicated are presented below.
(Average balances were determined using the daily average balances during the
year for each category).

1996 1995
Amount Rate Amount Rate
------ ---- ------ ----
(Dollars in Thousands)
Noninterest bearing demand deposit $10,052 --% $7,516 --%
Interest bearing demand deposit 15,629 2.77% 14,328 2.62%
Money market accounts 7,454 3.33% 8,121 2.89%
Passbook savings 16,811 2.93% 19,079 2.96%
Certificates of deposit 73,459 5.91% 66,399 4.74%
------- ----- -------- -----
Total $123,405 4.47% $115,443 3.74%
-------- ----- -------- -----
-------- ----- -------- -----

The amounts of time certificates of deposit issued in amounts of
$100,000 or more as of March 31, 1996 are shown below by category, which is
based on time remaining until maturity (dollars in thousands).

Three months or less $ --
Three to six months --
Six to twelve months 403
Over twelve months --
----
Total $403
----
----

RETURN ON ASSETS AND STOCKHOLDERS' EQUITY

The following rate of return information for the years indicated is presented
below.

1996 1995
Return on assets (1) 2.51% 1.06%
Return on equity (2) 22.25% 10.29%
Dividend payout ratio (3) 12.55% 20.18%
Equity to assets ratio (4) 11.29% 10.29%

(1) Net income divided by average total assets.

F-28
<PAGE>

(2) Net income divided by average equity.
(3) Dividends declared per share divided by net income per share.
(4) Average equity divided by average total assets.

SHORT TERM BORROWINGS

The following information is presented with respect to the Bank's short term
borrowings of the Bank at or for the years ended March 31, 1996 and 1995:
(Dollars in Thousands)

March 31,
1996 1995
------- ------
Ending balance
weighted average rate $21,279 $24,046
5.60% 6.19%
Average amount outstanding
weighted average rate $7,779 $10,266
6.04% 5.87%
Maximum outstanding during period $21,279 $24,046

SELECTED FINANCIAL DATA

The following selected financial data is derived from the consolidated
financial statements of Newnan Savings Bank and subsidiaries, and should be
read in conjunction with the consolidated financial statements and the
related notes contained elsewhere in this Registration Statement.

F-29
<PAGE>

SELECTED FINANCIAL DATA
(Dollars in Thousands Except Per Share Amounts)

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
BALANCE SHEET:
Total Assets $182,010 $169,477 $144,300 $128,598 $138,931
Loans, net (1) 130,952 130,121 102,864 84,820 90,815
Investments (2) 32,451 23,508 29,144 28,368 29,824
Real estate held for
development and sale 3,740 5,070 6,026 7,420 10,275
Deposit accounts (3) 130,635 117,818 117,199 108,621 116,903
Borrowings (4) 29,489 33,528 10,646 4,405 7,744
Stockholders' equity 20,266 16,603 15,147 14,052 12,168

OPERATING DATA:
Interest income 12,412 10,830 8,798 9,459 10,544
Interest expense 6,512 5,492 4,484 5,232 7,363
Net interest income 5,900 5,338 4,314 4,227 3,181
Provision for loan losses 10 108 275 180 588
Other income 5,248 2,357 2,547 3,450 1,897
General and administrative
expenses 4,646 5,071 5,258 4,664 4,993
Income tax expense 2,442 896 491 955 1
Earnings (loss) before
cumulative effect of change
in accounting principle 4,050 1,620 837 1,878 (504)
Cumulative effect of change in
accounting for income taxes -- -- 250 -- --
Net earnings (loss) 4,050 1,620 1,087 1,878 (504)
Earnings (loss) per share before
cumulative effect of change
in accounting principle 2.71 1.14 0.59 1.32 (0.35)
Cumulative effect per share of
change in accounting for
income taxes -- -- 0.17 -- --
Net earnings (loss) per share 2.71 1.14 0.76 1.32 (0.35)
Cash dividends per share 0.34 0.23 -- -- --
. .as a percentage of net
earnings per share 12.55% 20.18% -- -- --
Net interest margin 3.95% 3.77% 3.61% 3.68% 2.82%

REGULATORY CAPITAL RATIOS
(CURRENT)
Tangible 11.2% 9.1% 9.6% 9.7% 7.1%
Core 11.2% 9.1% 9.6% 9.7% 7.1%
Risk-based 20.3% 14.4% 15.9% 15.9% 9.6%

SELECTED FINANCIAL RATIOS AND
OTHER DATA (AS PERCENTAGES)
Return on average assets 2.51% 1.06% 0.81% 1.42% -0.38%

Return on average equity 22.25% 10.29% 7.40% 14.14% -4.08%
Average equity to average
assets 11.29% 10.29% 10.99% 10.08% 9.25%
Allowance for loan losses to
total loans and OREO 1.05% 1.09% 1.26% 1.32% 1.37%
Nonperforming assets to total
loans and OREO 0.63% 0.76% 1.75% 3.04% 1.48%
Allowance for loan losses to
nonperforming loans 192.29% 164.44% 92.09% 67.19% 128.22%
Allowance for loan losses to
nonperforming assets 165.98% 143.90% 71.60% 43.32% 92.26%

- ------------
</TABLE>

(1) Includes loans held for sale.
(2) Includes investment securities, mortgage-backed securities, and
interest-bearing deposits in other banks.
(3) Includes official checks outstanding
(4) Includes advances from Federal Home Loan Bank and notes payable.

F-30

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.*

MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE TWO YEAR PERIOD ENDED DECEMBER 31, 1995

*REFERRED TO AS "REGISTRANT" IN THE FOLLOWING DOCUMENT.

F-31
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the Registrant's financial
condition at December 31, 1995 and the results of operations for the two year
period ended December 31, 1995. The purpose of this discussion is to focus on
information about the Registrant's financial condition and results of operations
which are not otherwise apparent from the audited consolidated financial
statements included in this Annual Report. This discussion and analysis should
be read in conjunction with the consolidated financial statements and related
notes and the selected financial information and statistical data presented
elsewhere in this Annual Report. All financial information and statistical data
for the year ended December 31, 1994 have been restated to include the business
combination of Southside Financial Group, Inc., ("Southside") and Citizens Bank
& Trust of Fayette County ("Bank"), which was accounted for as a pooling-of-
interest.

BALANCE SHEET REVIEW

In 1995, the Registrant continued to show strong growth in total assets. This
is evident by the growth in total assets of 16.28% during 1995. Total loans
increased 14.02% or $6.3 million at December 31,1995 over December 31, 1994.

The Registrant's total assets increased from $70.6 million at December 31, 1994
to $82.1 million at December 31, 1995. Earning assets, which are comprised of
investment securities, loans, Federal funds sold and interest-bearing deposits
in banks, increased approximately $11.0 million or 16.81% at December 31, 1995.
Average total assets increased by 9.26% in 1995 when compared to 1994. The
growth in 1995 is significantly less than the 40.66% growth in 1994; however,
the growth in 1995 was consistent with management's expectations. In prior
years, the growth was spurred by marketing programs which included slightly
higher than market deposit rates.

As shown in Table 6, the loan growth during 1995 was in real estate mortgage
loans which increased by $4.9 million or 46% and in real estate-construction and
consumer loans which increased by $1.8 million and $1.4 million, respectively,
over 1994. The growth experienced over the past two years is due to a strong
local and national economy. The increases in 1995 were partially offset by a
decrease in commercial loans of $2.0 million.

Deposits increased 15.27% or approximately $9.3 million as of December 31, 1995
over year end 1994. The growth is the result of marketing efforts which
continue in the bank's market area. The growth realized by the Registrant in
non-interest bearing and lower yielding deposits was approximately 76% of the
total growth, enabling the Registrant to minimize interest expense, therefore
having a positive effect on income. Noninterest-bearing deposits increased
35.85% or $3.8 million as of December 31, 1995 as compared to year end 1994. As
of December 31, 1995, interest-bearing demand and savings deposits increased
18.68% or $3.6 million over December 31, 1994. The significant increases in
these short-term lower yielding deposits are partially due to the declining
interest rates paid on longer maturing time deposits. During a period of
declining interest rates, depositors chose to invest funds in more liquid

F-32
<PAGE>

accounts in order to take advantage of the anticipated increase in yields. The
Registrant realized growth in the longer-maturing deposits during 1995 as rates
reached the highest point in the past decade. Time deposits increased 6.78% or
$2.2 million at December 31, 1995 as compared to December 31, 1994. The
Registrant continues to be successful in maintaining this steady growth by
offering competitive rates in its market area and through various marketing
campaigns. The growth in deposits has provided the Registrant with available
fund for investing in loans with similar repricing characteristics.

Average total deposits increased by 8.39% or $5.0 million in 1995 when compared
to 1994. Average noninterest-bearing demand deposits accounted for $1.9 million
and average time deposits accounted for $3.3 million, or 66.9% of the total
increase in average deposits. The increase in time deposits is due to the
increase in rates paid on time deposits which averaged 5.57% for the year ended
December 31, 1995. The average rates in 1994 reflect marketing programs which
have gradually phased out over the past couple of years. These programs were
offered in prior years as a means of meeting the loan demands of their
customers, which have positively affected net income over the same period.

The investment portfolio at December 31, 1995 consisted of $180,000 of
securities held to maturity and $22.2 million of securities available for sale.
Securities available for sale, which are carried at fair value, resulted in an
unrealized gain of $119,000 at December 31, 1995. The unrealized gain was
recognized in stockholders' equity, net of taxes. Table 4 of the selected
statistical information provides a summary of these securities by type. The
securities portfolio increased during 1995 over 1994 by $4.4 million, with the
most significant increase being in U.S. Treasury and other U.S. Government
agencies and corporations, which accounted for $3.5 million or 78% of the
increase. The registrant attempts to maintain certain levels of loans to
deposits foremost, and invests in securities as a secondary source of income and
liquidity. The registrant classifies substantially all securities as available
for sale due to expected needs for loan growth, liquidity and ability to
reposition selected securities in a rising interest rate environment.

The decrease in stockholders' equity in 1994 related to the adoption of
Financial Accounting Standards Board Number 115, has more than recovered in
1995, resulting in an unrealized gain of $119,000. This recovery is directly
related to the stabilization of interest rates and repricing of selected
securities.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity management involves the matching of the cash flow requirements of
customers who may be either depositors desiring to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs. The Bank seeks to meet liquidity requirements primarily through
management of short-term investments (principally Federal funds sold) and
monthly amortizing loans. Another source of liquidity is the continuous
maturing of other earning assets. The deposit base provides sources of
liquidity through deposit growth and accessibility to market sources of funds.
Also, the Bank maintains relationships with correspondent banks and the Federal
Home Loan Bank, which could provide funds on short notice, if needed. During
1995, the Registrant was able to match borrowings from the Federal

F-33
<PAGE>

Home Loan Bank with specific earning assets, without giving up liquidity, and
positively impacting income.

The liquidity and capital resources of the Bank are monitored on a periodic
basis by State and Federal regulatory authorities. As determined under
guidelines established by those regulatory authorities, the Bank's liquidity
ratios at December 31, 1995 were considered satisfactory. At that date, the
Bank's short-term investments were adequate to cover any reasonably anticipated
immediate need for funds.

At December 31, 1995, the Bank's capital to asset ratios were considered
adequate based on guidelines established by the regulatory authorities. During
1995, the Bank increased its capital by retaining net earnings of $1,105,000.
Capital was also increased by the recovery of unrealized gains on securities
available for sale of $490,000. At December 31, 1995, total capital of the
Company amounted to $9,814,000. As of December 31, 1995, there were no
outstanding commitments for any major capital expenditures.

CAPITAL REQUIREMENTS

The regulatory agencies have minimum capital requirements for banks based in
part on the degrees of risk to which the institution's assets are subject.
Under these rules, the Bank is required to maintain a specified minimum ratio of
"qualifying" capital to risk-weighted assets. The ratio is calculated by
dividing adjusted qualifying capital by a weighted risk asset base. At least
50% of the institution's qualifying capital must be "Core" or "Tier 1" capital.
The balance may be "Supplementary" or "Tier 2" capital. For purposes of the
rules, a bank's Tier 1 capital is essentially equal to common stock surplus and
retained earnings, plus a certain amount of perpetual preferred stock, less
intangible assets and the unrealized gains or losses; Tier 2 capital includes
the excess of any perpetual preferred stock not included in Tier 1 capital,
mandatory convertible securities, subordinated debt, and general reserves for
loan and lease losses limited to 1.25% of total risk-weighted assets. The
weighted risk asset base is equal to the sum of the aggregate dollar value of
assets, adding back any unrealized losses or subtracting any unrealized gains on
securities available for sale, and certain off-balance-sheet items (such as
currency or interest rate swaps and certain loan commitments) in each of five
separate risk categories, multiplied by a weight assigned to each specific asset
category. After the items in each category have been totaled and multiplied by
the category's risk factor, the total of the adjusted qualifying capital base is
divided by the weighted risk assets to derive a ratio. A minimum ratio of 4.0%
of Tier 1 or Core Capital is required and a minimum ratio of 8.0% of total risk-
based capital is required. The capital regulations also require the Bank to
maintain a minimum leverage ratio of 4.0%. Leverage ratio is calculated by
dividing core capital by average quarterly total assets less intangible assets.
The Bank meets all regulatory capital requirements at December 31, 1995.

F-34
<PAGE>

The following table reflects the Bank's compliance with regulatory capital
requirements at December 31, 1995:

<TABLE>
<CAPTION>
Actual Required Excess
Amount Percent Amount Percent Amount Percent
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Leverage capital $ 9,436 11.53% $3,277 4.00% $6,159 7.53%
Risk based capital:
Core capital 9,436 16.70 2,223 4.00 7,213 12.70
Total capital 10,124 17.92 4,447 8.00 5,677 7.71
</TABLE>

In connection with the business combination with Newnan Holdings, Inc.,
Southside Financial Group, Inc. anticipates paying a special dividend to Newnan
Holdings, Inc. of approximately $4,500,000 to fund the purchase of shares of
Southside acquired for cash. Subsequent to the dividend, Southside Financial
Group will continue to meet all required capital requirements.

Management is not aware of any other current recommendations by the regulatory
authorities, events or trends, which, if they were to be implemented, would have
a material effect on the Bank's liquidity, capital resources or operations.

RESULTS OF OPERATIONS

The Bank's results of operations are determined by its ability to effectively
manage interest income and expense, to minimize loan and investment losses, to
generate non-interest income and to control operating expenses. Since interest
rates are determined by market forces and economic conditions beyond the control
of the Bank, the Bank's ability to generate net interest income is dependent
upon its ability to obtain an adequate net interest spread between the rate paid
on interest-bearing liabilities and the rate earned on interest-earning assets.
For the year ended December 31, 1995 the net interest income increased $963,000
as explained in the following paragraphs.

Interest income increased for the year ended December 31, 1995 as compared to
the same period in 1994 by $1,408,000. The single most contribution to the
increase was a $1,195,000 increase in interest income from interest and fees on
loans, followed by an increase of $238,000 in interest on taxable securities.
Interest income on nontaxable securities increased by $46,000 while interest on
deposits in other banks and Federal funds decreased by a combined $71,000.
These changes in interest income is consistent with the increases in average
loans and taxable securities during the year ended December 31, 1995 of $6.3
million and $2.4 million. During the same period nontaxable securities
increased $800,000 while interest-bearing deposits and Federal funds decreased
by $3.1 million. As shown in Table 2, the average rate earned on loan during
1995 was 11.17% as compared to 10.02% in 1994. The combined increase in average
volume of loans coupled with the increase in average rate greatly contributed to
the increase in total interest for the year ended December 31, 1995.

Interest expense increased for the year ended December 31, 1995 as compared to
the same period in 1994 by $445,000. The significant portion of the increase
was the

F-35
<PAGE>

interest expense related to deposits, or $432,000. The remaining increase in
interest expense of $13,000 was the increase related to other borrowings. The
increase in average interest bearing deposits for the year ended December 31,
1995 was $3,174,000. During this same period the average time deposits
increased $3,362,000 while the average interest-bearing demand and savings
decreased by $188,000. As shown in Table 2, the average rate paid on time
deposits was 5.57% as compared to 4.93% in 1994. The combination of an increase
in volume and rate represents the increase in total interest expense for fiscal
1995.

The net yield on average interest-earning assets (net interest margin) increased
in 1995 to 5.85% as compared to 4.94% in 1994. The increase in the net yield on
average interest-earning assets was attributable to the increase in loans during
1995, which are higher yielding assets, compared to a smaller increase in time
deposits which favorably affects the net interest margin. See Table 3 for a
summary of the changes in rate and volume which resulted in the increase in net
interest income. The ratio of average loans to average deposits at December
31, 1995 was 75.77% as compared to 71.67% at December 31, 1994, which is within
the Bank's target ratio. As assets and liabilities matured and repriced, the
rate on interest-bearing liabilities increased to 4.69% in 1995 as compared to
4.13% in 1994. The yield on earning assets increased to 9.40% in 1995 as
compared to 8.16% in 1994 or 124 basis points. These increases are consistent
with the rise in interest rates in 1995.

The provision for possible loan losses is the charge to operations which
management feels is necessary to fund the allowance for possible loan losses.
This provision is based on the growth of the loan portfolio, the amount of net
loan losses incurred, peer group averages and management's evaluation of
potential loan losses in the loan portfolio. The Bank's allowance for loan
losses amounted to $840,000 or 1.65% of total loans outstanding at December 31,
1995 as compared to $599,000 or 1.34% of total loans outstanding at December 31,
1994. Based on management's evaluations, the allowance is adequate to absorb
possible losses on existing loans that may become uncollectible. The provision
for loan losses increased for the year ended December 31, 1995 by $33,000, or
14.54%. The increase was necessary because of the increase in total loans for
the same period. The increase for the year represents .53% of increases in
total loans, which exceeds the Registrant's and peer group net charge off
percentage. The allowance for loan losses as a percentage of nonaccrual loans
decreased to 95.89% as compared to 503.36% at December 31, 1994. The ratio of
nonperforming loans to total loans at December 31, 1995 was 1.72% as compared to
.27% in 1994. The change in coverage ratios is due to three credit lines which
have been identified by management as having characteristics which question the
collection of interest. These loans have also been identified as impaired loans
in accordance with Financial Accounting Standards Board Number 114 and 118 and a
reserve of approximately $188,000 has been allocated to these lines. Management
is not aware of any trends related to these loans which is expected to
materially effect the loan portfolio or operations in the near term.

Net charge-offs for the year ended December 31, 1995 decreased to .04% of
average loans as compared to .13% for the previous year.

Other operating income increased from $608,000 in 1994 to $1,029,000 in 1995 or
by 69.3%. The most significant increases in other operating income were in
service

F-36
<PAGE>

charges on deposit accounts, other service charges, commissions and fees, and
mortgage origination fees. Service charges on deposit accounts increased
$14,000 or 4.4% in 1995. In 1992, the Bank implemented a new business manager
program. During 1995, this program has continued to provide additional income
for the Bank as indicated by the increase of $28,000 in business manager fees as
compared to 1994. The increase in mortgage origination fees is attributable to
the stabilization of interest rates during 1995 which resulted in an increase in
origination fees of $447,000. The activity in the refinance and new mortgage
loan market is expected to be strong again in 1996. The business manager fees
accounts for the increases in other commissions and fees. The Bank also
realized $46,000 in losses on sales of securities during 1995. The sale of the
available for sale securities was part of a restructuring of the Bank's
investment portfolio.

The Bank's noninterest expense increased $346,000 or 12.62% for the year
ended December 31, 1995 as compared to $794,000 or 40.76% for the same period
in 1994. Salaries and benefits represented 59.73% and 54.51% of the
noninterest expense for the two years ended December 31, 1995. Increases in
the number of employees has continued due to the growth of the Bank, the
start up of a mortgage loan department in 1994 and the marketing of new
products and services. The other single most significant item in noninterest
expense is deposit premiums which decreased by $53,000 in 1995 due to the
adjustment of Federal Deposit Insurance Corporation assessment rates. All
other increases were attributable to the Bank's growth in loans, deposits and
marketing of its services.

The Bank's tax expense increased from $276,000 in 1994 to $638,000 in 1995
representing an increase of $362,000 or 131%. The increase in taxes is
consistent with the growth in net income as presented below. The Registrant's
effective tax rate increased slightly from 32% to 34% in 1995. This increase is
primarily due to the increase in state income taxes.

Net income for the year ended December 31, 1995 was $1,219,000 as compared to
net income of $576,000 or 111.6% as of December 31, 1994.

F-37
<PAGE>

ASSET/LIABILITY MANAGEMENT

It is the Registrant's objective to manage assets and liabilities to provide a
satisfactory and consistent level of profitability within the framework of
established cash, loan, investment, borrowing and capital policies. Certain
officers of the bank are charged with the responsibility for monitoring policies
and procedures that are designed to ensure an acceptable composition of the
asset/liability mix. It is the overall philosophy of management to support
asset growth primarily through growth of core deposits of all categories made by
local individuals, partnerships and corporations.

The Registrant's asset/liability mix is monitored on a regular basis with a
report reflecting the interest rate sensitive assets and interest rate sensitive
liabilities being prepared and presented to the Board of Directors on a monthly
basis. The objective of this policy is to monitor interest rate sensitive
assets and liabilities so as to minimize the impact of substantial movements in
interest rates on earnings. An asset or liability is considered to be interest
rate-sensitive if it will reprice or mature within the time period analyzed,
usually one year or less. The interest rate-sensitivity gap is the difference
between the interest-earning assets and interest-bearing liabilities scheduled
to mature or reprice within such time period. A gap is considered positive when
the amount of interest rate-sensitive assets exceeds the amount of interest
rate-sensitive liabilities. A gap is considered negative when the amount of
interest rate-sensitive liabilities exceeds the interest rate-sensitive assets.
During a period of rising interest rates, a negative gap would tend to adversely
affect net interest income, while a positive gap would tend to result in an
increase in net interest income. Conversely, during a period of falling
interest rates, a negative gap would tend to result in an increase in net
interest income, while a positive gap would tend to adversely affect net
interest income. If the Registrant's assets and liabilities were equally
flexible and moved concurrently, the impact of any increase or decrease in
interest rates on net interest income would be minimal.

A simple interest rate "gap" analysis by itself may not be an accurate indicator
of how net interest income will be affected by changes in interest rates.
Accordingly, the Registrant also evaluates how the repayment of particular
assets and liabilities is impacted by changes in interest rates. Income
associated with interest-earning assets and costs associated with interest-
bearing liabilities may not be affected uniformly by changes in interest rates.
In addition, the magnitude and duration of changes in interest rates may have a
significant impact on net interest income. For example, although certain assets
and liabilities may have similar maturities or period of repricing, they may
react in different degrees to changes in market interest rates. Interest rates
on certain types of assets and liabilities fluctuate in advance of changes in
general market rates, while interest rates on other types may lag behind changes
in general market rates. In addition, certain assets, such as adjustable rate
mortgage loans, have features (generally referred to as "interest rate caps")
which limit changes in interest rates. Also, prepayments and early withdrawal
levels could deviate significantly from those assumed in calculating the
interest rate gap. The ability of many borrowers to service their debts may
decrease in the event of an interest rate increase. Changes in interest rates
also affect the Registrant's liquidity position. If deposits are not priced in
response to market rates, a loss of deposits could occur which would negatively
affect the Registrant's liquidity position.

F-38
<PAGE>

It is management's intention to continue to attract deposits by offering
competitive market rates for deposits in the respective market areas.
Management continually monitors the profitability associated with the mix of
earning assets and interest bearing liabilities by analyzing the GAP ratios of
the bank.

The following table sets forth the distribution of the repricing of the Bank's
earning assets and interest-bearing liabilities as of December 31, 1995, the
interest rate sensitivity gap (i.e., interest rate sensitive assets less
interest rate sensitive liabilities), the cumulative interest rate sensitivity
gap, the interest rate sensitivity gap ratio (i.e., interest rate sensitive
assets divided by interest rate sensitive liabilities) and the cumulative
interest rate sensitivity gap ratio. The table also sets forth the time periods
in which interest-earning assets and interest-bearing liabilities will mature
or may reprice in accordance with their contractual terms. However, the table
does not necessarily indicate the impact of general interest rate movements on
the net interest margin since the repricing of various categories of assets and
liabilities is subject to competitive pressures and the needs of the Bank's
customers. In addition, various assets and liabilities indicated as repricing
within the same period may in fact, reprice at different times within such
period and at different rates.

F-39
<PAGE>

<TABLE>
<CAPTION>
After After
Three One Year
Months But
Within But Within After
Three Within Five Five
Months One Year Years Years Total
------ -------- ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Interest-earnings assets:
Interest-bearing
deposits in banks $ 100 $ -- $ -- $ -- $ 100
Federal funds sold 2,760 -- -- -- 2,760
Investment securities 3,236 6,545 7,966 4,667 22,414
Loans 28,480 8,865 12,306 1,388 51,039
------ ------ ------ ------ ------

$ 34,576 $ 15,410 $ 20,272 $ 6,055 $ 76,313
------ ------ ------ ------ ------

Interest-bearing liabilities:
Interest-bearing demand
deposits $ 18,335 $ -- $ -- $ -- $ 18,335
Savings 3,010 -- -- -- 3,010
Certificates, less than
$100,000 4,781 18,342 2,027 -- 25,150
Certificates, $100,000
and over 1,837 7,513 422 -- 9,772
Other borrowings 10 59 208 613 890
------ ------ ------ ------ ------
$ 27,973 $ 25,914 $ 2,657 $ 613 $ 57,157
------ ------ ------ ------ ------

Interest rate sensitivity
gap $ 6,603 $(10,504) $ 17,615 5,442 $ 19,156
------ ------ ------ ------ ------
------ ------ ------ ------ ------

Cumulative interest rate
sensitivity gap $ 6,603 $ (3,901) $ 13,714 $ 19,156
------ ------ ------ ------
------ ------ ------ ------

Interest rate sensitivity
gap ratio 1.24 0.59 7.63 9.88
------ ------ ------ ------
------ ------ ------ ------

Cumulative interest rate
sensitivity gap ratio 1.24 0.93 1.24 1.34
------ ------ ------ ------
------ ------ ------ ------
</TABLE>

At December 31, 1995, the Registrant's cumulative three months or less and one
year interest rate sensitivity gap ratio was 1.24% and .93%, respectively. The
Registrant's targeted ratio is 80% to 120% for all time horizons. The above
target ratio for the three month or less period is due to the volume of real
estate construction loans of which, most have maturities of six to nine months.
The above target ratios are monitored periodically to take necessary actions to
make whatever adjustments are required to minimize market risk exposure. In the
current situation, a rising interest rate environment would result in increased
earnings, whereas a declining interest rate environment would negatively impact
the earnings of the Registrant. The rate sensitivity analysis is affected also
by the higher loan to deposit ratio in 1995. Management, through borrowing
arrangements with the Federal Home Loan Bank has the ability to match loans with
specific borrowings which will be beneficial in obtaining their target ratios.

F-40
<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE QUARTER ENDED MARCH 31, 1996

F-41
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements.

FINANCIAL CONDITION

As of March 31, 1996, the Company experienced a moderate increase in total
assets of 6.62% as compared to December 31, 1995. Total loans increased
$5,333,000 during this period or approximately 10.45% while all other interest-
bearing assets increased by a combined 2.66%. Total deposits increased
$5,546,000 or approximately 7.86%; therefore, the growth in loans was funded
primarily from the increase in deposit accounts. The growth experienced by the
Bank is consistent with management's expectations.

LIQUIDITY

As of March 31, 1996, the liquidity ratio was 36.85%, which is above the Bank's
target ratio of 30%. The Bank has available $5,000,000 in lines of credit to
meet any unexpected liquidity needs. Liquidity is measured by the ratio of net
cash, short-term and marketable securities to net deposits and short-term
liabilities.

CAPITAL

Banking regulations require the Bank to maintain minimum capital levels in
relation to Bank assets. At March 31, 1996, the Bank's capital ratios were
considered adequate based on regulatory minimum capital requirements. The
minimum capital requirements and the actual capital ratios for the Bank at
March 31, 1996 are as follows:

REGULATORY
ACTUAL REQUIREMENTS
---------- --------------

Leverage capital ratio 11.65% 4.00%
Risk-based capital ratios:
Core capital 15.71% 4.00%
Total capital 16.96% 8.00%

F-42
<PAGE>

CAPITAL (CONTINUED)

RESULTS OF OPERATIONS

Net interest income for the three months ended March 31, 1996 increased 13.79%
to $1,056,000 over the $928,000 for the same period in 1995. Interest income
for the three month period ended March 31, 1996 increased 16.80% from $1,494,000
to $1,745,000 while interest expense increased 21.73% from $566,000 to $689,000
as compared to the same period in 1995. The increase in interest income is
attributable to the increase in earning assets of $15,121,000 or 22.50% at March
31, 1996 as compared to March 31, 1995. The most significant growth in earning
assets came in loans and securities which grew by $8,298,000 and $4,711,000,
respectively. This growth was funded by a 22.64% or $14,048,000 increase in
deposits as compared to March 31, 1995. Of this growth, 68.57% or $9,633,000
occurred in interest-bearing deposits.

The provision for loan loss increased for the three months ended March 31,
1996 by $55,000 as compared to the same period in 1995. The increase in the
provision for the three months ended March 31, 1996 as compared to 1995 is
attributable to three loans which were identified in the fourth quarter of
1995. These loans have characteristics which question the collectibility of
principal and interest, and specific allowances have been identified for
these loans. Management continually evaluates these loans and provides
additional allowances as changes occur in the financial position of the
borrowers and changes occur in the value of the underlying collateral values.
The allowance for loan losses as a percentage of total loans was 1.65% at
March 31, 1996 and December 31, 1995. The allowance for loan losses as a
percentage of nonperforming loans and the ratio of nonperforming loans as a
percentage of total loans as of March 31, 1996 was 107.88% and 1.53%,
respectively. These ratios are consistent with December 31, 1995.
Management believes that the allowance for loan losses is adequate to absorb
anticipated loan losses.

F-43
<PAGE>

RESULTS OF OPERATIONS (CONTINUED)

Information with respect to nonaccrual, past due and restructured loans at
March 31, 1996 and 1995 is as follows:

MARCH 31,
------------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)

Nonaccrual loans $ 863 $ 340
Loans contractually past due ninety days or
more as to interest or principal payments
and still accruing -- 13
Restructured loans 87 297
Loans, now current about which there are
serious doubts as to the ability of the
borrower to comply with loan repayment
terms -- --

The increase in nonaccrual loans is due primarily to one customer line which was
included in a bankruptcy petition in January 1996. Management believes that the
Bank's collateral position in this customer line will be adequate to prevent any
significant losses.

It is the policy of the Company to discontinue the accrual of interest income
when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a significant
deterioration in the financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or interest is more
than ninety days past due, unless the loan is both well-secured and in the
process of collection. Accrual of interest on such loans is resumed when, in
management's judgment, the collection of interest and principal becomes
possible.

Loans classified for regulatory purposes as loss, doubtful, substandard or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
These classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms.

F-44
<PAGE>

RESULTS OF OPERATIONS (CONTINUED)

THREE MONTHS ENDED
MARCH 31,
-----------------------
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
-----------------------

Average amount of loans outstanding $ 51,240 $ 47,012
-------- --------
-------- --------

Balance of allowance for loan losses
at beginning of period 840 599
-------- --------

Loan recoveries -- --
Commercial and financial 5 --
-------- --------

Additions to allowance charged to
operating expense during period 86 31
-------- --------

Balance of allowance for loan losses
at end of period 931 630
-------- --------
-------- --------

Ratio of net loans charged off during
the period to average loans outstanding (.01%) --
-------- --------
-------- --------

Other operating income increased by 31.54% or $55,000 during the three month
period ended March 31, 1996 as compared to the same period in 1995. The
increase is primarily due to an increase in mortgage origination fees of $42,000
or 52.61% from 1995 to 1996.

Other operating expenses increased by 6.93% or $49,000 for the three month
period ended March 31, 1996 as compared to the same period in 1995. The most
significant change occurred in personnel expenses which increased from $412,000
as of March 31, 1995 to $422,000 for the same period in 1996. The number of
full-time employees increased from 41 as of March 31, 1995 to 46 as of March 31,
1996. Other operating expenses increased overall by 9.67% or $20,000. The
change is attributable primarily to increases in legal and accounting fees,
director's fees and miscellaneous charge-offs of $10,000, $6,500 and $13,500,
respectively. These increases were partially offset by a decrease in deposit
insurance premiums of $34,000 from 1995 to 1996.

Net income for the three months ended March 31, 1996 increased by $53,000 as
compared to the same period in 1995. Income tax expense increased by $27,000
for the three months ended March 31, 1996, resulting in a decrease in the
effective tax rate of 35.04% at March 31, 1995 to 34.85% at March 31, 1996.

F-45
<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.*

SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA

*REFERRED TO AS "REGISTRANT" IN THE FOLLOWING DOCUMENT.

F-46
<PAGE>

SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA

The tables and schedules on the following pages set forth certain selected
financial information and statistical data with respect to: the distribution of
assets, liabilities and stockholders' equity, the interest rates and interest
differentials; the investment portfolio; the loan portfolio, including types of
loans, maturities and sensitivities to changes in interest rates and information
on nonperforming loans; summary of the loan loss experience and reserves for
loan losses; types of deposits and the return on equity and assets.

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIALS

TABLE 1 AVERAGE BALANCES

The condensed average balance sheets for the periods indicated are presented
below (1).

Year Ended December 31,
1995 1994
---- ----
ASSETS (Dollars in Thousands)

Cash and due from banks $ 2,345 $ 2,215
Interest-bearing deposits in banks 493 1,183
Taxable investment securities 16,586 14,186
Nontaxable investment securities 2,418 1,619
Unrealized losses on securities
available for sale (249) (278)
Federal funds sold 2,682 5,102
Loans (2) 49,255 42,986
Reserve for loan losses (682) (533)
Other assets 2,763 2,720
------- -------
$75,611 $69,200
------- -------
------- -------

Total interest-earning assets $71,434 $65,076
------- -------
------- -------

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Noninterest-bearing demand $11,962 $10,107
Interest-bearing demand & savings 18,738 18,926
Time 34,303 30,941
------- -------
Total deposits $65,003 $59,974
Other borrowings 1,095 895
Other liabilities 726 393
------- -------
Total liabilities $66,824 $61,262
------- -------
Stockholders' equity (3) $ 8,787 $ 7,938
------- -------
$75,611 $69,200
------- -------
------- -------

Total interest-bearing liabilities $54,136 $50,762
------- -------
------- -------

F-47
<PAGE>

(1) Average balances were determined using the daily average balances during
the year for each category.

(2) The average balance of loans is stated net of average deferred loan fees
and includes nonaccrual loans.

(3) In accordance with SFAS 115, unrealized losses on securities available for
sale have been included in stockholders' equity at $154,000 and $181,000
for 1995 and 1994, respectively, which are the average balances for the
years, net of average deferred taxes.

TABLE 2 INTEREST INCOME AND INTEREST EXPENSE

The following tables set forth the amount of the Registrant's interest income
and interest expense for each category of interest-earning assets and interest-
bearing liabilities and the average interest rate for total interest-earning
assets and total interest-bearing liabilities, net interest spread and net yield
on average interest-earning assets.

<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
---- ----
Average Average
Interest Rate Interest Rate
-------- ---- -------- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans (1) $5,502 11.17% $4,308 10.02
Interest on deposits in banks 31 6.29 52 4.40
Interest on taxable securities 914 5.51 675 4.76
Interest on nontaxable securities (2) 120 4.96 74 4.57
Interest on Federal funds sold 150 5.59 200 3.92
------ ------
Total interest income $6,717 9.40% $5,309 8.16%
------ ------

INTEREST EXPENSE:
Interest on interest-bearing
demand and savings deposits $ 551 2.94% $ 505 2.67%
Interest on time deposits 1,909 5.57 1,524 4.93
Interest on other borrowings 78 7.12 65 7.26
------ ------
Total interest expense $2,538 4.69% $2,094 4.13%
------ ------

NET INTEREST INCOME $4,179 $3,215
------ ------
------ ------

Net interest spread 4.71% 4.03%
------ ------
------ ------
Net yield on average interest-earning assets 5.85% 4.94%
------ ------
------ ------
</TABLE>

(1) Interest and fees on loans include $566,208 and $556,118 of loan fee income
for the years ended December 31, 1995 and 1994, respectively. Interest and
fees on loans includes $91,000 of interest on nonaccrual loans for 1995.
There was no interest recorded on nonaccrual loans during 1994.

(2) Yields on nontaxable securities have not been computed on a tax equivalent
basis.

F-48
<PAGE>

TABLE 3 RATE AND VOLUME ANALYSIS

The following table describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected the Registrant's interest income and expense during the year
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (1) change in
volume (change in volume multiplied by old rate); (2) change in rate (change in
rate multiplied by old volume); and (3) a combination of change in rate and
change in volume. The changes in interest income and interest expense
attributable to both volume and rate have been allocated proportionately to the
change due to volume and the change due to rate.

<TABLE>
<CAPTION>
Year Ended December 31,
1995 vs. 1994
Increase Changes Due To
(Decrease) Rate Volume
---------- ---- ------
<S> <C> <C> <C>
Increase (decrease) in:
Income from interest-earning assets:
Interest and fees on loans $ 1,194 $ 668 $ 526
Interest on deposits in banks (21) 17 (38)
Interest on taxable securities 239 115 124
Interest on nontaxable securities 46 7 39
Interest on Federal funds sold (50) 66 (116)
------- ------- -------
Total interest income $ 1,408 $ 873 $ 535
------- ------- -------

Expense from interest-bearing liabilities:
Interest on interest-bearing
demand and savings deposits $ (46) $ (51) $ (5)
Interest on time deposits 385 210 175
Interest on borrowed money 13 (1) 14
------- ------- -------
Total interest expense $ 444 $ 260 $ 184
------- ------- -------

Net interest income $ 964 $ 613 $ 351
------- ------- -------
------- ------- -------
</TABLE>

F-49
<PAGE>

INVESTMENT PORTFOLIO

TABLE 4 TYPES OF INVESTMENTS

The carrying amounts of investment securities at the dates indicated are
summarized as follows (1):

December 31,
1995 1994
---- ----
(Dollars in Thousands)
U.S. Treasury and U.S. Government
agencies and corporations $ 19,021 $ 15,550
State and municipal securities 3,393 2,426
-------- --------
$ 22,414 $ 17,976
-------- --------
-------- --------

(1) Investment securities include "held to maturity" securities carried at
amortized cost and "available for sale" securities carried at fair value.

TABLE 5 MATURITIES

The amounts of investment securities as of December 31, 1995 are shown in the
following table according to maturity classifications (1) one year or less, (2)
after one year through five years, (3) after five years through ten years and
(4) after 10 years.

U.S. Treasury and
U.S. Government Agencies State and Municipal
and Corporations Securities
Amount Yield Amount Yield
------ ----- ------ -----
(1) (1) (2)
(Dollars in Thousands)
One year or less $ 5,481 5.03% $ 360 2.94%
After one year
through five years 10,054 5.70 469 3.72
After five years
through ten years 2,103 7.16 820 5.92
After ten years 1,383 6.89 1,744 4.78
------- -------
Total $19,021 5.75% $ 3,393 4.71%
------- -------
------- -------

(1) Yields were computed using carrying value, coupon interest, including
discount accretion and premium amortization, as appropriate, on a ratable
basis over the life of each security. The weighted average yield for each
maturity range was computed using the carrying value of each security in
that range.

2) Yields on securities of state and municipalities are not computed on a tax
equivalent basis.

F-50
<PAGE>

LOAN PORTFOLIO

TABLE 6 TYPES OF LOANS

The amount of loans outstanding at the dates indicated are shown in the
following table according to the type of loan.

December 31,
1995 1994
---- ----
(Dollars in Thousands)

Commercial and financial $ 14,236 $ 16,275
Real estate - construction 16,245 14,476
Real estate - mortgage 15,579 10,670
Consumer 4,077 2,670
Other 902 673
-------- --------
$ 51,039 $ 44,764
Less allowance for loan losses 840 599
-------- --------

Net loans $ 50,199 $ 44,165
-------- --------
-------- --------

(1) Real estate - mortgage loans are net of $167,000 and $136,000 of deferred
loan fees in 1995 and 1994, respectively.

TABLE 7 MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

Total loans as of December 31, 1995 are shown in the following table according
to maturity classifications (1) one year or less, (2) after one year through
five years and (3) after five years. (1)

(Dollars in Thousands)

Maturity:
One year or less $ 37,345
After one year through five years 12,306
After five years 1,388
--------
$ 51,039
--------
--------

The following table summarizes loans at December 31, 1995 with the due dates
after one year which (1) have predetermined interest rates and (2) have floating
or adjustable interest rates. (1)

(Dollars in Thousands)

Predetermined interest rates $ 8,570
Floating or adjustable interest rates 5,124
--------
$ 13,694
--------
--------

(1) Records were not available to present the above information in each
category listed above and could not be reconstructed without undue burden
and expense to the Registrant. In addition, the due dates for variable
rate loans with due dates after one year are presented based on repricing
dates. Records were not available to present this information based on
contractual maturities without undue burden and expense to the Registrant.
The Registrant has initiated plans to be able to provide this information
in the near future.

F-51
<PAGE>

TABLE 8 - RISK ELEMENTS

The following table presents, at the dates indicated, the aggregate of
nonaccrual, past due and restructured loans:

December 31,
1995 1994
---- ----
(Dollars in Thousands)

Loans accounted for on a nonaccrual basis $ 876 $ 119

Installment loans and term loans contractually
past due ninety days or more as to interest
or principal payments and still accruing -- 152

Loans, the terms of which have been renegotiated
to provide a reduction or deferral of interest
or principal because of deterioration in the
financial position of the borrower -- 286

Loans now current about which there are serious
doubts as to the ability of the borrower to comply
with present loan repayment terms -- --

The reduction in interest income associated with nonaccrual and renegotiated
loans as of December 31, 1995 is as follows:

(Dollars in Thousands)

Interest income that would have been
recorded on nonaccrual and restructured
loans under original terms 122
---
---
Interest income that was recorded on
nonaccrual and restructured loans 91
---
---

At December 31, 1995, the Registrant had identified $2,067,000 of impaired loans
in accordance with SFAS 114 and 118. Management has determined that an
allowance of $188,000 is required on $863,000 of those impaired loans, the
majority of which are included in nonaccrual loans. Included in the
$2,067,000 of impaired loans are six loans to two separate borrowers totaling
$1,564,780, which is discussed below. Of the $867,000 nonaccrual loans and
$188,000 of specific reserves on impaired loans, $601,111 and $130,000,
respectively, pertains to the following loans.

At December 31, 1995 one borrower was indebted to the Bank for $361,103
consisting of one loan in the amount of $210,174 and one loan in the amount
of $155,916. One loan is secured by real estate with an appraised fair
market value of $204,000. At December 31, 1995, the borrower had a contract
for the sale of the real estate for $200,000, contingent on a clean
environmental inspection. Management has determined that the risk of loss on
this particular loan is approximately $70,000 as of December 31, 1995,
including any clean-up costs, therefore specifically reserving $70,000.

The second loan is secured by a second mortgage on real estate with an
appraised fair market value of $1,900,000. The first lien is approximately
$1,000,134. In addition, the loan is secured by all inventory, equipment and
accounts receivable that was last appraised in October of 1995 at a value of
approximately $238,000. The financial condition of the corporation reported a
significant net loss for the year ended December 31, 1994. Due to the
financial condition of the corporation, management has specifically reserved
$60,000 as of December 31, 1995 for this second loan.

A separate borrower was indebted to the Bank for $1,203,677 at December 31,
1995, consisting of four loans. The first loan in the amount of $240,008 is
secured by a second mortgage on real estate with an appraised fair market
value of $1,030,000 with a first lien outstanding for approximately $355,000
at December 31, 1995. In addition, the loan is securied by all inventory,
equipment and accounts receivable of the corporation. Two other loans in the
amount of $104,204 and $15,413 are secured by real estate with an appraised
fair market value of $155,000 and equipment valued at approximately $25,000.
The fourth loan is an asset based loan secured by all accounts receivable,
equipment and inventory of the corporation in the amount of $844,051. As of
December 31, 1995, the accounts receivable outstanding consisted of $639,023
of current receivables, $203,095 of receivables less than 30 days old and
$1,933 of receivables outstanding over 30 days. In the first quarter of 1996,
the Corporation filed bankruptcy under Chapter 11. The Bank has been awarded
continuing security interest in pre-petition assets and post-petition assets
by the bankruptcy court. The Corporation continues to be a viable business
and through monitoring procedures performed by the Bank, the sales volume is
consistent with prior years. Based on all available information and updated
appraisals, management of the Bank determined that the risk of loss in this
particular customer line was minimal, even after discounting the various
collateral.

The interest income information on nonaccrual and restructured loans in the
above table is not comparable with the interest income information on
impaired loans as disclosed in Note 3 of the financial statements. The above
table includes interest income information only on nonaccrual and
restructured loans that were outstanding at the end of the year. The
financial statements include interest income information on impaired loans
that were outstanding throughout the year. Also, the interest income
information in the above table represents the interest that could have been
earned during the entire year. The interest income information on impaired
loans in the financial statements represents the interest that was recognized
only during the period of impairment.

F-52
<PAGE>

It is the policy of the Registrant to discontinue the accrual of interest income
when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a significant
deterioration in the financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or interest is more
than ninety days past due, unless the loan is both well-secured and in the
process of collection. Accrual of interest on such loans is resumed when, in
management's judgment, the collection of interest and principal becomes
probable.

Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
These classified loans do not represent material credits about which management
is aware of which causes management to have serious doubts as to the ability of
such borrowers to comply with the loan repayment terms.

COMMITMENTS AND LINES OF CREDIT

The Bank will, in the normal course of business, commit to extend credit in
the form of letters of credit or lines of credit. The amount of outstanding
loan commitments and letters of credit at December 31, 1995 and 1994 were
$16,125,000 and $8,672,000, respectively. These commitments are recorded in
the financial statements when funds are disbursed or the financial
instruments become payable. The Bank uses the same credit and collateral
policies for these off balance sheet commitments as it does for financial
instruments that are recorded in the financial statements. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitment amounts expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.

F-53
<PAGE>

SUMMARY OF LOAN LOSS EXPERIENCE

TABLE 9

The following table summarizes average loan balances for each year determined
using the daily average balances during the year; changes in the allowance for
possible loan losses arising from loans charged off and recoveries on loans
previously charged off; additions to the allowance which have been charged to
operating expense; and the ratio of net charge-offs during the year to average
loans.

Years Ended December 31,
1995 1994
---- ----
(Dollars in Thousands)

Average amount of loans outstanding $ 49,255 $ 42,986
-------- --------
-------- --------
Balance of allowance for loan losses
at beginning of year $ 599 $ 430
-------- --------

Charge-offs:
Installment loans (33) (2)
Commercial loans (18) (58)
-------- --------
(51) (60)
-------- --------
Recoveries:
Installment loans 26 2
Commercial loans 6 --
-------- --------
32 2
-------- --------

Net charge-offs (19) (58)
-------- --------

Additions to allowance charged to operating
expense during year 260 227
-------- --------

Balance of allowance for loan losses
at end of year $ 840 $ 599
-------- --------
-------- --------

Ratio of net loans charged off during the
year to average loans outstanding 0.04% 0.13%
-------- --------
-------- --------

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level deemed appropriate by
management to adequately cover all known and inherent risks in the loan
portfolio. Management's evaluation of the loan portfolio includes a continuing
review of loan loss experience, current economic conditions which may affect the
borrower's ability to pay and the underlying collateral value of the loans.

F-54
<PAGE>

Management has not formally allocated the Registrant's allowance for loan
losses to specific categories of loans, other than discussed in Table 8.
However, based on management's best estimate and historical experience, the
allocation of the allowance for loan losses for December 31, 1995 and 1994 is
summarized below:

<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
Percent of loans in Percent of loans in
each category each category
Amount to total loans Amount to total loans
------ -------------- ------ --------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Commercial and financial $ 420 27.89% $ 300 36.36%
Real estate 210 62.35 150 56.17
Consumer installment
loans and other 210 9.76 149 7.47
----- ------ ----- ------
$ 840 100.00% $ 599 100.00%
----- ------ ----- ------
----- ------ ----- ------
</TABLE>

DEPOSITS

TABLE 10

<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
---- ----
Amount Rate Amount Rate
------- ---- ------- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Noninterest-bearing
demand deposits $11,962 --% $10,107 --%
Interest-bearing demand
and savings deposits 18,738 2.94 18,926 2.67
Time deposits 34,303 5.57 30,941 4.93
------- -------
Total deposits $65,003 $59,974
------- -------
------- -------
</TABLE>

(1) Average balances were determined using the daily average balances
during the year for each category.

F-55

<PAGE>

The amounts of time certificates of deposit issued in amounts of $100,000 or
more as of December 31, 1995 are shown below by category, which is based on
time remaining until maturity of (1) three months or less, (2) over three
through six months (3) over six through twelve months and (4) over twelve
months.

(Dollars in Thousands)

Three months or less $1,837
Over three through six months 1,288
Over six through twelve months 6,225
Over twelve months 422
------
Total $9,772
------
------

RETURN ON EQUITY AND ASSETS

TABLE 11

The following rate of return information for the years indicated is presented
below:

Year Ended December 31,
1995 1994
------ ------
Return on assets (1) 1.61% .83%
Return on equity (2) 13.88 7.26
Dividend payout ratio (3) 9.42 --
Equity to assets ratio (4) 11.62 11.47

(1) Net income divided by average total assets.
(2) Net income divided by average equity.
(3) Dividends declared per share divided by net income per share.
(4) Average equity divided by average total assets.

F-56

<PAGE>

Pro Forma Financial Information

for Newnan Holdings, Inc.

F-57

<PAGE>

Newnan Holdings, Inc., Newnan Savings Bank, and Southside Financial Group, Inc.
Pro Forma Condensed Combined Financial Statements
As of and For the Year Ended March 31, 1996
(Unaudited)

The following pro forma condensed combined balance sheet of Newnan Holdings,
Inc. and subsidiaries as of March 31, 1996 and the related pro forma
condensed combined statement of income for the year then ended gives effect,
to the proposed acquisition by Newnan Holdings, Inc. of 100% of the issued
and outstanding shares of common stock of Newnan Savings Bank in the Newnan
Savings Reorganization through a one for one exchange of shares, in a manner
similar to a pooling of interests, and 100% of the issued and outstanding
shares of common stock of Southside Financial Group, Inc., using the
purchase method of accounting for a combination of cash and Newnan Holdings,
Inc. common stock totaling $16,456,662. The historical condensed statement
of income for Newnan Holdings represents the results of operations for Newnan
Savings Bank for its year ended March 31, 1996. The historical condensed
statement of income presented for Southside Financial Group, Inc. represents
its results of operations for the twelve month period ended March 31, 1996
and has been derived from its financial statements for the year ended
December 31, 1995 and the quarters ended March 31, 1995 and 1996. The pro
forma condensed combined balance sheet and statement of income should be read
in conjunction with the notes to the pro forma financial statements and the
separate financial statements and related notes of the respective entities
appearing elsewhere in this Joint Proxy Statement/Prospectus.

F-58

<PAGE>

NEWNAN HOLDINGS, INC., NEWNAN SAVINGS BANK, AND SOUTHSIDE FINANCIAL GROUP, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
NEWNAN PRO FORMA ADJUSTMENTS PRO FORMA
HOLDINGS SOUTHSIDE DEBIT CREDIT COMBINED
-----------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Cash and due from banks $ 9,215 $ 3,405 424 A $ 9,377
10,000 B
13,617 D
50 G
Interest bearing deposits in other banks 524 115 639
Federal funds sold 0 4,050 2,000 B 2,050
Investment securities 31,927 21,789 1,500 B 52,216

Loans, net 130,952 55,441 54 F 186,339
Real estate held for development and sale 3,740 0 3,740
Premises and equipment, net 2,746 1,783 150 F 4,679
Other assets 2,789 978 3,767
Investment in Southside 0 0 157 C 0
13,617 D
2,683 E

16,457 H
Organization Cost 0 0 50 G 50
Goodwill 117 0 6,225 F 6,342
----------------------- ------- ---------------------
Total assets $ 182,010 $87,561 $33,321 $33,693 $ 269,199
----------------------- ------- ---------------------
----------------------- ------- ---------------------
Deposit accounts $ 130,635 $76,089 302 F $ 207,026
Other borrowings 29,488 880 6,500 B 36,868
Other liabilities 1,621 578 157 C 2,356
----------------------- ------- ---------------------
Total liabilities 161,744 77,547 0 6,959 246,250
----------------------- ------- ---------------------
Common stock 1,458 3,822 192 A 1,603
145 E
4,014 H
Additinal paid-in capital 5,854 4,002 232 H 8,392
2,538 E
6,049 F
10,253 H
Retained earnings 12,954 2,205 2,205 H 12,954
Unrealized losses on securities available for sale, net of tax
0 (15) 15 H 0
----------------------- ------- ---------------------
Total stockholders' equity 20,266 10,014 16,472 9,141 22,949
----------------------- ------- ---------------------
Total liabilities and stockholders' equity
$ 182,010 $87,561 $16,472 $16,100 $ 269,199
----------------------- ------- ---------------------
----------------------- ------- ---------------------
</TABLE>

F-59

<PAGE>

NEWNAN HOLDINGS, INC., NEWNAN SAVINGS BANK, AND SOUTHSIDE FINANCIAL GROUP, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED MARCH 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1996
-----------------------------------------------------------------
NEWNAN PRO FORMA ADJUSTMENTS PRO FORMA
HOLDINGS SOUTHSIDE DEBIT CREDIT COMBINED
-----------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Interest income $ 12,412 $ 6,969 $ 276 I $ 19,033
83 J
11 O
Interest expense 6,512 2,661 423 K 9,536
60 P
----------------------- ------- ---------------------
Net interest income 5,900 4,308 782 71 9,497
Provision for loan losses 10 315 325
----------------------- ------- ---------------------
Net interest income after provisions for loan losses 5,890 3,993 782 71 9,172
Other income 5,248 1,084 6,332
Other expense 4,646 3,139 8 L 8,115
312 M
10 N
----------------------- ------- ---------------------
Earnings before income taxes 6,492 1,938 1,112 71 7,389
Income tax expense 2,442 665 276 Q 2,831
----------------------- ------- ---------------------
Net earnings $ 4,050 $ 1,273 $ 1,112 347 4,558
----------------------- ------- ---------------------
----------------------- ------- ---------------------
Earnings per share of common stock $ 2.71 $ 2.78
---------- ----------
---------- ----------
Weighted average common and common
equivalent shares outstanding 1,495,737 1,640,737
---------- ---------
---------- ---------
</TABLE>

F-60

<PAGE>

NEWNAN HOLDINGS, INC., NEWNAN SAVINGS BANK, AND SOUTHSIDE FINANCIAL GROUP, INC.,
NOTES TO PRO FORMA CONDENSED COMBINED
BALANCE SHEET AND STATEMENT OF INCOME
(UNAUDITED)

(A) Reflects the exercise of 19,150 options for common stock of Southside for
approximately $424,000.

(B) Reflects projected liquidation of $2,000,000 of federal funds sold and
$1,500,000 of investment securities, and proceeds of $6,500,000 from other
borrowings. These funds and $3,260,000 existing cash of the subsidiary
banks will be used by them to pay a special dividend to Newnan Holdings,
Inc. to provide cash for purchase of Southside shares and to provide
working capital for Newnan Holdings. The borrowings will be obtained by
subsidiary banks from the Federal Home Loan Bank of Atlanta and are
anticipated to be borrowed for a term of two years. Sufficient borrowing
capacity at the Federal Home Loan Bank is available to enable such
borrowing.

(C) Reflects establishment of Special Reserve Account for a portion of the
purchase price. This amount is to be held in escrow until the resolution
of certain outstanding loans of Citizens Bank. The amount of the special
reserve was determined as of May 31, 1996 based on the maximum amount of
$558,000 less certain specific and general reserve amounts.

(D) Reflects the payment of cash used to acquire 335,955 shares of the common
stock of Southside at $41.00 per share less cash held in the Special
Reserve Account.

(E) Reflects the issuance of 145,000 shares of common stock of Newnan Holdings,
Inc. stock to acquire 65,427 shares of the common stock of Southside. For
purposes of determining the number of shares of common stock of Southside
to be acquired through the issuance of Newnan Holdings, Inc. common stock,
a market value of $18.50 per share has been assumed for Newnan Holdings,
Inc. common stock.

(F) Reflects the allocation of the purchase price in excess of the book value
of Southside. The estimated fair market value of the shares of Southside
being acquired in this transaction was determined to be $41 per share as
specified in the purchase agreement. The allocation of the excess purchase
price over the net book values of Southside's assets and liabilities is
estimated to be as follows:

F-61

<PAGE>

<TABLE>
<S> <C>
Number of shares of Southside after exercise of options 401,382
Purchase price per share $41.00
--------
Total purchase price (thousands) $ 16,457
--------
--------
Southside stockholders' equity $ 10,014
Add: Proceeds from exercise of options 424
--------
Southside stockholders' equity after exercise of options $ 10,438
--------
--------
Excess of purchase price over stockholders' equity $ 6,019
--------
--------

ALLOCATION OF EXCESS OF PURCHASE PRICE OVER STOCKHOLDERS' EQUITY:
Fixed Assets 150
Loans (54)
Deposits (302)
Goodwill 6,225
--------
Total $ 6,019
--------
--------
</TABLE>

The allocation of the excess purchase price to Southside's premises and
equipment represents the write-up to estimated fair value. Adjustments to
loans and deposits are estimates based on fair value disclosures of those
items at December 31, 1995. The remainder of the purchase price in excess
of stockholders' equity of Southside has been allocated to goodwill.

(G) Reflects the payment of estimated organizational costs associated with
the formation of the holding company.

(H) Reflects the elimination of the equity accounts of Southside and the
elimination of the valuation allowance for unrealized losses on
investment securities available for sale.

(I) Reflects the elimination of interest income on Federal Funds sold of
$2,000,000 and other cash deposits of $3,260,000 used to fund the
purchase of Southside, based on an average yield for such investments of
5.27% for the year ended March 31, 1996.

(J) Reflects the elimination of interest income on Investment Securities of
$1,500,000 used to fund the purchase based on an average yield of 5.51%
for the year ended March 31, 1996.

(K) Reflects the interest expense on other borrowings incurred to fund the
purchase at an assumed rate of 6.50%. This approximates the FHLB
fixed-rate advance for a term of two years.

(L) Reflects the depreciation expense on the write-up of the depreciable
premises and equipment

F-62

<PAGE>

of Southside which will be expensed using the straight line method over
the estimated remaining useful life of twenty years.

(M) Reflects the amortization of goodwill which will be expensed over a
period of twenty years. For purposes of these pro forma financial
statements, effect of the Special Reserve Account on amortization expense
has not been considered due to immateriality.

(N) Reflects the amortization of holding company organization costs which
will be expensed over a period of five years.

(O) Reflects the accretion of the fair market value adjustment to loans
receivable over a period of five years using the straight line method.

(P) Reflects the amortization of the fair market value adjustment to deposits
over a period of five years using the straight line method.

(Q) Reflects the income tax benefit due to reduced net interest income,
additional depreciation expense and amortization of market value
adjustment to loans and deposits. An effective Federal and state tax
rate of 38% was used.

F-63

<PAGE>

Financial Statements

Newnan Savings Bank, FSB

F-64

<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES
Consolidated Statements of Financial Condition
March 31, 1996 and 1995

1996 1995
<S> <C> <C>
ASSETS
Cash and due from banks $ 9,214,902 $ 4,546,433
Interest-bearing deposits in other banks 524,372 4,051,819
Loans held for sale 7,878,878 5,470,954
Investment securities available for sale (notes 2 and 10) 22,794,000 9,817,445
Mortgage-backed securities at amortized cost, fair value of $9,086,437 and
$9,288,110 at March 31, 1996 and 1995, respectively (notes 2 and 10) 9,132,552 9,638,640
Loans receivable, net (notes 3 and 10) 123,072,970 124,650,122
Accrued interest receivable (note 4) 939,088 972,253
Real estate acquired in settlement of loans 111,150 124,485
Real estate held for development and sale (notes 5 and 9) 3,739,572 5,070,411
Federal Home Loan Bank stock, at cost (note 6) 1,471,700 1,672,900
Premises and equipment, net (note 7) 2,746,486 2,730,206
Income taxes receivable (note 14) 62,268 - -
Deferred income taxes (note 14) 40,000 14,000
Other assets 282,362 717,632
-----------------------------
$182,010,300 $169,477,300
-----------------------------
-----------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit accounts (note 8) $130,635,333 $117,818,439
Advances from the Federal Home Loan Bank (note 10) 29,433,626 33,457,312
Notes payable (note 9) 54,839 70,480
Accrued interest payable 118,913 79,782
Advance payments by borrowers for property taxes and insurance 384,828 489,582
Income taxes payable (note 14) - - 82,563
Accrued expenses and other liabilities 1,116,764 876,478
-----------------------------
Total liabilities 161,744,303 152,874,636
-----------------------------

Commitments and Contingencies (notes 3 and 11)

Stockholders' equity (notes 12 and 13):
Common stock, $1.00 par value, 8,000,000 shares authorized; 1,458,307 and
1,443,116 shares issued and outstanding for 1996 and 1995, respectively 1,458,307 1,443,116
Additional paid-in capital 5,853,830 5,762,429
Retained earnings, substantially restricted 12,954,052 9,396,869
Net unrealized holding gains (losses) on investment securities available for sale (192) 250
-----------------------------
Total stockholders' equity 20,265,997 16,602,664
-----------------------------

$182,010,300 $169,477,300
-----------------------------
-----------------------------

</TABLE>

See accompanying notes to consolidated financial statements.

F-65

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES
Consolidated Statements of Earnings
For the Years Ended March 31, 1996, 1995, and 1994

1996 1995 1994
<S> <C> <C> <C>
Interest and dividend income:
Loans $11,448,987 $ 9,816,727 $ 7,218,949
Interest-bearing deposits 95,908 115,841 123,000
Investment securities 274,784 299,827 437,640
Mortgage-backed securities 505,328 515,704 971,944
Dividends on Federal Home Loan Bank stock 87,374 82,414 46,721
--------------------------------------------
Total interest and dividend income 12,412,381 10,830,513 8,798,254
--------------------------------------------

Interest expense:
Interest on deposits (note 8) 5,517,083 4,319,730 4,138,889
Interest on Federal Home Loan Bank advances 984,624 1,165,841 318,277
Interest on notes payable 10,685 6,717 26,918
--------------------------------------------
Total interest expense 6,512,392 5,492,288 4,484,084
--------------------------------------------
Net interest income 5,899,989 5,338,225 4,314,170
Provision for loan losses (note 3) 10,000 108,000 275,000
--------------------------------------------
Net interest income after provision for loan losses 5,889,989 5,230,225 4,039,170
--------------------------------------------
Other income (losses):
Loan servicing and other loan fees, net 570,977 528,438 294,954
Deposit and other service charge income 640,555 593,979 577,803
Gain on sale of loans 630,684 281,968 722,159
Gain (loss) on sale of real estate acquired in settlement of loans 21,846 45,139 (34,991)
Gain on sale of real estate held for development and sale 3,215,004 763,403 829,273
Other operating income 168,760 143,664 157,967
--------------------------------------------
Total other income 5,247,826 2,356,591 2,547,165
--------------------------------------------

General and administrative expenses:
Compensation, payroll taxes, and fringe benefits (note 15) 2,088,139 2,269,250 2,237,921
Office properties and equipment 809,277 885,501 913,889
Write-down of premises and equipment - - - - 250,811
Federal insurance premiums 274,463 290,560 296,590
Data processing costs 222,285 286,083 274,945
Other operating expenses 1,251,800 1,339,853 1,283,721
--------------------------------------------
Total general and administrative expenses 4,645,964 5,071,247 5,257,877
--------------------------------------------
Earnings before income taxes and cumulative effect of change in
accounting principle 6,491,851 2,515,569 1,328,458
--------------------------------------------
Income tax expense (benefit) - (note 14):
Current 2,467,896 839,505 810,000
Deferred (26,000) 56,000 (319,000)
--------------------------------------------
Total income tax expense 2,441,896 895,505 491,000
--------------------------------------------
Earnings before cumulative effect of change in accounting principle 4,049,955 1,620,064 837,458
Cumulative effect of change in accounting for income taxes (note 14) - - - - 250,000
--------------------------------------------
Net earnings $ 4,049,955 $ 1,620,064 $ 1,087,458
--------------------------------------------
--------------------------------------------
Earnings before cumulative effect of change in accounting principle per
share $ 2.71 $ 1.14 $ 0.59
Cumulative effect of change in accounting for income taxes - - - - 0.17
--------------------------------------------
Net earnings per share $ 2.71 $ 1.14 $ 0.76
--------------------------------------------
--------------------------------------------
Weighted average common and common equivalent shares outstanding 1,495,737 1,425,553 1,422,359

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

</TABLE>

See accompanying notes to consolidated financial statements.

F-66
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
For the Years Ended March 31, 1996, 1995, and 1994

Net
unrealized
holding gains
(losses) on
investment Total
Additional securities stockholders
Common Paid-in Retained available for equity
Stock capital earnings1 sale

<S> <C> <C> <C>
Balance at March 31, 1993 $ 1,291,590 $ 4,655,312 $ 8,105,287 $ - - $14,052,189
Net earnings for year ended March 31, 1994 - - - - 1,087,458 - - 1,087,458
Exercise of stock options 1,516 5,924 - - - - 7,440
10% stock dividend 129,253 957,765 (1,087,018) - - - -
---------------------------------------------------------------------------
Balance at March 31, 1994 1,422,359 5,619,001 8,105,727 - - 15,147,087
Cumulative effect of change in accounting for
investment securities (Note 1) - - - - - - 104,000 104,000
Net earnings for year ended March 31,1995 - - - - 1,620,064 - - 1,620,064
Exercise of stock options 20,757 143,428 - - - - 164,185
Change in net unrealized holding gains on
investment securities available for sale - - - - - - (103,750) (103,750)
Dividends, $.23 per share - - - - (328,922) - - (328,922)
---------------------------------------------------------------------------
Balance at March 31, 1995 1,443,116 5,762,429 9,396,869 250 16,602,664
Net earnings for year ended March 31,1996 - - - - 4,049,955 - - 4,049,955
Exercise of stock options 15,191 91,401 - - - - 106,592
Change in net unrealized holding gains on
investment securities available for sale - - - - - - (442) (442)
Dividends, $.34 per share - - - - (492,772) - - (492,772)
---------------------------------------------------------------------------
Balance at March 31, 1996 $ 1,458,307 $ 5,853,830 $12,954,052 $ (192) $20,265,997
---------------------------------------------------------------------------
---------------------------------------------------------------------------

</TABLE>

See accompanying notes to consolidated financial statements.

F-67
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended March 31, 1996, 1995, and 1994

1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,049,955 $ 1,620,064 $ 1,087,458
Adjustments to reconcile net earnings to net cash (used in)
provided by operating activities:
Cumulative effect of change in accounting for income taxes - - - - (250,000)
Provision for loan losses 10,000 108,000 275,000
Depreciation 314,471 265,531 305,262
Write-down of premises and equipment - - - - 250,811
Net (gain) loss on sale of premises and equipment - - (80) 6,765
Amortization of excess servicing fees - - - - 299,146
Other amortization and (accretion), net 49,775 82,608 174,372
Net gain on sale of loans (630,684) (281,968) (722,159)
Origination of loans held for sale (45,930,746) (37,647,466) (65,985,849)
Proceeds from sale of loans 44,153,506 37,728,466 67,210,710
Net gain on sale of real estate (3,454,514) (884,975) (879,701)
Deferred income tax (benefit) expense (26,000) 56,000 (319,000)
Stock dividends on FHLB stock - - - - (46,500)
(Increase) decrease in accrued interest receivable 33,165 (234,704) 34,169
(Increase) decrease in other assets 410,269 (494,117) 119,140
Increase (decrease) in accrued interest payable 39,131 25,536 (53,169)
Increase (decrease) in current income taxes payable (123,673) 24,244 92,319
(Decrease) increase in accrued expenses and other liabilities 206,772 (85,276) 1,612,504
----------------------------------------------
Net cash (used in) provided by operating activities (898,573) 281,863 3,211,278
----------------------------------------------
Cash flows from investing activities:
Proceeds from maturities of investment securities available for sale 8,500,000 2,999,061 - -
Purchases of investment and mortgage-backed securities held to
maturity - - (3,937,188) (6,260,762)
Proceeds from maturities of investment and mortgage-backed
securities held to maturity - - 2,543,330 8,861,786
Purchases of investment securities available for sale (21,491,442) (7,503,351) - -
Principal payments received on mortgage-backed securities held to
maturity 495,759 157,723 9,594,000
Loan originations, net of principal collections 4,604,002 (26,948,146) (18,614,921)
Additions to real estate (5,244) (17,157) - -
Proceeds from sales of real estate 1,767,082 1,925,825 2,597,209
Purchase of FHLB stock (502,600) (802,800) - -
Purchase of premises and equipment (330,751) (90,202) (446,588)
Proceeds from redemption of FHLB stock 703,800 - - - -
Proceeds from sales of premises and equipment - - 3,403 207,020
----------------------------------------------
Net cash used in investing activities (6,259,394) (31,669,502) (4,062,256)
----------------------------------------------

</TABLE>

F-68
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended March 31, 1996, 1995, and 1994

1996 1995 1994
<S> <C> <C> <C>
Cash flows from financing activities:
Net increase in deposit accounts $ 12,816,894 $ 619,702 $ 7,135,227
Repayment of notes payable (15,641) (14,481) (190,271)
Advances from Federal Home Loan Bank 452,254,000 444,846,000 50,439,000
Repayments of advances from Federal Home Loan Bank (456,277,686) (421,949,240) (44,008,448)
Increase (decrease) in advance payments by borrowers for
property taxes and insurance (104,754) 206,982 78,770
Dividends (447,959) (228,134) - -
Stock options exercised 74,135 111,485 7,440
----------------------------------------------
Net cash provided by financing activities 8,298,989 23,592,314 13,461,718
----------------------------------------------
Net increase (decrease) in cash and cash equivalents 1,141,022 (7,795,325) 12,610,740
Cash and cash equivalents at beginning of year 8,598,252 16,393,577 3,782,837
----------------------------------------------
Cash and cash equivalents at end of year $ 9,739,274 $ 8,598,252 $ 16,393,577
----------------------------------------------
----------------------------------------------

Supplemental disclosures of cash paid during the year for:
Interest $ 6,473,261 $ 5,466,752 $ 4,537,253
----------------------------------------------
----------------------------------------------
Income taxes $ 2,612,727 $ 816,355 $ 475,000
----------------------------------------------
----------------------------------------------

Supplemental disclosures of noncash investing activities:
Sales of real estate totaling $3,400,133, $268,829, and $1,412,389, for the years ended March 31, 1996, 1995, and 1994,
respectively, were financed by loans from the Bank
Loans receivable of $347,057, $67,026 and $468,998 were transferred to real estate acquired in settlement of loans during
the years ended March 31, 1996, 1995, and 1994, respectively

</TABLE>

See accompanying notes to consolidated financial statements.

F-69
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a description of the more significant accounting and reporting
policies which Newnan Savings Bank, FSB and subsidiaries (the Bank) follow in
preparing and presenting their consolidated financial statements.

(a) Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Newnan Savings Bank, FSB, its wholly-owned subsidiaries, Newnan Financial
Services, Inc. and Citizens Mortgage Group, and Jefferson Ventures, Inc., a
wholly-owned subsidiary of Newnan Financial Services, Inc. All significant
intercompany accounts and transactions have been eliminated.

The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of the
statement of financial condition and revenues and expenses for the period.
Actual results could differ significantly from those estimates.

(b) Loans Receivable

Loans receivable held for investment are stated at their unpaid principal
balances less, where applicable, unearned income, deferred loan fees, and
allowance for loan losses. First mortgage loans held for sale are carried at
the lower of cost or estimated market value as determined by outstanding
commitments from investors or current investor yield requirements calculated on
an aggregate basis.

Interest accrual is generally discontinued when a loan becomes 90 days
delinquent. At that time, all accrued but unpaid interest is reserved.

In May 1993, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 114, "Accounting by Creditors for
Impairment of a Loan." SFAS 114 requires impaired loans to be measured based
on the present value of expected future cash flows, discounted at the loan's
effective interest rate, or at the loan's observable market price, or the
fair value of the collateral if the loan is collateral dependent, beginning
in fiscal 1996. In October 1994, the FASB issued SFAS 118, "Accounting by
Creditors for Impairment of a Loan-Income Recognition and Disclosures," which
amends the requirements of SFAS 114 regarding interest income recognition and
related disclosure requirements. Initial adoption of SFAS 114 and SFAS 118
must be reflected prospectively. Under the provisions of SFAS 114 and SFAS
118, a loan is considered impaired when, based on current information and
events, it is probable that the Bank will be unable to collect all amounts
due according to the contractual terms of the note agreement. The provisions
of SFAS 114 do not apply to large pools of smaller balance homogeneous loans,
such as consumer and installment loans, which are collectively evaluated for
impairment. Impairment losses are included in the allowance for loan losses
through a charge to the provision for loan losses. Cash receipts on impaired
loans which are accruing interest are applied to principal and interest under
the contractual terms of the loan agreement. Cash receipts on impaired loans
for which the accrual of interest has been discontinued are applied to reduce
the principal amount of such loans until the principal has been recovered and
are recognized as interest income thereafter. The Bank adopted SFAS 114 and
SFAS 118 on April 1, 1995, and the impact to the consolidated financial
statements was not material.

The Bank provides for loan and real estate losses on the allowance method.
Accordingly, all loan and real estate losses are charged to related allowances
and all recoveries are credited to them. Additions to the allowances for loan
and real estate losses are provided by charges to operations based on various
factors which, in management's judgement, deserve current recognition in
estimating possible losses. Such factors considered by management include the
market value of the underlying collateral,

F-70
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

growth and composition of the loan and real estate portfolios, the relationship
of the allowance for loan losses to outstanding loans, delinquency trends, and
economic conditions. Management evaluates the carrying value of loans and real
estate periodically and the allowances are adjusted accordingly. Management
believes that the allowance for possible loan losses is adequate and the
valuation of real estate acquired in settlement of loans is appropriate. While
management uses the best information available to make evaluations, future
adjustments to the allowances may be necessary if conditions differ
substantially from the assumptions used in making the evaluations. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowances for losses on loans and real estate
acquired in settlement of loans. Such agencies may require the Bank to
recognize additions to the allowances based on their judgements of information
available to them at the time of their examination.

A substantial portion of the Bank's loans is secured by real estate in the
Georgia counties of Coweta, Fayette, and Troup. In addition, all of the real
estate acquired in settlement of loans is located in that same territory.
Accordingly, the ultimate collectibility of a substantial portion of the Bank's
portfolio and the recovery of the carrying values of real estate acquired in
settlement of loans are susceptible to changes in market conditions in this
market area.

(d) Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation.
Depreciation is provided on the declining-balance or straight-line methods over
the estimated useful lives of the related assets.

(e) Real Estate

Real estate acquired in settlement of loans represents real estate acquired
through foreclosure or acceptance of a deed in lieu of foreclosure and is
initially recorded at the lower of cost (principal balance of the former
mortgage loan plus costs of obtaining title and possession) or fair value less
estimated selling costs. Any necessary write-downs of the loan balance to the
fair value of the real estate at foreclosure is recorded as a charge to the
allowance for loan losses. A provision for estimated losses is charged to
earnings when a subsequent decline in value reduces the fair value less selling
costs to less than carrying value.

Real estate held for development and sale is carried at the lower of cost or net
realizable value. Interest and other carrying charges related to properties
under development are capitalized as construction costs during the construction
period.

Sales of real estate are recognized upon closing. The recognition of gains and
losses is dependent upon and determined by the terms and conditions of the sale
and whether the bank has provided financing to facilitate such sales. If the
transaction does not meet the initial investment requirements of SFAS No. 66,
"Accounting for Sales of Real Estate", income recognition is deferred until such
requirements are met. Gains recognized or deferred are based on the proceeds
from sale, less selling costs, and the carrying value of the real estate,
including capitalized interest and carrying costs. Any losses are recognized at
time of sale.

(f) Investment and Mortgage-Backed Securities

The Bank adopted the provisions of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" on April 1, 1994. Under SFAS 115,
the Bank has classified its investment securities in two categories: available
for sale or held to maturity. Held to maturity securities are those securities
for which the Bank has the ability and intent to hold the security until
maturity. All other securities are classified as available for sale. As a
result of the adoption of SFAS 115 on April 1, 1994, the Bank reclassified
$5,354,492 from held to maturity securities to available for sale securities and
recorded an unrealized gain on investment securities available for sale of
$167,000 with a corresponding increase in stockholders' equity of $104,000, net
of deferred income taxes of $63,000.

Held to maturity securities are recorded at amortized cost adjusted for the
amortization or accretion of premiums or discounts. Available for sale
securities are recorded at fair value. Unrealized holding gains and losses, net
of the related income tax effects, on securities available for sale are excluded
from earnings and are reported as a separate component of stockholders'

F-71
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

equity until realized.

Available for sale securities transferred into the held to maturity category are
recorded at fair value at date of transfer. The related unrealized holding gain
or loss at date of transfer reported as a component of stockholders' equity is
amortized over the remaining life of the security as an adjustment of yield.

Mortgage-backed securities held to maturity are stated at their unpaid principal
balances, adjusted for unamortized premiums and unaccreted discounts.

A decline in the market value of any available for sale or held to maturity
security below cost that is deemed other than temporary results in a charge to
earnings and the establishment of a new cost basis for the security. At March
31, 1996, the Bank did not have any securities with other than temporary
impairment for which a new cost basis had been established.

Premiums and discounts are amortized or accreted over the life of the related
investment security as an adjustment to yield using a method which approximates
the effective interest method and takes into consideration prepayment
assumptions. Dividends and interest income are recognized when earned.
Realized gains and losses for investment securities sold are included in
earnings and are derived using the specific identification method for
determining the cost of securities sold.

(g) Intangible Assets

Intangible assets included in other assets relate to certain branch acquisitions
in 1988 and consist of goodwill and deposit base premiums. Goodwill is being
amortized on a straight-line method over 20 years. The deposit base premium is
being amortized using an accelerated method over 10 years.

(h) Loan Origination and Commitment Fees

Loan origination fees, net of certain direct origination costs, are deferred and
amortized as a yield adjustment over the contractual lives of the underlying
loans. If a loan is subsequently sold, the remaining unamortized fees are
recognized as a component of the gain or loss. In addition, fees for a
commitment to originate or purchase loans are deferred and, if the commitment is
exercised, recognized over the life of the related loan as a yield adjustment
or, if the commitment expires unexercised, recognized as income upon expiration
of the commitment.

(i) Loan Sales

Gains and losses are realized at the time of sale of loans as determined by the
difference between the selling price and carrying amount of the loans sold
(principal amounts less deferred fees). This amount is adjusted by the present
value of the excess or deficiency, if any, of the estimated future servicing
revenues over normal servicing fees. Any resulting discount or premium is
amortized using a level yield method over the estimated remaining life of such
loans. The carrying value of the excess servicing fee receivable is evaluated
and adjusted periodically when the Bank experiences unanticipated principal
prepayments and the net present value of estimated future servicing revenue in
excess of a normal fee is less than its carrying value.

(j) Unearned Income

Unearned income arising from the origination of short-term second mortgage and
consumer loans is accreted into income over the lives of the loans by use of a
method that approximates a level yield.

(k) Earnings Per Share

Earnings per share are computed on the weighted average number of shares
outstanding, including the dilutive effect of

F-72
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

unexercised stock options in 1996. The effect of stock options in 1995 and 1994
was insignificant to earnings per share computations.

(l) Income Taxes

The Bank files a consolidated Federal income tax return. In February 1992, the
FASB issued SFAS 109, "Accounting for Income Taxes." SFAS 109 required a
change from the deferred method of accounting for income taxes of Accounting
Principles Board (APB) Opinion 11. Under the asset and liability method of
SFAS 109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

Effective April 1, 1993, the Bank adopted SFAS 109 and has reported the
cumulative effect of that change in the method of accounting for income taxes in
the fiscal 1994 statement of earnings.

(m) Reclassifications

Certain reclassifications have been made to the 1995 and 1994 financial
statements to conform to the classifications adopted in 1996.

(n) Cash Equivalents

For purposes of the statement of cash flows, the Bank considers interest-bearing
deposits in other banks to be cash equivalents.

(o) Recent Accounting Pronouncements

In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and For Long-Lived Assets to be Disposed Of," (SFAS 121). The
provisions of SFAS 121 require that long-lived assets be reviewed for impairment
whenever events or changes in circumstance indicate that the carrying amount may
not be recoverable. In performing the review of long-lived assets that will be
held and used by the Bank, recoverability is based on the future cash flows
expected from the use of the asset and its eventual disposition. If the asset
is impaired, an impairment loss equal to the excess of the carrying value of the
asset over its fair value must be recorded. SFAS 121 is effective for financial
statements for fiscal years beginning after December 15, 1995. The Bank does
not believe the provisions of SFAS 121 will have a material impact on the
consolidated financial statements.

In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing
Rights" (SFAS 122). SFAS 122 requires that the Bank recognize as separate
assets rights to service mortgage loans for others, however those servicing
rights are acquired. SFAS 122 also requires that the Bank assess its
capitalized mortgage servicing rights for impairment based on the fair value of
those rights. SFAS 122 is effective for financial statements issued for fiscal
years beginning after December 15, 1995. The Bank does not believe the
provisions of SFAS 122 will have a material impact on the consolidated financial
statements.

In October 1995, the FASB issued SFAS 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 establishes financial accounting and
reporting standards for stock-based employee compensation plans. Those plans
include all arrangements by which employees receive shares of stock or other
equity instruments of the employer or the employer incurs liabilities to
employees in amounts based on the price of the employer's stock. Such
instruments include stock purchase plans, stock options, restricted stock, and
stock appreciation rights. SFAS 123 also applies to transactions in which an
entity issues its equity instruments to acquire goods or services from
nonemployees.

F-73
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

A new method of accounting for stock-based compensation arrangements with
employees is established by SFAS 123. The new method is a fair value based
method rather than the intrinsic value based method. However, SFAS 123 does not
require an entity to adopt the new fair value based method for purposes of
preparing its basic financial statements. Entities are allowed (1) to continue
to use their existing method or (2) adopt the SFAS 123 fair value based method.
The selected method would apply to all of an entity's compensation plans and
transactions.

SFAS 123 requires that an employer's financial statements include certain
disclosures about stock-based employee compensation arrangements regardless of
the method used to account for them. The accounting requirements of this
statement are effective for transactions entered into in fiscal years that begin
after December 15, 1995. The disclosure requirements are effective for
financial statements for fiscal years beginning after December 15, 1995. The
Bank has not determined the impact of adopting SFAS 123.

(2) INVESTMENT AND MORTGAGE-BACKED SECURITIES

A summary of investment and mortgage-backed securities as of March 31, 1996 and
1995 is as follows:

Amortized Unrealized Unrealized Approixmate
Cost gains losses fair value
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE AT MARCH 31, 1996
Investment Securities:
United States government and agency obligations $22,794,309 $ 13,732 $ 14,041 $22,794,000
------------------------------------------------------------
------------------------------------------------------------

SECURITIES HELD TO MATURITY AT MARCH 31, 1996
Mortgage-backed securities:
FHLMC collateralized mortgage obligations $ 5,982,151 $ 13,849 $ 54,820 $ 5,941,180
FNMA collateralized mortgage obligations 1,745,183 26,591 -- 1,771,774
FNMA mortgage-backed securities 1,405,218 -- 31,735 1,373,483
------------------------------------------------------------
$ 9,132,552 $ 40,440 $86,555 $ 9,086,437
------------------------------------------------------------
------------------------------------------------------------

SECURITIES AVAILABLE FOR SALE AT MARCH 31, 1995
Investment securities:
United States government and agency obligations $ 9,817,195 $ 13,122 $ 12,872 $ 9,817,445
------------------------------------------------------------
------------------------------------------------------------

SECURITIES HELD TO MATURITY AT MARCH 31, 1995
Mortgage-backed securities:
FHLMC collateralized mortgage obligations $ 5,983,491 $ -- $ 234,911 $ 5,748,580
FNMA collateralized mortgage obligations 1,959,188 -- 21,688 1,937,500
FNMA mortgage-backed securities 1,695,961 -- 93,931 1,602,030
------------------------------------------------------------
$ 9,638,640 $ -- $ 350,530 $ 9,288,110
------------------------------------------------------------
------------------------------------------------------------

</TABLE>

F-74
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

A summary of investment (by maturity) and mortgage-backed (by anticipated cash
flow) securities as of March 31, 1996 follows:

Held to maturity Available for sale
-------------------------------------------------------
Amortized Approximate Amortized Approximate
cost fair value cost fair value
----------- ----------- ----------- ------------

<S> <C> <C> <C> <C>
Investment securities:
Within one year $ -- $ -- $22,495,458 $22,495,500
After one year through five years -- -- 298,851 298,500
------------------------------------------------------------
$ -- $ -- $22,794,309 $22,794,000
------------------------------------------------------------
------------------------------------------------------------

Mortgage-backed securities:
Within one year $ 4,742,857 $ 4,771,088 $ -- $ --
After one year through five years 3,916,448 3,852,758 -- --
After five years through ten years 473,247 462,591 -- --
------------------------------------------------------------
9,132,552 9,086,437 -- --
------------------------------------------------------------
$ 9,132,552 $ 9,086,437 $22,794,309 $22,794,000
------------------------------------------------------------
------------------------------------------------------------

</TABLE>

There were no sales of investment or mortgage-backed securities during 1996,
1995 or 1994.

The approximate carrying value of investment and mortgage-backed securities at
March 31, 1996 and 1995, which were pledged as collateral for certain deposits
and borrowings of the Bank are as follows:

Pledged for: 1996 1995
-------- --------
Deposits $ 3,100,000 $ 1,100,000
FHLB Advances 25,500,000 7,500,000
Other 1,300,000 300,000
------------------------------------
$ 29,900,000 $ 8,900,000
------------------------------------
------------------------------------
(3) LOANS RECEIVABLE

Loans receivable at March 31, 1996 and 1995 are summarized as follows:

1996 1995
-------- --------
First mortgage loans $ 95,611,541 $ 97,619,949
Real estate construction loans 35,651,688 28,217,741
Consumer and other installment loans 10,404,452 10,825,603
------------------------------------
141,667,681 136,663,293
------------------------------------
Less:
Undisbursed proceeds on loans in process 16,178,914 9,234,721
Deferred loan fees 1,044,381 1,342,220
Unearned interest on installment loans -- 1,537
Allowance for loan losses 1,371,416 1,434,693
------------------------------------
18,594,711 12,013,171
------------------------------------
$123,072,970 $124,650,122
------------------------------------
------------------------------------

At March 31, 1996, the Bank had commitments to originate loans, exclusive of the
undisbursed portion of loans in process, of approximately $5,480,000. These
commitments to originate loans consisted of fixed rate commitments with terms
of up to 30 years and rates ranging from 6.75% to 8.63%. In addition, the Bank
is committed to loan funds on unused variable rate lines of

F-75
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

credit of approximately $3,160,000 at March 31, 1996. In making such
commitments the Bank applies the same credit standards used in the lending
process and periodically reassesses creditworthiness through ongoing credit
review.

As of March 31, 1996 and 1995, the Bank had commitments to sell loans of
$8,508,000 and $4,776,000, respectively. At March 31, 1996 and 1995, no
valuation allowance was required in connection with loans held for sale or
commitments to originate loans.

As of March 31, 1996, 1995, and 1994, the Bank was servicing loans for others
with approximate aggregate balances of $124,983,000, $137,365,000, and
$133,713,000, respectively.

At March 31, 1996, 1995, and 1994, the Bank had nonaccrual loans aggregating
approximately $713,000, $872,000, and $1,427,000, respectively. During the
years ended March 31, 1996, 1995, and 1994, respectively, additional interest of
$30,000, $34,000, and $111,000, would have been recorded on these loans if the
loans had been accruing interest for the entire period.

At March 31, 1996, pursuant to the definition within SFAS 114 the Bank had one
impaired loan with an outstanding balance of $1,131,000 and a related valuation
allowance of $5,655.

The following is a summary of the activity in the allowance for loan losses for
the years ended March 31, 1996, 1995, and 1994:

1996 1995 1994
-------- -------- --------
Balance at beginning of year $ 1,434,693 $ 1,314,574 $ 1,145,289
Provision for loan losses 10,000 108,000 275,000
Less loan losses 92,210 36,717 110,947
Add recoveries 18,933 48,836 5,232
-------------------------------------------------
Balance at end of year $ 1,371,416 $ 1,434,693 $ 1,314,574
-------------------------------------------------
-------------------------------------------------

In the ordinary course of business, the Bank has direct and indirect loans
outstanding to certain executive officers, directors, and principal holders of
equity securities (including their associates). Management believes such loans
are made substantially on the same terms, including interest rate and
collateral, as those prevailing at the time for comparable transactions with
other customers.

The following is a summary of the activity in loans outstanding to officers,
directors, and their associates for the years ended March 31, 1996 and 1995:

1996 1995
-------- --------

Balance at beginning of year $ 404,325 $ 515,560
New loans 679,032 201,500
Principal repayments (196,882) (312,735)
----------------------------------
Balance at end of year $ 886,475 $ 404,325
----------------------------------
----------------------------------

F-76
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

(4) ACCRUED INTEREST RECEIVABLE

Accrued interest receivable at March 31, 1996 and 1995 consisted of the
following:

1996 1995
-------- --------
Loans receivable $ 817,107 $ 856,996
Mortgage-backed securities 41,607 44,023
Investment securities and other
earning assets 80,374 71,234
----------------------------------
$ 939,088 $ 972,253
----------------------------------
----------------------------------

(5) REAL ESTATE HELD FOR DEVELOPMENT AND SALE

Real estate held for development and sale at March 31, 1996 and 1995 is
summarized as follows:

1996 1995
-------- --------
White Oak $3,381,677 $4,712,516
Other land 357,895 357,895
----------------------------------
$3,739,572 $5,070,411
----------------------------------
----------------------------------

White Oak, acquired in July 1984, is a development in Coweta County, Georgia
consisting of approximately 1,660 acres which currently includes 15 developed
lots and certain amenities.

(6) INVESTMENTS REQUIRED BY LAW

Investment in stock of a Federal Home Loan Bank is required of federally insured
savings banks who utilize their services. No ready market exists for the stock
and it has no quoted market value.

(7) PREMISES AND EQUIPMENT

Premises and equipment at March 31, 1996 and 1995 are summarized as follows:

1996 1995
-------- --------
Land $ 802,028 $ 802,028
Buildings and building improvements 3,020,021 3,020,021
Furniture, fixtures, and equipment 2,429,430 2,396,706
Computer equipment 298,027 --
----------------------------------
6,549,506 6,218,755
Less accumulated depreciation 3,803,020 3,488,549
----------------------------------
Premises and equipment, net $ 2,746,486 $ 2,730,206
----------------------------------
----------------------------------

F-77
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

(8) DEPOSIT ACCOUNTS

Deposit accounts at March 31, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>

1996 1995
Weighted Weighted
average average
interest interest
Amount rate Amount rate
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Noninterest bearing demand deposits $ 10,955,609 -- $ 8,443,351 --
Interest bearing demand deposits 19,066,541 2.77% 16,664,624 2.59%
Money market demand accounts 6,594,488 3.31% 7,366,070 3.00%
Passbook accounts 16,658,718 2.99% 17,491,690 3.01%
Certificate accounts:
All other 76,956,625 5.94% 67,652,704 4.81%
Jumbo 403,352 5.58% 200,000 4.51%
--------------- ---------------
Total deposit accounts $ 130,635,333 4.60% $ 117,818,439 4.15%
--------------- ---------------
--------------- ---------------

</TABLE>

Interest expense on deposit accounts is summarized as follows:

Years ended March 31,
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
NOW accounts $ 432,615 $ 374,854 $ 353,960
Money market demand accounts 248,097 235,254 257,279
Passbook accounts 492,653 565,059 505,479
Certificate accounts 4,369,023 3,192,807 3,044,572
Less early withdrawal penalties (25,305) (48,244) (22,401)
---------------------------------------------
$ 5,517,083 $ 4,319,730 $ 4,138,889
---------------------------------------------
---------------------------------------------

</TABLE>

The Bank credited interest to deposit accounts totaling approximately
$4,482,000, $3,462,000, and $3,434,000, during the years ended
March 31, 1996, 1995, and 1994, respectively.

A summary of certificate accounts by maturity and rate as of March 31, 1996
follows:

April 1, 1996 April 1, 1997 April 1, 1998
to March 31, to March 31, to March 31,
1997 1998 1999 Thereafter Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
3-4% $ 4,738,131 $ 349,797 $ 16,547 $ -- $ 5,104,475
4-6 29,000,265 5,210,538 7,438,524 1,408,666 43,057,993
6-7 15,153,241 5,381,578 3,639,094 3,289,039 27,462,952
7-9 1,405,965 328,592 -- -- 1,734,557
---------------------------------------------------------------------------
$50,297,602 $11,270,505 $11,094,165 $4,697,705 $77,359,977
---------------------------------------------------------------------------
---------------------------------------------------------------------------

</TABLE>

At March 31, 1996, the Bank has pledged approximately $3,100,000 of mortgage-
backed securities as collateral for deposits held by local government units.

F-78
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

(9) NOTES PAYABLE

Notes payable at March 31, 1996 and 1995 are summarized as follows:

1996 1995
---------- ----------
<S> <C> <C>
8% purchase money promissory note payable by subsidiary in annual
installments of $21,279, including interest beginning April 21, 1991 through
April 21, 1998; secured by certain real estate held for development and sale $ 54,839 $ 70,480
-----------------------------------
-----------------------------------

</TABLE>

The aggregate maturities of notes payable at March 31, 1996 are as follows:

<S> <C>
12 months or less $ 16,892
12 months to 24 months 18,243
24 months to 36 months 19,704
-----------------
$ 54,839
-----------------
-----------------
</TABLE>

(10) ADVANCES FROM THE FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank at March 31, 1996 and 1995 are summarized by maturity in the table below:

Interest Rates Amounts
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Maturing in
12 months or less 5.60-5.87% 5.75-6.88% $22,545,893 $25,312,666
After one year through five years 5.71% 5.41-5.85% 1,655,173 5,066,672
After five years 5.41-5.85% 5.41-5.85% 5,232,560 3,077,974
--------------- --------------
$29,433,626 $33,457,312
--------------- --------------
--------------- --------------

</TABLE>

At March 31, 1996 the Bank had established with the Federal Home Loan Bank a
line of credit totaling $45,000,000 with the remaining available credit totaling
$15,566,374.

The weighted average interest rate on Federal Home Loan Bank advances was 5.65%
and 5.74% at March 31, 1996 and 1995, respectively.

At March 31, 1996, the Bank has pledged, under a blanket floating lien, first
mortgage loans with unpaid balances which, when discounted at 75% of such unpaid
principal balances, equals or exceeds the advances outstanding. The Bank has
also pledged $25,500,000 in investment and mortgage-backed securities as
collateral for short term advances.

(11) LEASE COMMITMENTS

The Bank is committed under two operating leases for office space. One lease is
month-to-month, and the other lease will expire during 1997. For the years
ended March 31, 1996, 1995, and 1994, lease expense was $92,242, $99,261, and
$107,082, respectively.

(12) STOCKHOLDERS' EQUITY AND DIVIDEND RESTRICTIONS

On March 19, 1986, the Bank completed its conversion from a federally chartered
mutual institution to a Federal capital stock institution. As required by
Federal regulations, eligible deposit account holders, at the conversion date,
were granted priority in the event of future liquidation by the establishment of
a liquidation account equal to net worth at June 30, 1985. In the event of a
complete liquidation (and only in such an event), each eligible depositor will
be entitled to receive a liquidation distribution from the liquidation account,
in the proportionate amount of the then current adjusted balance for deposits
then held, before any liquidation distribution may be made with respect to
stockholders. Except for the repurchase of stock and payment of dividends

F-79
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

by the Bank, the existence of the liquidation account will not restrict the use
or application of net worth.

Federal regulations do not permit the Bank to pay dividends on common stock if
the effect of the payment of a dividend would cause regulatory capital to be
reduced below either the amount required for the aforementioned liquidation
account or the stated regulatory capital requirements.

At March 31, 1996, approximately $ 2,472,000 of the Bank's retained earnings
represent allocations of income to bad debt deductions for income tax purposes
only. If, in the future, this portion of retained earnings is used for any
purpose other than to absorb bad debt losses, Federal income taxes will be
imposed at the then applicable rates.

The Bank adopted a Stock Option and Incentive Plan in 1986 (the "PLAN") which
provides that stock options may be awarded to officers and key employees with an
exercise price representing the fair market value of the common stock at date of
grant. Information relating to stock options for the years ended March 31, 1996,
1995, and 1994 is summarized as follows:

1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Options outstanding at beginning of period 83,909 95,965 62,538
Options granted 25,000 -- 28,810
Options canceled (220) (1,584) --
Options exercised (8,976) (10,472) (1,516)
Additional options resulting from stock dividend -- -- 6,133
----------------------------------------------------------
Options outstanding at end of period 99,713 83,909 95,965
----------------------------------------------------------
----------------------------------------------------------

Option price per share:
Options granted during the period $ 16.38 $ -- $ 8.50
----------------------------------------------------------
----------------------------------------------------------
Options canceled $ 3.98 $ 10.00 $ --
----------------------------------------------------------
----------------------------------------------------------
Options exercised $ 3.98 - 10.23 $ 3.98 - 10.00 $ 4.14 - 4.56
----------------------------------------------------------
----------------------------------------------------------
Options outstanding at end of period $ 3.98 - 16.38 $ 3.98 - 10.23 $ 3.98 - 10.23
----------------------------------------------------------
----------------------------------------------------------
</TABLE>

At March 31, 1996, no more stock options may be granted pursuant to the Plan.
Substantially all options outstanding may be exercised immediately.

During fiscal 1994, the stockholders of the Bank approved a Directors'
Nonincentive Stock Option Plan (the "Directors' Plan") which provided that a
maximum of 110,000 shares would be reserved for future issuance by the Bank to
be granted to directors of the Bank as an alternative to the payment of
directors' retainer fees. During fiscal 1995, the stockholders approved an
amendment to the Directors' Plan to increase the number of shares of Common
Stock reserved for issuance pursuant to the Directors' Plan to a total of
200,000.

Pursuant to the Directors' Plan, the option exercise price for each option
granted shall be $2.00 below the fair market value of shares of the Bank's stock
on the date the option is granted. For their compensation, Directors may elect
to receive options in lieu of cash, with the number of options granted equal to
the amount of cash compensation the Director would have received divided by the
$2.00 per share discount. The compensation expense recorded during the years
ended March 31, 1996, 1995, and 1994 relating to these options was $104,600,
$101,400, and $81,600, respectively.

F-80
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

Information related to the Directors' Plan is summarized as follows:

1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Options outstanding at beginning of period 118,335 77,920 31,100
Options granted 50,550 50,700 40,800
Options exercised (6,215) (10,285) --
Additional options resulting from stock dividend -- -- 6,020
----------------------------------------------------------
Options outstanding at end of period 162,670 118,335 77,920
----------------------------------------------------------
----------------------------------------------------------

Option prices per share:
Options granted during the period $ 11.25 - 15.13 $ 7.25 - 9.50 $ 6.38 - 7.05
----------------------------------------------------------
----------------------------------------------------------
Options exercised $ 3.30 - 7.05 $ 3.30 - 7.05 $ --
----------------------------------------------------------
----------------------------------------------------------
Options outstanding at end of period $ 3.30 - 15.13 $ 3.30 - 9.50 $ 3.30 - 7.05
----------------------------------------------------------
----------------------------------------------------------

</TABLE>

At March 31, 1996, an additional 19,730 stock options may be granted pursuant to
the Directors' Plan. All options under the Directors' Plan are exercisable at
the date of grant.

(13) FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT ("FIRREA") OF
1989

Under provisions of the Financial Institutions Reform, Recovery, and Enforcement
Act ("FIRREA") of 1989, the Bank is required to meet certain tangible, core, and
risk-based capital ratios. The regulations require institutions to have a
minimum regulatory tangible capital equal to 1.5% of total assets, a minimum of
3% core capital ratio, and a minimum 8.0% risk-based capital ratio. The OTS has
published a notice of a proposed amendment to the core capital requirement,
whereby a 3% core ratio would be required for institutions with a MACRO rating
of 1. All other institutions would be required to maintain core ratios of 4% to
5%. The Bank is in compliance with such minimum capital requirements at March
31, 1996.

In addition to the capital requirements, FIRREA includes, among other matters,
provisions for changes in the Federal regulatory structure for institutions,
including a new deposit insurance system, increased deposit insurance premiums,
more restrictive loans to one borrower requirements, and restricted investment
activities with respect to real estate held for development and sale,
noninvestment grade corporate debt, and certain other investments.

(14) INCOME TAXES

As discussed in note 1, the Bank adopted SFAS 109 as of April 1, 1993. The
cumulative effect of this change in accounting for income taxes of $250,000 has
been determined as of April 1, 1993 and reported separately in the statement of
earnings for the year ended March 31, 1994.

Income tax expense (benefit) attributable to income from continuing operations
for the years ended March 31, 1996, 1995, and 1994 consists of:

1996 1995 1994
---------- ---------- ----------
Federal: Current $ 2,151,938 $ 779,655 $ 810,000
Deferred (26,000) 56,000 (319,000)
---------------------------------------------
2,125,938 835,655 491,000
State: Current 315,958 59,850 --
---------------------------------------------
$ 2,441,896 $ 895,505 $ 491,000
---------------------------------------------
---------------------------------------------

Income tax expense attributable to income from continuing operations of
$2,441,896, $895,505, and $491,000, for the years

F-81
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

ended March 31, 1996, 1995, and 1994, differed from the amounts computed by
applying the U.S. Federal income tax rate of 34% to earnings before income tax
expense and cumulative effect of change in accounting principle as follows:

1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Computed "expected" tax expense $ 2,207,229 $ 855,293 $ 451,676
Increase (decrease) in tax expense resulting from:
Loss on sale of real estate acquired in settlement of loans -- -- 11,897
State taxes, net of federal tax benefit 208,532 39,501 --
Other, net 26,135 711 27,427
----------------------------------------------
$ 2,441,896 $ 895,505 $ 491,000
----------------------------------------------
----------------------------------------------
</TABLE>

The Bank is subject to state income taxation. However, because of state net
operating loss carryforwards and certain credit carryforwards, the Bank incurred
no Georgia state income tax expense in 1994.

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities as of March 31, 1996 and
1995 are presented below:

1996 1995
---------- ----------
Deferred tax assets:
Allowance for loan losses $ 286,378 $ 414,063
Deferred gain on sale of real estate 10,176 30,388
Write-down of premises and equipment 93,439 93,439
Deferred compensation 117,838 83,079
----------------------------------
Total gross deferred tax assets 507,831 620,969
Less valuation allowance -- --
----------------------------------
Net deferred tax assets 507,831 620,969
----------------------------------
Deferred tax liabilities:
Deferred loan fees 289,553 313,294
FHLB stock dividends 138,428 238,930
Depreciation 22,625 31,323
Core deposit intangible amortization 17,225 23,422
----------------------------------
Total deferred tax liabilities 467,831 606,969
----------------------------------
Net deferred tax assets $ 40,000 $ 14,000
----------------------------------
----------------------------------

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which the temporary defferences resulting in the deferred tax assets become
deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making the assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods which the related
temporary differences are deductible, management believes it is more likely than
not the Bank will realize the benefits of these deductible differences.

(15) RETIREMENT PLANS AND EMPLOYEE BENEFITS

The Bank had a defined benefit pension plan covering substantially all employees
which was terminated during 1993 and replaced with a 401(k) plan.

The 401(k) plan went into effect January 1, 1993 and permits eligible employees
to make discretionary contributions to the plan of up to 15 percent of total
compensation. The Bank matches the employee's contributions 100 percent up to 2
percent, not to exceed $2,750 per year, of the employee's base annual salary.
The Bank recognized $27,290, $25,038 and $25,000 in

F-82
<PAGE>

NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES

Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------

expense related to its obligation under the plan for the years ended March 31,
1996, 1995 and 1994, respectively. In addition, upon approval of the Board of
Directors, the Bank may make an annual discretionary profit sharing contribution
to all eligible plan participants. There was no such discretionary contribution
made by the Bank for the years ended March 31, 1996, 1995, or 1994.

In addition, the Bank instituted an Incentive Compensation Plan for all
employees during 1993 that provides for annual cash awards, if any, based on
certain achievement standards and earnings performance. The awards, if any, are
based on earnings performance in relation to earnings goals as proposed by
executive officers and ratified by the Board of Directors. The Bank's expense
under this plan, classified as compensation, was $128,563, $85,993, and $75,000
for 1996, 1995, and 1994, respectively.

(16) WHOLLY-OWNED SUBSIDIARIES

Condensed consolidated financial statements of Newnan Financial Services, Inc.
(NFS) and its subsidiary, Jefferson Ventures, Inc. (Jefferson), are presented
below. NFS has been involved primarily in the acquisition and development of
real estate and in providing real estate appraisal services.

NEWNAN FINANCIAL SERVICES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Financial Condition
March 31, 1996 and 1995

1996 1995
---------- ----------
ASSETS
Cash $ 366,153 $ 95,553
Notes Receivable 194,101 194,101
Real estate held for development and sale 3,381,677 4,712,516
Other 7,696 14,767
----------------------------------
$3,949,627 $5,016,937
----------------------------------
----------------------------------

LIABILITIES AND STOCKHOLDER'S EQUITY
Notes payable to Parent Company $ -- $1,541,899
Other notes payable 54,839 70,480
Accounts payable 89,316 55,905
Income taxes payable to Parent 70,606 267,723
Other liabilities 52,933 107,221
Common stock 75,000 75,000
Additional paid-in capital 75,000 1,225,000
Retained earnings 3,531,933 1,673,709
----------------------------------
$3,949,627 $5,016,937
----------------------------------
----------------------------------

F-83
<PAGE>

NEWNAN FINANCIAL SERVICES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Earnings and Retained Earnings
For the Years Ended March 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>

1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Income from Parent Company -appraisal fees $ 102,607 $ 77,595 $ 125,291
Gain on sale of real estate 3,215,004 763,403 829,273
Other income 21,325 25,171 29,160
---------------------------------------------
Total revenue 3,338,936 866,169 983,724
---------------------------------------------
Expenses:
Salaries related benefits 48,000 48,000 48,000
Management fees, paid to Parent Company 66,300 66,300 --
Depreciation -- 1,683 22,789
Interest expense, paid to Parent Company 70,171 192,576 295,690
Other interest expense 10,685 6,717 26,866
Other operating expenses 146,644 158,212 228,387
---------------------------------------------
Total expenses 341,800 473,488 621,732
---------------------------------------------
Earnings before allocation of income taxes from Parent Company 2,997,136 392,681 361,992
Allocation of income tax expense from Parent Company 1,138,912 149,218 137,557
---------------------------------------------
Net earnings 1,858,224 243,463 224,435
Retained earnings, beginning of year 1,673,709 1,430,246 1,205,811
---------------------------------------------
Retained earnings, end of year $ 3,531,933 $ 1,673,709 $ 1,430,246
---------------------------------------------
---------------------------------------------

</TABLE>

(17) FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS 107, "Disclosures about Fair Value of Financial Instruments," requires
disclosure of fair value information about financial instruments, whether or not
recognized on the face of the statement of financial condition, for which it is
practicable to estimate that value. Fair value estimates are made at a specific
point in time, based on relevant market information and information about the
financial instrument. These estimates do not reflect any premium or discount
that could result from offering for sale at one time the Bank's entire holdings
of a particular financial instrument. Because no market exists for a portion of
the Bank's financial instruments, fair value estimates are based on judgements
regarding future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgement and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates. Fair value
estimates are based on existing on and off-balance sheet financial instruments
without attempting to estimate the value of anticipated future business and the
value of assets and liabilities that are not considered financial instruments.
In addition, the tax ramifications related to the realization of the unrealized
gains and losses can have a significant effect on fair value estimates and have
not been considered in any of the estimates. The assumptions used in the
estimation of the fair value of the Bank's financial instruments are explained
below. Where quoted market prices are not available, fair values are based on
estimates using discounted cash flow and other valuation techniques. Discounted
cash flows can be significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. The following fair value
estimates cannot be substantiated by comparison to independent markets and
should not be considered representative of the liquidation value of the Bank's
financial instruments, but rather a good-faith estimate of the fair value of
financial instruments held by the Bank. SFAS 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements.

The following methods and assumptions were used by the Bank in estimating the
fair value of its financial instruments:

F-84
<PAGE>

(a) Cash and Due from Banks and Interest-Bearing Deposits in Other Banks

Fair value equals the carrying value of such assets due to their nature.

(b) Investment Securities and Mortgage-Backed Securities

The fair value of investment and mortgage-backed securities is based on
quoted market prices.

The fair value of loans is calculated using discounted cash flows by loan
type. The discount rate used to determine the present value of the loan
portfolio is an estimated market discount rate that reflects the credit and
interest rate risk inherent in the loan portfolio. The estimated maturity
is based on the Bank's historical experience with repayments adjusted to
estimate the effect of current market conditions. Fair values of loans
held for sale are determined using outstanding commitments from investors
and other similar information. The carrying amount of related accrued
interest receivable approximates its fair value.

(d) Deposits

The fair value of deposits with no stated maturity, such as noninterest-
bearing demand deposits, NOW accounts, savings, and money market deposit
accounts, is equal to the carrying value due to their short-term nature.
Fair values for certificates of deposit have been determined using
discounted cash flows. The discount rate used is based on estimated market
rates for deposits of similar remaining maturities. The carrying amount of
related accrued interest payable approximates its fair value.

(e) Advances from the Federal Home Loan Bank

The fair value of advances from the FHLB approximates the carrying value as
the weighted average rate on such advances approximates the current market
rates and the majority of the advances mature in 12 months or less. The
carrying amount of related accrued interest payable approximates its fair
value.

The carrying values and estimated fair values of the Bank's financial
instruments at March 31, 1996 are as follows:
Carrying Estimated Fair
Amount Value
------------ ------------

Financial assets:
Cash and due from banks $ 9,215 $ 9,215
-----------------------------
-----------------------------
Interest-bearing deposits in other banks $ 524 $ 524
-----------------------------
-----------------------------
Investment and mortgage-backed securities $ 31,927 $ 31,880
-----------------------------
-----------------------------
Loans, net $ 130,952 $ 131,512
-----------------------------
-----------------------------
Financial liabilities:
Deposits $ 130,635 $ 131,039
-----------------------------
-----------------------------
FHLB Advances $ 29,434 $ 29,434
-----------------------------
-----------------------------

F-85
<PAGE>

(18) PROPOSED BUSINESS COMBINATION

F-86
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Newnan Savings Bank, FSB

We have audited the accompanying consolidated statements of financial condition
of Newnan Savings Bank, FSB and subsidiaries (the Bank) as of March 31, 1996 and
1995, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the years in the three-year period ended March 31,
1996. These consolidated financial statements are the responsibility of the
Bank's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Newnan Savings Bank,
FSB and subsidiaries as of March 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended March 31, 1996, in conformity with generally accepted accounting
principles.

As discussed in note 1 to the consolidated financial statements, the Bank
changed its method of accounting for investment securities on April 1, 1994 to
adopt the provisions of Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities." As
discussed in notes 1 and 14 to the consolidated financial statements, the Bank
changed its method of accounting for income taxes on April 1, 1993 to adopt the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes."

KPMG Peat Marwick LLP
Atlanta, Georgia
May 3, 1996

F-87

<PAGE>

Financial Statements

Southside Financial Group, Inc.

F-88
<PAGE>

- -------------------------------------------------------------------------------
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 1995
- -------------------------------------------------------------------------------

F-89
<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 1995

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

TABLE OF CONTENTS

Page
----

INDEPENDENT AUDITOR'S REPORT . . . . . . . . . . . . . . . . . . . . 1

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS. . . . . . . . . . . . . . . . . . . . 2
CONSOLIDATED STATEMENTS OF INCOME. . . . . . . . . . . . . . . . . 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY. . . . . . . . . . 4
CONSOLIDATED STATEMENTS OF CASH FLOWS. . . . . . . . . . . . 5 AND 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . .7-28

F-90
<PAGE>

INDEPENDENT AUDITOR'S REPORT
- --------------------------------------------------------------------------------

TO THE BOARD OF DIRECTORS
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
FAYETTEVILLE, GEORGIA

We have audited the accompanying consolidated balance sheets of
SOUTHSIDE FINANCIAL GROUP, INC. AND SUBSIDIARY as of December 31, 1995 and 1994,
and the related consolidated statements of income, stockholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Southside Financial Group, Inc. and Subsidiary as of December 31, 1995 and 1994,
and the results of their operations and their cash flows for the years then
ended, in conformity with generally accepted accounting principles.

As discussed in Note 2, the Company changed its method of accounting
for investments to adopt the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", at January 1, 1994.

[Signature]

Atlanta, Georgia
February 9, 1996

F-91
<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994

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

ASSETS 1995 1994
----------- -----------
<S> <C> <C>
Cash and due from banks $ 3,811,989 $ 2,712,938
Interest-bearing deposits in banks 100,000 991,272
Federal funds sold 2,760,000 1,600,000
Securities available for sale, at fair value 22,233,819 15,794,899
Securities held to maturity, at cost (fair value
$181,049 and $2,166,272) 180,209 2,180,627

Loans 51,038,724 44,763,978
Less allowance for loan losses 840,000 598,749
----------- -----------
Loans, net 50,198,724 44,165,229
----------- -----------
Premises and equipment, net 1,809,541 1,907,873

Other assets 1,032,198 1,277,773
----------- -----------
$82,126,480 $70,630,611
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
Noninterest-bearing demand $14,276,436 $10,509,336
Interest-bearing demand 18,334,800 14,463,431
Savings 3,009,571 3,521,152
Time, $100,000 and over 9,772,088 9,511,753
Other time 25,150,378 23,192,593
----------- -----------
Total deposits 70,543,273 61,198,265
Other borrowings 890,476 1,219,048
Other liabilities 878,374 270,573
----------- -----------
Total liabilities 72,312,123 62,687,886
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES

STOCKHOLDERS' EQUITY
Common stock, par value $10; 5,000,000 shares
authorized, 382,232 and 369,607 issued and outstanding 3,822,320 3,696,070
Capital surplus 4,002,039 3,851,190
Retained earnings 1,916,096 811,220
Unrealized gains (losses) on securities available
for sale, net of taxes 73,902 (415,755)
----------- -----------
Total stockholders' equity 9,814,357 7,942,725
----------- -----------
$82,126,480 $70,630,611
----------- -----------
----------- -----------
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-92
<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995 AND 1994

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

1995 1994
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $5,502,992 $4,308,071
Interest on taxable securities 913,699 675,361
Interest on nontaxable securities 119,738 74,226
Interest on deposits in other banks 31,287 51,694
Interest on Federal funds sold 149,616 199,981
---------- ----------
6,717,332 5,309,333
---------- ----------
INTEREST EXPENSE
Interest on deposits 2,460,129 2,028,570
Interest on other borrowings 78,199 65,068
---------- ----------
2,538,328 2,093,638
---------- ----------
Net interest income 4,179,004 3,215,695
PROVISION FOR LOAN LOSSES 259,969 227,468
---------- ----------
Net interest income after provision for loan losses 3,919,035 2,988,227
---------- ----------
OTHER INCOME
Service charges on deposit accounts 327,206 313,416
Other service charges, commissions and fees 1,931 19,882
Mortgage origination fees 686,787 239,599
Security transactions, net (45,818) -
Other 58,743 34,701
---------- ----------
1,028,849 607,598
---------- ----------
OTHER EXPENSE
Salaries and employee benefits 1,845,621 1,495,721
Equipment expense 200,861 182,951
Occupancy expense 170,551 135,774
Data processing 99,264 94,765
Advertising and promotion 41,128 68,608
Stationery and supplies 86,271 87,302
Deposit insurance 71,321 124,247
Donations 12,049 69,626
Other operating expenses 563,008 484,833
---------- ----------
3,090,074 2,743,827
---------- ----------
Income before income taxes 1,857,810 851,998
APPLICABLE INCOME TAXES 638,356 275,952
---------- ----------
Net income $1,219,454 $ 576,046
---------- ----------
---------- ----------
EARNINGS PER SHARE BASED ON WEIGHTED AVERAGE
OUTSTANDING SHARES OF 370,679 IN 1995; 367,834 IN 1994 $ 3.29 $ 1.56
---------- ----------
---------- ----------
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-93
<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
UNREALIZED
GAINS
(LOSSES) ON
SECURITIES
COMMON STOCK AVAILABLE TOTAL
--------------------- CAPITAL RETAINED FOR SALE, STOCKHOLDERS'
SHARES PAR VALUE SURPLUS EARNINGS NET OF TAXES EQUITY
--------- ---------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 352,225 $3,522,250 $3,590,460 $ 675,455 $ -- $ 7,788,165
Cumulative effect of a change in
method of accounting for
investments in debt and equity
securities -- -- -- -- (16,346) (16,346)
Net income -- -- -- 576,046 -- 576,046
5% stock dividend 17,382 173,820 260,730 (434,550) -- --
Cash paid in lieu of fractional
shares -- -- -- (5,731) -- (5,731)
Net change in unrealized losses on
securities available for sale,
net of taxes -- -- -- -- (399,409) (399,409)
--------- ---------- ---------- ---------- ------------ -------------
BALANCE, DECEMBER 31, 1994 369,607 3,696,070 3,851,190 811,220 (415,755) 7,942,725
Net income -- -- -- 1,219,454 -- 1,219,454
Cash dividend, $.31 per share -- -- -- (114,578) -- (114,578)
Issuance of common stock 12,625 126,250 150,849 -- -- 277,099
Net change in unrealized gains on
securities available for sale,
net of taxes -- -- -- -- 489,657 489,657
--------- ---------- ---------- ---------- ------------ -------------
BALANCE, DECEMBER 31, 1995 382,232 $3,822,320 $4,002,039 $1,916,096 $ 73,902 $ 9,814,357
--------- ---------- ---------- ---------- ------------ -------------
--------- ---------- ---------- ---------- ------------ -------------
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-94

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,219,454 $ 576,046
------------- -----------

Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization 12,122 13,260
Depreciation 176,227 166,497
Provision for loan losses 259,969 227,468
Provision for deferred income taxes (48,984) (25,248)
Net realized losses on securities available for sale 45,818 --
Increase in interest receivable (18,317) (170,460)
Increase in interest payable 110,780 39,473
Increase (decrease) in taxes payable 387,910 (111,966)
Other assets and liabilities, net 109,753 (21,286)
------------ -----------
Total adjustments 1,035,278 117,738
------------ -----------
Net cash provided by operating activities 2,254,732 693,784
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale (11,141,342) (9,905,326)
Proceeds from sale of securities available for sale 5,092,708 --
Proceeds from maturities of securities available for sale 2,353,665 4,432,738
Purchases of securities held to maturity -- (2,180,871)
Proceeds from maturities of securities held to maturity 418 244
Decrease in interest-bearing deposits in banks, net 891,272 198,728
(Increase) decrease in Federal funds sold, net (1,160,000) 4,383,000
Increase in loans, net (6,293,464) (4,911,186)
Purchase of premises and equipment (77,895) (185,527)
------------ -----------
Net cash used in investing activities (10,334,638) (8,168,200)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net 9,345,008 6,673,513
(Decrease) increase in other borrowings, net (328,572) 1,219,048
Exercise of stock options 277,099 --
Payment for fractional shares -- (5,731)
Dividends paid (114,578) --
------------ -----------
Net cash provided by financing activities 9,178,957 7,886,830
------------ -----------
</TABLE>

F-95

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Net increase in cash and due from banks $ 1,099,051 $ 412,414
Cash and due from banks at beginning of year 2,712,938 2,300,524
------------ -----------
Cash and due from banks at end of year $ 3,811,989 $ 2,712,938
------------ -----------
------------ -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 2,427,548 $ 2,054,165
Income taxes $ 299,430 $ 413,166
NONCASH TRANSACTIONS
Unrealized (gains) losses on securities available for sale $ (789,769) $ 670,572
Principal balances on loans transferred to other real estate $ 279,430 $ 141,000
Securities held to maturity transferred to securities
available for sale $ 2,000,000 $10,992,883
</TABLE>

F-96

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Southside Financial Group, Inc. is a one-bank holding company whose
business is presently conducted by its wholly-owned subsidiary,
Citizens Bank & Trust of Fayette County. Citizens Bank & Trust (the
Bank) is a commercial bank with operations in Fayette County, Georgia.
The Bank provides a full range of banking services to individual and
corporate customers in its primary market area of Fayette County. The
Bank is subject to the regulations of certain Federal and state
agencies. The Bank is periodically examined by certain regulatory
authorities.

The accounting and reporting policies of the Company and its subsidiary
conform to generally accepted accounting principles and general
practices within the financial services industry. In preparing the
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of the balance sheet and revenues and expenses for the
period. Actual results could differ from those estimates.

The consolidated financial statements include the accounts of the
Company and its subsidiary. Significant intercompany transactions and
accounts are eliminated in consolidation.

The principles which significantly affect the determination of
financial position, results of operations and cash flows are summarized
below:

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and due from banks
includes cash on hand and amounts due from banks (including cash
items in process of clearing). Cash flows from loans originated by
the Bank, deposits, interest-bearing deposits, other borrowings and
Federal funds sold are reported net.

The Bank maintains amounts due from banks which, at times, may
exceed Federally insured limits. The Bank has not experienced any
losses in such accounts.

F-97

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SECURITIES AVAILABLE FOR SALE

Securities classified as available for sale are those debt securities
that the Bank intends to hold for an indefinite period of time, but
not necessarily to maturity. Any decision to sell a security
classified as available for sale would be based on various factors,
including significant movements in interest rates, changes in the
maturity mix of the Bank's assets and liabilities, liquidity needs,
regulatory capital considerations and other similar factors.
Securities available for sale are carried at fair value. Unrealized
gains or losses are reported as increases or decreases in
stockholders' equity, net of the related deferred tax effect.
Realized gains or losses, determined on the basis of the cost of
specific securities sold, are included in earnings.

SECURITIES HELD TO MATURITY

Securities classified as held to maturity are those debt securities
the Bank has both the intent and ability to hold to maturity
regardless of changes in market conditions, liquidity needs or
changes in general economic conditions. These securities are carried
at cost adjusted for amortization of premium and accretion of
discount, computed by the interest method over their contractual
lives. The sale of a security within three months of its maturity
date or after collection of at least 85 percent of the principal
outstanding at the time the security was acquired is considered a
maturity for purposes of classification and disclosure.

A decline in the fair value below cost of any available for sale or
held to maturity security that is deemed other than temporary is
charged to earnings resulting in the establishment of a new cost
basis for the security.

F-98

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

LOANS AND INTEREST INCOME

Loans are stated at principal amounts outstanding less unearned
income and the allowance for loan losses. Interest income on loans is
credited to income on a daily basis, based upon the principal amount
outstanding at the respective rate of interest.

Accrual of interest income is discontinued on loans when, in the
opinion of management, collection of such interest income becomes
doubtful. Accrual of interest on such loans is resumed when, in
management's judgment, the collection of interest and principal
becomes probable.

The net of loan fees and the related costs on real estate loans is
deferred and recognized over the life of the loan computed on the
straight-line method. Fees and costs incurred in origination of most
other loans are recognized at the time the loan is placed on the
books. The results of operations are not materially different than
the results which would be obtained by accounting for loan fees and
costs in accordance with generally accepted accounting principles.

The allowance for loan losses is established through a provision for
loan losses charged to expense. Loans are charged against the
allowance for loan losses when management believes that
collectibility of the principal is unlikely. The allowance is an
amount that management believes will be adequate to absorb estimated
losses on existing loans that may become uncollectible, based on
evaluation of the collectibility of loans and prior loss experience.
This evaluation also takes into consideration such factors as changes
in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific problem loans and current economic
conditions that may affect the borrower's ability to pay. While
management uses the best information available to make its
evaluation, future adjustments to the allowance may be necessary
if there are significant changes in economic

F-99

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

LOANS AND INTEREST INCOME (CONTINUED)

conditions. In addition, regulatory agencies, as an integral part of
their examination process, periodically review the Bank's allowance
for loan losses, and may require the Bank to record additions to the
allowance based on their judgment about information available to them
at the time of their examinations.

As prescribed by Statement of Financial Accounting Standards No. 114,
impaired loans are measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate
or, as a practical expedient, at the loan's observable market price
or the fair value of the collateral if the loan is collateral
dependent. Accrual of interest on an impaired loan is discontinued
when management believes, after considering collection efforts and
other factors, that the borrower's financial condition is such that
collection of interest is doubtful. The method of recognition of
interest income on impaired loans is determined by management on a
loan by loan basis. Generally, cash collections on impaired loans
which are adequately collateralized are credited to income. Other
cash collections are credited to the loans receivable balance, and no
interest income is recognized on those loans until the principal
balance has been collected.

The Bank considers the following type loans to be impaired:

(1) all nonaccrual loans, (2) loans that have been restructured in a
troubled debt restructuring provided that the restructured loan
agreement specifies an interest rate that is less than the Bank
would be willing to accept at the time of the restructuring for a
new loan with comparable risk or the loan becomes impaired based on
the terms specified by the restructured loan agreement, and (3) any
other loan in which management does not expect to collect all
contractual principal and interest payments in accordance with the
terms of the loan agreement. Insignificant delays or shortfalls in
the amount of loan payments contractually due do not affect the
determination of when a loan is impaired.

The Bank has not identified large groups of smaller-balance
homogeneous loans which are collectively evaluated for impairment.
Any loan that meets the characteristics as described above are
considered to be impaired regardless of loan type or balance.

F-100

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

OTHER REAL ESTATE OWNED

Other real estate owned (OREO) represents properties acquired through
foreclosure or other proceedings. OREO is held for sale and is
recorded at the lower of the recorded amount of the loan or fair
value of the properties less estimated costs of disposal. Any
write-down to fair value at the time of transfer to OREO is charged
to the allowance for loan losses. Property is evaluated regularly
to ensure the carrying amount is supported by its current fair value
and valuation allowances to reduce the carrying amount to fair value
less estimated costs to dispose are recorded as necessary. Subsequent
decreases and increases in fair value, up to the value established at
foreclosure, are recognized as charges or credits to noninterest
expense. OREO is reported net of allowance for losses in the
Company's consolidated financial statements.

PREMISES AND EQUIPMENT

Premises and equipment are stated at cost less accumulated
depreciation, computed principally on the straight-line method over
the following estimated useful lives:

YEARS
-------

Buildings and improvements 5-40
Furniture and equipment 3-20

INCOME TAXES

The Company and its subsidiary file a consolidated income tax return.
The subsidiary provides for income taxes based on its contribution to
income taxes (benefits) of the consolidated group.

Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effect of changes in tax
laws on the date of enactment.

F-101

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

Net income per common and common equivalent share are computed by
dividing net income by the weighted average number of shares of
common stock and common stock equivalents outstanding during each
year. Common stock equivalents consist of stock options.

PROFIT-SHARING PLAN

Profit-sharing plan costs are funded as accrued and are based on a
percentage of individual employee's salary, not to exceed the amount
that can be deducted for Federal income tax purposes.

Current Accounting Developments

The Financial Accounting Standards Board has issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", No. 122, "Accounting for
Mortgage Servicing Rights" and No. 123, "Accounting for Stock-Based
Compensation", all of which are effective for financial statements
for years beginning after December 31, 1995 and for transactions
after December 31, 1995.

SFAS 121 requires that long-lived assets and certain identifiable
intangibles, including goodwill, be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. In the event that the sum of the
expected future cash flows is less than the carrying amount of an
impaired long-lived asset, an impairment loss should be recognized.
The adoption of this Statement is not expected to have a material
effect on the earnings or financial condition of the Company.

SFAS 122 requires mortgage banking enterprises to recognize as a
separate asset the rights retained to service mortgage loans for
third parties. These assets are to be based on the fair value of the
mortgage servicing rights and mortgage loans, if practicable to
estimate. Otherwise, the entire cost of purchasing or originating
these loans should be allocated to mortgage loans. The adoption of
this Statement is not expected to have a material effect on the
earnings or financial condition of the Company.

F-102

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CURRENT ACCOUNTING DEVELOPMENTS (CONTINUED)

SFAS 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. The statement defines a fair
value based method of accounting for employee compensation plans and
encourages the adoption for all plans. However, the statement allows
previous methods of accounting for compensation plans to be utilized
with additional disclosures required. The adoption of this Statement
is not expected to have a material effect on the earnings or financial
condition of the Company.

NOTE 2. INVESTMENT SECURITIES

The carrying amounts of investment securities and their approximate
fair value were as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE
DECEMBER 31, 1995:
U. S. GOVERNMENT AND AGENCY SECURITIES $17,496,198 $107,990 $ (77,532) $17,526,656
STATE AND MUNICIPAL SECURITIES 3,138,597 79,165 (4,600) 3,213,162
MORTGAGE-BACKED SECURITIES 1,479,827 14,683 (509) 1,494,001
----------- -------- --------- -----------
$22,114,622 $201,838 $ (82,641) $22,233,819
----------- -------- --------- -----------
----------- -------- --------- -----------
DECEMBER 31, 1994:
U. S. GOVERNMENT AND AGENCY SECURITIES $13,973,961 $ -- (535,873) $13,438,088
STATE AND MUNICIPAL SECURITIES 2,377,637 503 (133,287) 2,244,853
MORTGAGE-BACKED SECURITIES 113,873 -- (1,915) 111,958
----------- -------- --------- -----------
$16,465,471 $ 503 $(671,075) $15,794,899
----------- -------- --------- -----------
----------- -------- --------- -----------
SECURITIES HELD TO MATURITY
DECEMBER 31, 1995:
STATE AND MUNICIPAL SECURITIES $ 180,209 $ 840 $ -- $ 181,049
----------- -------- --------- -----------
----------- -------- --------- -----------
DECEMBER 31, 1994:
U. S. GOVERNMENT AND AGENCY SECURITIES $ 2,000,000 $ 3,125 $ (17,031) $ 1,986,094
STATE AND MUNICIPAL SECURITIES 180,627 -- (449) 180,178
----------- -------- --------- -----------
$ 2,180,627 $ 3,125 $ (17,480) $ 2,166,272
----------- -------- --------- -----------
----------- -------- --------- -----------
</TABLE>

F-103

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
NOTE 2. INVESTMENT SECURITIES (CONTINUED)

Gross realized gains and losses on sales of securities available for
sale were as follows:

DECEMBER 31,
----------------
1995 1994
------- ------
GROSS REALIZED GAINS:
U. S. Government and agency securities $ 271 $ --
------- ----
------- ----
GROSS REALIZED LOSSES:
U. S. Government and agency securities $46,089 $ --
------- ----
------- ----

The amortized cost and fair value of securities as of
December 31, 1995 by contractual maturity are shown below.
Maturities may differ from contractual maturities in
mortgage-backed securities because the mortgages underlying the
securities may be called or prepaid without penalty. Therefore,
these securities are not included in the maturity categories in
the following maturity summary.

SECURITIES AVAILABLE SECURITIES HELD
FOR SALE TO MATURITY
------------------------ --------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Due in one year or less $ 5,679,010 $ 5,660,569 $180,209 $181,049
Due from one year to five years 10,401,042 10,412,280 -- --
Due from five to ten years 2,845,033 2,922,642 -- --
Due after ten years 1,709,710 1,744,327 -- --
Mortgage-backed securities 1,479,827 1,494,001 -- --
----------- ----------- -------- --------
$22,114,622 $22,233,819 $180,209 $181,049
----------- ----------- -------- --------
----------- ----------- -------- --------
</TABLE>

Securities with a carrying value of $1,299,936 and
$1,264,598 at December 31, 1995 and 1994, respectively, were
pledged to secure public deposits and for other purposes.

On April 30, 1995, four securities were identified by the Company
as being erroneously classified by its safekeeping agent as held
to maturity rather than available for sale. The securities, which
amounted to $2,000,000, were transferred to available for sale and
marked to fair value resulting in a net unrealized loss of
$15,938. The unrealized loss was included in stockholders' equity
at $9,882, net of related taxes of $6,056.

F-104

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
NOTE 2. INVESTMENT SECURITIES (CONTINUED)

Effective January 1, 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities". Upon adoption, the Company transferred $10,992,883
from securities held for investment to securities available for
sale. The securities available for sale were marked to fair value
resulting in a net unrealized loss of $24,766 which was included
in stockholders' equity at $16,346 net of deferred taxes of $8,420.

NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES

The composition of loans is summarized as follows:

DECEMBER 31,
--------------------------
1995 1994
----------- -----------
Commercial and financial $14,236,000 $16,275,000
Real estate - construction 16,245,000 14,476,000
Real estate - mortgage 15,746,000 10,806,000
Consumer 4,077,000 2,670,000
Other 901,279 672,721
----------- -----------
51,205,279 44,899,721
Deferred loan fees, net (166,555) (135,743)
Allowance for loan losses (840,000) (598,749)
----------- -----------
Loans, net $50,198,724 $44,165,229
----------- -----------
----------- -----------

Changes in the allowance for loan losses are as follows:

DECEMBER 31,
--------------------------
1995 1994
----------- -----------

BALANCE, BEGINNING OF YEAR $ 598,749 $ 430,000
Provision charged to operations 259,969 227,468
Loans charged off (51,405) (60,220)
Recoveries 32,687 1,500
----------- -----------
BALANCE, END OF YEAR $ 840,000 $ 598,748
----------- -----------
----------- -----------

Loans on which the accrual of interest had been
discontinued or reduced amounted to $876,390 and $118,706 at
December 31, 1995 and 1994, respectively. There was no
significant reduction in interest income associated with
nonaccrual loans.

F-105

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)

Information with respect to impaired loans as of and for the
year ended December 31, 1995 is as follows:

<TABLE>

<S> <C>
Impaired loans for which there is a related allowance for
credit losses determined in accordance with SFAS No. 114 $ 863,066

Impaired loans for which there is no related allowance for
credit losses determined in accordance with SFAS No. 114 1,203,677
----------
Total impaired loans $2,066,743
----------
----------
Allowance for loan losses related to impaired loans
determined in accordance with SFAS No. 114 $ 188,422
----------
----------
Average balance of impaired loans $2,377,348
----------
----------
Interest income recognized on impaired loans on an accrual basis $ 102,222
----------
----------
Interest income recognized on impaired loans on a cash basis $ --
----------
----------
</TABLE>

At December 31, 1995, executive officers and directors, and
companies in which they have a 10 percent or more beneficial
ownership, were indebted to the Bank in the aggregate amount of
$4,526,478. The interest rates on these loans were substantially
the same as rates prevailing at the time of the transaction and
repayment terms are customary for the type of loan involved.
Following is a summary of transactions:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
BALANCE, BEGINNING OF YEAR $ 3,865,401 $ 2,347,902
Advances 2,148,250 3,482,070
Repayments (1,459,009) (2,140,405)
Transactions due to change in directors -- 175,834
----------- -----------
BALANCE, END OF YEAR $ 4,554,642 $ 3,865,401
----------- -----------
----------- -----------
</TABLE>

F-106

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
NOTE 4. PREMISES AND EQUIPMENT, NET

Major classifications of these assets are summarized as follows:

DECEMBER 31,
----------------------
1995 1994
---------- ----------
Land $ 307,500 $ 307,500
Buildings and improvements 1,188,976 1,178,043
Equipment 971,139 904,229
---------- ----------
2,467,615 2,389,772
Accumulated depreciation (658,074) (481,899)
---------- ----------
$1,809,541 $1,907,873
---------- ----------
---------- ----------

Depreciation expense for the years ended December 31, 1995 and 1994
was $176,227 and $166,497, respectively.

NOTE 5. OTHER BORROWINGS

Other borrowings consisted of Federal Home Loan Bank advances as
follow:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
-------- ----------
<S> <C> <C>
7.80% interest only, payable monthly, principal
due in 2004. $600,000 $ 600,000
6.34%, payable in monthly instalments of $3,333. 133,333 173,333
6.89%, payable in semi-annual instalments
of $14,286. 157,143 185,715
7.20%, interest only, payable monthly, principal
due in 1999. Advance paid out in July 1995. -- 260,000
-------- ----------
$890,476 $1,219,048
-------- ----------
-------- ----------
</TABLE>

F-107

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
NOTE 5. OTHER BORROWINGS (CONTINUED)

Aggregate maturities required on other borrowings at December 31,
1995 are as follows:

1996 $ 68,572
1997 68,572
1998 68,572
1999 41,905
2000 28,572
Later years 614,283
--------
$890,476
--------
--------
The borrowings are secured by real estate loans with a balance of
approximately $3,974,000 as of December 31, 1995.

NOTE 6. EMPLOYEE BENEFIT PLANS

The Company has a noncontributory profit-sharing plan covering all
employees, subject to certain minimum age and service
requirements. Contributions to the plan charged to expenses during
1995 and 1994 amounted to $20,579 and $12,759, respectively.

F-108

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6. EMPLOYEE BENEFIT PLANS (CONTINUED)

STOCK OPTIONS

On March 19, 1991, the Board of Directors adopted an Employee Stock
Option Plan with 10,500 shares of common stock reserved for the grant
of options to senior officers of the Bank. The purchase price of a
share of stock shall be not less than the greater of the fair market
value of the stock on the date of grant or the par value of the
stock. Any options granted under this Plan shall be granted within
ten (10) years of the date of the adoption of this Plan by the Board
of Directors of the Bank.

On May 16, 1995, the Board of Directors adopted an Incentive Stock
Option Plan with 25,000 shares of common stock reserved for the grant
of options to key employees of the Company. The options originally
had a three-year vesting period; however, due to the signing of an
agreement of merger on November 3, 1995, all options granted in 1995
under the Plan became immediately exercisable. The purchase price of
a share of stock shall be equal to or greater than the fair market
value of such shares as of the grant date. Any options granted under
this Plan must be exercised by May 16, 2005.

Additionally, during 1995, 1,000 shares of common stock reserved for
the grant of options to senior officers of the Bank were granted
under the March 19, 1991 plan as described above.

As of December 31, 1995, options had been granted as follows:

NUMBER OPTIONS
OF EXERCISED
GRANTED PRICE SHARES TO DATE CANCELED UNEXERCISED
------- -------------- ------ --------- -------- -----------
1991 $ 20.00 4,725 -- -- 4,725
1992 -- -- -- -- 4,725
1993 -- -- -- -- 4,725
1994 22.21 1,050 -- -- 5,775
1995 22.41 - 24.00 26,000 12,625 -- 19,150

F-109

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 7. INCOME TAXES

The total income taxes in the consolidated statements of income are as
follows:

YEAR ENDED DECEMBER 31,
-----------------------
1995 1994
--------- ---------
Current $ 687,340 $ 301,200
Deferred (48,984) (25,248)
--------- ---------
$ 638,356 $ 275,952
--------- ---------
--------- ---------

The Company's provision for income taxes differs from the amounts computed
by applying the Federal income tax statutory rates to income before income
taxes. A reconciliation of the differences is as follows:

DECEMBER 31,
---------------------------------------
1995 1994
------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- -------
Tax provision at statutory
rate $631,672 34% $289,679 34%
Increase (decrease)
resulting from:
Tax-exempt interest (46,715) (2) (28,370) (3)
Disallowed interest
expense 6,242 -- 3,682 --
State taxes 25,781 1 -- --
Other items, net 21,376 1 10,961 1
-------- ------- -------- -------
Provision for income taxes $638,356 34% $275,952 32%
-------- ------- -------- -------
-------- ------- -------- -------

F-110

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 7. INCOME TAXES (CONTINUED)

Net deferred income tax assets of $120,604 and $371,733 at December 31,
1995 and 1994, respectively, are included in other assets. The components
of deferred income taxes are as follows:

DECEMBER 31,
--------------------
1995 1994
-------- --------
DEFERRED TAX ASSETS:
Loan loss reserves $269,714 $213,917
Preopening expenses -- 9,693
Securities available for sale -- 254,818
-------- --------
269,714 478,428
-------- --------

DEFERRED TAX LIABILITIES:
Depreciation 103,815 106,695
Securities available for sale 45,295 --
-------- --------
149,110 106,695
-------- --------

NET DEFERRED TAX ASSETS $120,604 $371,733
-------- --------
-------- --------

NOTE 8. COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, the Bank has entered into off-balance-
sheet financial instruments which are not reflected in the consolidated
financial statements. These instruments include commitments to extend
credit and standby letters of credit. Such financial instruments are
included in the consolidated financial statements when funds are disbursed
or the instruments become payable. These instruments involve, to varying
degrees, elements of credit risk in excess of the amount recognized in the
consolidated balance sheet.

F-111

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 8. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual amount of
those instruments. A summary of the Bank's commitments is as follows:

DECEMBER 31,
-------------------------
1995 1994
----------- ----------
Commitments to extend credit $15,719,337 $8,395,599
Standby letters of credit 405,695 276,847
----------- ----------
$16,125,032 $8,672,446
----------- ----------
----------- ----------

Commitments to extend credit generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
The credit risk involved in issuing these financial instruments is
essentially the same as that involved in extending loans to customers. The
Bank evaluates each customer's creditworthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by the Bank upon
extension of credit, is based on management's credit evaluation of the
customer. Collateral held varies but may include real estate and
improvements, marketable securities, accounts receivable, inventory,
equipment and personal property.

Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements.
The credit risk involved in issuing letters of credit is essentially the
same as that involved in extending loan facilities to customers.
Collateral held varies as specified above and is required in instances
which the Bank deems necessary.

In the normal course of business, the Company and the Bank are involved in
various legal proceedings. In the opinion of management, any liability
resulting from such proceedings would not have a material adverse effect on
the Company's consolidated financial statements.

F-112

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 9. CONCENTRATIONS OF CREDIT

The Bank originates primarily commercial, residential and consumer loans to
customers in Fayette County, and surrounding counties. The ability of the
majority of the Bank's customers to honor their contractual loan
obligations is dependent on the local and metro Atlanta economies.

Sixty-three (63%) of the Company's loan portfolio is concentrated in real
estate loans. A substantial portion of these loans are secured by real
estate in the Company's primary market area. Accordingly, the ultimate
collectibility of the Company's loan portfolio are susceptible to changes
in market conditions in the Company's primary market area.

The other significant concentrations of credit by type of loan are set
forth in Note 3. The Bank, as a matter of policy, does not generally
extend credit to any single borrower or group of related borrowers in
excess of 25% of statutory capital, or approximately $1,778,000.

NOTE 10. STOCKHOLDERS' EQUITY

The primary source of funds available to the Parent Company is the payment
of dividends by the subsidiary. Banking regulations limit the amount of
dividends that may be paid without prior approval of the Bank's regulatory
agency. Approximately $617,000 are available to be paid as dividends by
the Bank subsidiary at December 31, 1995.

Banking regulations also require the Bank to maintain minimum capital
levels in relation to Bank assets. At December 31, 1995, the Bank's
capital ratios were considered adequate based on regulatory minimum capital
requirements. The minimum capital requirements and the actual capital
ratios for the Bank at December 31, 1995 are as follows:

REGULATORY
ACTUAL REQUIREMENT
-------- ---------------
Leverage capital ratio 11.53% 4.00%
Risk based capital ratios:
Core capital 16.70 4.00
Total capital 17.92 8.00

F-113

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Accounting Standards Board Statement No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate that value. In
cases where quoted market prices are not available, fair values are based
on estimates using present value techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and,
in many cases, could not be realized in immediate settlement of the
instrument. Statement No. 107 excludes certain financial instruments from
its disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.

Many of the Company's assets and liabilities are short-term financial
instruments whose carrying amounts reported in the balance sheet
approximate fair value. These items include cash and due from banks,
interest-bearing deposits in banks, Federal funds sold and financial
instruments included in other assets and liabilities. The following
methods and assumptions were used in estimating the fair value of the
Company's remaining financial instruments:

INVESTMENT SECURITIES:

Fair values for investment securities are based on quoted market
prices.

LOANS:

For equity lines and other loans with short-term or variable rate
characteristics, the carrying value is a reasonable estimate of
fair value. The fair value of all other loans is estimated by
discounting their future cash flows using interest rates currently
being offered for loans with similar terms.

F-114

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

DEPOSITS:

The fair values for demand deposits (e.g., interest- and noninterest-
bearing demand and savings) approximate the amounts payable on demand
at the reporting date (i.e., their carrying amounts). Fair values for
time deposits are estimated using a discounted cash flow calculation
that applies interest rates currently being offered on time deposits.

OTHER BORROWINGS:

Fair value of fixed rate other borrowings are estimated using a
discounted cash flow calculation that applies interest rates currently
offered for similar types of instruments.

OFF-BALANCE-SHEET INSTRUMENTS:

Fair values of the Company's off-balance-sheet financial instruments
(commitments to extend credit and standby letters of credit) are based
on fees charged to enter into similar agreements. However,
commitments to extend credit and standby letters of credit do not
represent a significant value to the Company until such commitments
are funded. The Company has determined that these instruments do not
have a distinguishable fair value and no fair value has been assigned.

The carrying value and estimated fair values of the Company's
remaining financial instruments at December 31, 1995 are as follows:

CARRYING ESTIMATED
VALUE FAIR VALUE
------------ ------------
FINANCIAL ASSETS:
Investment securities $22,414,028 $22,414,868
----------- -----------
----------- -----------
Loans $51,038,724 $50,984,651
Less allowance for loan losses (840,000) -
----------- -----------
$50,198,724 $50,984,651
----------- -----------
----------- -----------
FINANCIAL LIABILITIES,
Time deposits $34,922,466 $35,224,455
----------- -----------
----------- -----------
Other borrowings $ 890,476 $ 951,459
----------- -----------
----------- -----------

F-115

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 12. BUSINESS COMBINATIONS

On August 31, 1994, Southside Financial Group, Inc. acquired all of
the outstanding stock of Citizens Bank & Trust of Fayette County in
exchange for 352,225 shares of $10 par value common stock.

The acquisition was accounted for as a pooling of interests and,
accordingly, all prior financial statements were restated to
reflect the combination.

Income of the subsidiary prior to acquisition on August 31, 1994
was $357,329, which is included in the consolidated statements of
income.

On November 3, 1995, the Company announced the signing of a
definitive agreement to merge with Newnan Savings Bank, F.S.B.

Each shareholder of the Company will receive $41.00 in cash for
each share of common stock. Any shareholder currently owning 5,000
or more common shares may elect to receive up to, but not more
than, fifty percent of their consideration in the form of shares of
holding company common stock. The aggregate number of common shares
of the newly formed holding company (Newnan Holdings, Inc.) which
will be available for issuance to Southside shareholders shall not
exceed 145,000 shares. An oversubscription will result in a pro
rata reduction of the requested shares issued to Southside's
electing shareholders.

F-116

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 13. CONDENSED FINANCIAL INFORMATION ON SOUTHSIDE FINANCIAL GROUP,
INC. (PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994

1995 1994
---------- ----------
ASSETS
Cash $ 263,393 $ 3,793
Investment in subsidiary 9,519,860 7,910,885
Other assets 31,104 28,047
---------- ----------
Total assets $9,814,357 $7,942,725
---------- ----------
---------- ----------
STOCKHOLDERS' EQUITY $9,814,357 $7,942,725
---------- ----------
---------- ----------

CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995 AND 1994

1995 1994
---------- ----------
INCOME, dividends from subsidiary $ 114,578 $ 40,000
---------- ----------
EXPENSE
Amortization expense 5,795 2,414
Other expense 17,499 1,503
---------- ----------
23,294 3,917
---------- ----------
Income before income tax benefits
and equity in undistributed earnings
of subsidiary 91,284 36,083

INCOME TAX BENEFITS 8,852 1,488
---------- ----------
Income before equity in undistributed
earnings of subsidiary 100,136 37,571

EQUITY IN UNDISTRIBUTED EARNINGS OF
SUBSIDIARY 1,119,318 181,146
---------- ----------
Net income $1,219,454 $ 218,717
---------- ----------
---------- ----------

F-117

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 13. CONDENSED FINANCIAL INFORMATION ON SOUTHSIDE FINANCIAL GROUP,
INC. (PARENT COMPANY ONLY) (CONTINUED)

CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994

1995 1994
----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,219,454 $ 218,717
----------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Undistributed earnings of subsidiary (1,119,318) (181,146)
Increase in other assets (3,057) (28,047)
----------- ---------
Total adjustments (1,122,375) (209,193)
----------- ---------
Net cash provided by operating activities 97,079 9,524
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (114,578) (5,731)
Exercise of stock options (277,099) -
----------- ---------
Net cash provided by (used in)
financing activities 162,521 (5,731)
----------- ---------
Net increase in cash 259,600 3,793

Cash at beginning of year 3,793 -
----------- ---------
Cash at end of year $ 263,393 $ 3,793
----------- ---------
----------- ---------

F-118

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)

ASSETS
- ------
Cash and due from banks $3,405,012
Interest-bearing deposits in banks 114,663
Federal funds sold 4,050,000
Securities available for sale, at fair value 21,608,904
Securities held to maturity, at cost (fair value $180,587) 180,105

Loans 56,371,916
Less allowance for loan losses 931,000
-----------
Loans, net 55,440,916
-----------
Premises and equipment, net 1,782,566
Other assets 978,865
-----------
$87,561,031
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $14,918,151
Interest-bearing demand 21,048,160
Savings 3,200,409
Certificates of deposit 36,922,758
-----------
Total deposits 76,089,478
Other liabilities 577,210
Other borrowings 880,476
-----------
Total liabilities 77,547,164
-----------

COMMITMENTS AND CONTINGENT LIABILITIES

STOCKHOLDERS' EQUITY

Common stock $10 par value, 5,000,000 shares authorized;
382,232 shares issued and outstanding 3,822,320
Surplus 4,002,039
Retained earnings 2,204,691
Unrealized loss on securities available for sale, net of tax 15,183
-----------
Total stockholders' equity 10,013,867
-----------
$87,561,031
-----------
-----------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

F-119

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $1,388,360 $1,238,369
Interest on Federal funds sold 42,215 12,150
Interest on interest-bearing deposits 1,481 11,857
Interest on taxable securities 273,389 202,833
Interest on nontaxable securities 39,566 28,613
---------- ----------
1,745,011 1,493,822
---------- ----------
INTEREST EXPENSE
Interest on deposits 672,765 543,664
Interest on borrowed funds 16,284 22,343
---------- ----------
689,049 566,007
---------- ----------
Net interest income 1,055,962 927,815
PROVISION FOR LOAN LOSSES 86,000 31,251
---------- ----------
Net interest income after provision for loan
losses 969,962 896,564
---------- ----------

OTHER OPERATING INCOME 230,947 175,573
---------- ----------

OTHER OPERATING EXPENSES
Salaries and other employee benefits 442,109 411,946
Occupancy and equipment expenses 89,452 90,463
Other operating expense 226,392 206,433
---------- ----------
757,953 708,842
---------- ----------

Income before income taxes 442,956 363,295

APPLICABLE INCOME TAXES 154,362 127,282
---------- ----------
Net income $ 288,594 $ 236,013
---------- ----------
---------- ----------
</TABLE>

F-120

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
PER SHARE OF COMMON STOCK BASED ON AVERAGE NUMBER
OF SHARES OUTSTANDING DURING PERIOD
Net income $ 0.76 $ .64
---------- ----------
---------- ----------

AVERAGE SHARES OUTSTANDING 382,232 369,607
---------- ----------
---------- ----------

CASH DIVIDENDS PER SHARE OF COMMON STOCK $ -- $ --
---------- ----------
---------- ----------

</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-121

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)

1996 1995
---------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 288,594 $ 236,013
---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization 1,449 4,161
Depreciation 39,612 45,115
Provision for loan losses 86,000 31,251
Increase in interest receivable (81,697) (4,067)
Increase in interest payable 24,623 45,424
Increase (decrease) in taxes payable (200,356) 108,927
Other assets and liabilities, net (149,048) 207,801
---------- ----------
Total adjustments (297,417) 438,612
---------- ----------
Net cash provided by operating activities 9,177 674,625
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale (34,500) -
Proceeds from maturities of securities
available for sale 727,633 1,112,715
(Increase) decrease in interest-bearing
deposits in banks, net (7,760) 179,656
(Increase) decrease in Federal funds sold, net (1,290,000) 360,000
Increase in loans, net (5,328,192) (3,310,110)
Purchase of premises and equipment (12,637) (22,267)
---------- ----------
Net cash used in investing activities (5,945,456) (1,680,006)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net 5,546,205 843,359
Decrease in other borrowings, net (10,000) (10,000)
---------- ----------
Net cash provided by financing activities 5,536,205 833,359
---------- ----------
Net decrease in cash and due from banks (400,074) (172,022)

Cash and due from banks at beginning of period 3,805,086 2,712,938
---------- ----------
Cash and due from banks at end of period $3,405,012 $2,540,916
---------- ----------
---------- ----------

F-122
<PAGE>
SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)

1996 1995
---------- ----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $664,426 $520,583

Income taxes $403,702 $18,355

NONCASH TRANSACTION
Unrealized losses on securities available for sale $143,686 $215,580

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

F-123

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

The consolidated financial information included herein is
unaudited; however, such information reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair statement of
results in the interim periods.

The results of operations for the three month period ended March
31, 1996 are not necessarily indicative of the results to be
expected for the full year.

NOTE 2. BUSINESS COMBINATION

On November 3, 1995, Southside Financial Group, Inc.
("Registrant"), the holding company parent of Citizens Bank and
Trust of Fayette County, announced the signing of a definitive
agreement to merge with Newnan Savings Bank, F.S.B.

Each shareholder of Southside will receive $41.00 in cash for
each share of Southside common stock. Any Southside shareholder
currently owning 5,000 or more Southside common shares may elect
to receive up to, but not more than fifty percent of his or her
consideration in the form of shares of the new holding company's
common stock. The aggregate number of common shares of the new
holding company which will be available for issuance to
Southside shareholders shall not exceed 145,000 shares. An
oversubscription will result in a pro rata reduction of the
requested shares issued to Southside's electing shareholders.

Newnan Savings Bank operates seven banking offices in Coweta,
Fayette and Troup Counties, Georgia. As of September 30, 1995,
Newnan Savings Bank had total assets of $172.1 million, loans
of $135.6 million and deposits of $119.6 million.

F-124

<PAGE>

APPENDIX A

PLAN OF REORGANIZATION

<PAGE>

PLAN OF REORGANIZATION

THIS PLAN OF REORGANIZATION (the "Plan"), made and entered into as of the
14th day of December, 1995, among NEWNAN SAVINGS BANK, FSB (the "Bank"), a bank
organized under the laws of the United States of America, NEWNAN HOLDINGS, INC.
(the "Holding Company"), a Georgia corporation, and INTERIM NEWNAN FSB
("Interim"), an interim savings bank organized under the laws of the United
States of America and wholly owned subsidiary of the Holding Company;

WITNESSETH

WHEREAS, the principal offices of the Bank, the Holding Company and Interim
are located at 19 Jefferson Street, Newnan, Georgia 30263;

WHEREAS, the authorized capital stock of the Bank consists of 8,000,000
shares of common stock ("Bank Stock"), $1.00 par value, of which 1,443,116
shares are issued and outstanding;

WHEREAS, the authorized capital stock of the Holding Company consists of
8,000,000 shares of common stock ("Holding Company Stock"), $1.00 par value, of
which one share is issued and outstanding;

WHEREAS, the authorized capital stock of Interim consists of 8,000,000
shares of common stock ("Interim Stock"), $1.00 par value, of which one share is
issued and outstanding;

WHEREAS, the respective Boards of Directors of the Bank and Interim deem it
advisable and in the best interests of the Bank and Interim and their respective
shareholders that Interim be merged with and into the Bank and, by resolutions
duly adopted, have approved and adopted this Plan and directed that it be
submitted to the respective shareholders of the Bank and Interim for their
approval; and

WHEREAS, the Board of Directors of the Holding Company has approved and
adopted this Plan, and the Holding Company has agreed to join in and be bound
hereby and to issue the shares of Holding Company Stock which shareholders of
the Bank will receive upon consummation of the Reorganization and merger as
herein provided;

NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and for the purpose of stating the method, terms
and conditions of the merger provided for herein, the mode of carrying the same
into effect, the manner and basis of converting and exchanging the shares of
Bank Stock and Interim Stock as hereinafter provided, and such other provisions
relating to the merger as the parties deem necessary or desirable, the parties
hereto agree as follows:

<PAGE>

SECTION 1

REORGANIZATION

Pursuant to the provisions of the Rules and Regulations of the Office of
Thrift Supervision ("OTS Regulations") and other applicable provisions of
federal law, Interim shall be merged with and into the Bank. The Bank shall be
the survivor of the merger (the "Resulting Bank") continuing under the charter
of the Bank and with the name "Newnan Savings Bank, FSB."

SECTION 2

EFFECTIVE DATE OF THE REORGANIZATION

The merger of Interim with and into the Bank and the reorganization of the
Bank into a holding company structure shall be effective as of the date (the
"Effective Date of the Reorganization") specified in the Articles of Combination
to be issued by the Office of Thrift Supervision in accordance with the
applicable provisions of 12 C.F.R. Section 552.13(j).

Since the merger of Interim with and into the Bank will effect the
reorganization of the Bank into a holding company structure, such merger and
reorganization, collectively, shall hereinafter be referred to as the
"Reorganization."

SECTION 3

LOCATION, CHARTER AND BYLAWS, MANAGEMENT
AND CAPITAL STRUCTURE OF THE RESULTING BANK

On the Effective Date of the Reorganization:

(a) The principal office of the Resulting Bank shall be located at 19
Jefferson Street, Newnan, Georgia 30263, or such other location where the Bank
is located immediately prior to the Effective Date of the Reorganization.

(b) The Charter and Bylaws of the Resulting Bank shall be the same as the
Charter and Bylaws of the Bank as in effect immediately prior to the Effective
Date of the Reorganization.

(c) The directors and officers of the Resulting Bank shall be the
directors and officers of the Bank immediately prior to the Effective Date of
the Reorganization. All such directors and officers of the Resulting Bank shall
serve until their respective successors are elected or appointed pursuant to the
Bylaws of the Resulting Bank.

(d) The Resulting Bank will distribute to the Holding Company all of the
capital and surplus of Interim, so that the resulting capital structure of the
Resulting Bank shall be identical to the capital structure of the Bank
immediately prior to the Effective Date of the Reorganization.

-2-

<PAGE>

The capital structure of the Bank shall not be altered or amended by the
Reorganization and shall continue in effect as that of the Resulting Bank.

SECTION 4

EXISTENCE, RIGHTS, DUTIES, ASSETS
AND LIABILITIES OF THE RESULTING BANK

(a) As of the Effective Date of the Reorganization, the existence of
Interim as a separate entity shall cease, but its existence shall continue in
the Resulting Bank.

(b) As of the Effective Date of the Reorganization, the Resulting Bank
shall have, without further act or deed, all of the properties, rights, powers,
trusts, duties and obligations of the Bank and Interim.

(c) As of the Effective Date of the Reorganization, the Resulting Bank
shall have the authority to engage only in such businesses and to exercise only
such powers as are then permissible for federal savings banks under the OTS
Regulations and as are provided for in the Federal Stock Charter of the
Resulting Bank, and the Resulting Bank shall be subject to the same prohibitions
and limitations to which it would be subject upon original incorporation, except
that the Resulting Bank may engage in any business and may exercise any right
that the Bank could lawfully have exercised or engaged in immediately prior to
the Effective Date of the Reorganization.

(d) No liability of the Bank or Interim or of any of their shareholders,
directors or officers shall be affected by the Reorganization, nor shall any
lien on any property of the Bank or Interim be impaired by the Reorganization.
Any claim existing or any action pending by or against the Bank or Interim may
be prosecuted to judgment as if the Reorganization had not taken place, or the
Resulting Bank may be substituted in place of the Bank or Interim.

SECTION 5

MANNER AND BASIS OF CONVERTING SHARES OF INTERIM STOCK

The manner and basis of converting and exchanging the shares of Interim
Stock into shares of Resulting Bank Stock shall be as follows:

As soon as practicable after the Effective Date of the Reorganization, the
Holding Company shall, upon presentation and surrender of a certificate
representing all of the issued and outstanding shares of Interim Stock to the
Bank, as exchange agent, be entitled to receive in exchange therefor a
certificate or certificates representing all of the then outstanding shares of
Resulting Bank Stock.

-3-

<PAGE>

SECTION 6

MANNER AND BASIS OF CONVERTING SHARES OF BANK STOCK

The manner and basis of converting shares of Bank Stock into shares of
Holding Company Stock, excluding those shares of Bank Stock held by shareholders
who have perfected dissenters' rights of appraisal under the applicable
provisions of the OTS Regulations (the "Dissenters' Rights Provisions"), shall
be as follows:

(a) EXCHANGE RATIO. Each share of Bank Stock outstanding immediately
prior to the Effective Date of the Reorganization shall, by virtue of the
Reorganization and without any action on the part of the holder or holders
thereof, be converted into the right to receive one share of Holding Company
Stock.

(b) RIGHTS OF FORMER BANK SHAREHOLDERS. As of the Effective Date of the
Reorganization, each certificate theretofore representing one or more
outstanding shares of Bank Stock shall be deemed for all corporate purposes to
evidence only the right to receive a certificate representing shares of Holding
Company Stock in accordance with this Plan.

(c) LETTER OF TRANSMITTAL. As soon as practicable after approval of the
Reorganization by the Bank's shareholders, a letter of transmittal shall be
mailed to each Bank shareholder as of the close of business on the date
immediately preceding the Effective Date of the Reorganization. Upon receipt of
the letter of transmittal, each holder of a certificate or certificates
theretofore representing shares of Bank Stock shall surrender such certificates
to Newnan Savings Bank, FSB, as exchange agent, together with a properly
completed and signed letter of transmittal, and shall receive in exchange
therefor a certificate representing an equivalent number of shares of Holding
Company Stock, subject to the restrictions and conditions of this Plan.

(d) FAILURE TO SURRENDER BANK STOCK CERTIFICATES. Until the former Bank
shareholder surrenders his or her Bank Stock certificate or certificates to the
Bank (or suitable arrangements are made to account for any lost, stolen or
destroyed certificates according to the Bank's usual procedures), the
shareholder:

(i) shall not be issued a certificate representing the shares of
Holding Company Stock or the cash which such Bank Stock
certificate may entitle the shareholder to receive;

(ii) shall not have any voting rights in respect of the shares of
Holding Company Stock which such Bank Stock certificate may
entitle the shareholder to receive; and

(iii) shall not be paid dividends or other distributions in
respect of the shares of Holding Company Stock which such
Bank Stock certificate may entitle the shareholder to
receive; instead such dividends or distributions shall be
retained, without interest, for the shareholder's account
until surrender of such Bank Stock certificate.

-4-

<PAGE>

(e) CONVERSION OF STOCK OPTIONS. At the Effective Date of the
Reorganization, all rights with respect to Bank Stock pursuant to stock options
("Bank Options") granted by the Bank, which are outstanding at the Effective
Date of the Reorganization, whether or not exercisable, shall be converted into
and become rights with respect to Holding Company Stock, and the Holding Company
shall assume each Bank Option, in accordance with the terms of the stock option
agreement by which it is evidenced. From and after the Effective Date of the
Reorganization, (i) each Bank Option assumed by the Holding Company may be
exercised solely for shares of Holding Company Stock, (ii) the number of shares
of Holding Company Stock subject to such Bank Option shall be equal to the
number of shares of Bank Stock subject to such Bank Option immediately prior to
the Effective Date of the Reorganization, and (iii) the per share exercise price
under each such Bank Option shall not be changed. It is intended that the
foregoing assumption shall be undertaken in a manner that will not constitute a
"modification" as defined in Section 424 of the Internal Revenue Code, as to any
stock option which is an "incentive stock option."

SECTION 7

ACQUISITION OF DISSENTERS' BANK STOCK

Any shareholder of the Bank who fully complies with the Dissenters' Rights
Provisions shall be paid an amount of cash (as determined under such Provisions)
for his or her shares of Bank Stock by the Bank. Immediately upon the Bank's
acquisition of any of Bank Stock from its shareholders pursuant to the
Dissenters' Rights Provisions, the Holding Company shall acquire such shares
from the Bank for the same price as shall have been paid by the Bank to the
dissenting shareholders. The shares of Bank Stock so acquired by the Holding
Company shall be cancelled.

SECTION 8

REDEMPTION OF HOLDING COMPANY STOCK

As soon as practicable after the Effective Date of the Reorganization, the
Holding Company shall redeem any shares of Holding Company Stock which may have
been issued prior to the Effective Date of the Reorganization at a redemption
price equal to the same consideration paid for such shares, so that immediately
after such redemption the then outstanding shares of Holding Company Stock shall
consist solely of the shares to be issued by the Holding Company upon the
conversion of shares of Bank Stock as provided herein.

SECTION 9

FURTHER ACTIONS

From time to time, as and when requested by the Resulting Bank, or by its
successors or assigns, Interim shall execute and deliver or cause to be executed
and delivered all such deeds and

-5-

<PAGE>

other instruments, and shall take or cause to be taken all such other actions,
as the Resulting Bank, or its successors and assigns, may deem necessary or
desirable in order to vest in and confirm to the Resulting Bank, and its
successors and assigns, title to and possession of all the property, rights,
powers, trusts, duties and obligations referred to in Section 4 hereof and
otherwise to carry out the intent and purposes of this Plan.

SECTION 10

CONDITIONS PRECEDENT TO CONSUMMATION OF THE REORGANIZATION

This Plan is subject to, and consummation of the Reorganization herein
provided for is conditioned upon, the fulfillment prior to the Effective Date of
the Reorganization of each of the following conditions:

(a) Approval of the Plan by the affirmative vote of the holders of at
least a majority of the outstanding voting shares of the Bank and Interim;

(b) The number of shares held by persons who have perfected dissenters'
rights of appraisal pursuant to the Dissenters' Rights Provisions shall not be
deemed by the parties hereto to make consummation of this Plan inadvisable and,
in any event, shall not exceed 10% of the Bank's outstanding shares (or 144,312
as of the date of this Agreement);

(c) Procurement of any action, consent, approval or ruling, governmental
or otherwise, which is, or in the opinion of counsel for the Bank may be,
necessary to permit or enable the Resulting Bank, upon and after the
Reorganization, to conduct all or any part of the business and activities
conducted by the Bank prior to the Reorganization;

(d) The receipt by the Bank of a written opinion of special counsel to the
Bank that for federal income tax purposes no gain or loss will be recognized by
a Bank shareholder who exchanges his or her Bank Stock for Holding Company
Stock, as provided by this Plan; and

(e) At the time of mailing the proxy statement of the Bank to its
shareholders in connection with the meeting at which the Reorganization is
considered and thereafter through the Effective Date of the Reorganization, the
Holding Company Stock to be received by Bank shareholders upon the conversion of
their Bank Stock shall be the subject of an effective registration statement
under the Securities Act of 1933, as amended.

(f) Approval for the listing on the Nasdaq NMS of the shares of Holding
Company Stock issuable pursuant to Section 6 of this Plan shall have been
obtained.

-6-

<PAGE>

SECTION 11

ACQUISITION OF SOUTHSIDE FINANCIAL GROUP, INC.

This Plan is subject to, and consummation of the reorganization herein
provided for is conditioned upon, the simultaneous consummation of the
transaction described in the Agreement and Plan of Merger dated November 2,
1995, by and among the Bank, the Holding Company, Southside Financial Group,
Inc. ("Southside"), Citizens Bank & Trust of Fayette County and Interim Citizens
Corporation (the "Acquisition").

Upon consummation of the Acquisition, the Holding Company Articles of
Incorporation will be amended to change its corporate title to "Southside
Financial Group, Inc."

The parties intend and shall use their reasonable best efforts to insure
that the Reorganization and the Acquisition will be simultaneous transactions
that together qualify for non-recognition treatment as transfers to a controlled
corporation within the meaning of Section 351 of the Internal Revenue Code. To
that end, the parties have agreed that neither one of the transactions shall be
consummated until such time as all approvals required to consummate both
transactions have been obtained. When such approvals have been obtained or when
the Plan of Merger of Interim Citizens with and into Southside has been
abandoned, the Certificates of Merger and other documents required to effectuate
the merger of Interim Citizens with and into Southside (if such Plan of Merger
has not been abandoned) and the Articles of Combination and such other documents
required to effectuate the merger of Interim with and into the Bank shall be
filed on the same day or as near in time so as to be considered simultaneous
with the appropriate governmental and/or regulatory authorities.

SECTION 12

TERMINATION

In the event that:

(a) The number of shares of Bank Stock voted against the Reorganization
shall make consummation of the Reorganization inadvisable in the opinion of the
Board of Directors of the Bank, Interim or the Holding Company;

(b) Any action, suit, proceeding or claim has been instituted, made or
threatened relating to the proposed Reorganization which shall make consummation
of the Reorganization inadvisable in the opinion of the Board of Directors of
the Bank, Interim or the Holding Company;

(c) Any action, consent, approval, opinion, or ruling required to be
provided by Section 10 of this Plan shall not have been obtained; or

-7-

<PAGE>

(d) The Acquisition as described in Section 11 of this Plan shall not be
consummated; or

(e) For any other reason consummation of the Reorganization is deemed
inadvisable in the opinion of the Board of Directors of the Bank, Interim or the
Holding Company;

then this Plan may be terminated at any time before consummation of the
Reorganization by written notice, approved or authorized by the Board of
Directors of the party wishing to terminate, to the other parties. Upon
termination by written notice as provided by this Section 12, this Plan shall be
void and of no further effect, and there shall be no liability by reason of this
Plan or the termination hereof on the part of the Bank, Interim, the Holding
Company or their directors, officers, employees, agents or shareholders.

SECTION 13

AMENDMENT; WAIVER

(a) At any time before or after approval and adoption hereof by the
respective shareholders of the Bank, Interim and the Holding Company, this Plan
may be amended by agreement among the Bank, Interim and the Holding Company;
provided, however, that after the approval and adoption of this Plan by the
shareholders of the Bank, no amendment reducing the consideration payable to
Bank shareholders pursuant to Section 6(a) and (b) hereof shall be valid without
having been approved by the shareholders of the Bank in the manner required for
approval of this Plan.

(b) A waiver by any party hereto of any breach of a term or condition of
this Plan shall not operate as a waiver of any other breach of such term or
condition or of other terms or conditions, nor shall failure to enforce any term
or condition operate as a waiver or release of any other right, in law or in
equity, or claim which any party may have against another party for anything
arising out of, connected with or based upon this Plan. A waiver shall be
effective only if evidenced by a writing signed by the party who is entitled to
the benefit of the term or condition of this Plan which is to be waived. A
waiver of a term or condition on one occasion shall not be deemed to be a waiver
of the same or of any other term or condition on a future occasion.

SECTION 14

BINDING EFFECT; COUNTERPARTS; HEADINGS; GOVERNING LAW

This Plan is binding upon the parties hereto and upon their successors and
assigns. This Plan may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The title of this Plan and the headings
herein set out are for convenience or reference only and shall not be deemed a
part of this Plan. This Plan shall be governed by and construed in accordance
with the laws of the State of Georgia.

-8-

<PAGE>

WITNESS WHEREOF, the parties hereto have caused this Plan of Reorganization
to be executed by their duly authorized officers and their bank and corporate
seals to be affixed hereto all as of the day and year first above written.

NEWNAN SAVINGS BANK, FSB

[BANK SEAL] By: /s/ Tom Moat
-------------------------------
Tom Moat
President
ATTEST:

/s/ Pauline S. Duncan
- -------------------------------
Pauline S. Duncan
Secretary

INTERIM NEWNAN FSB

[INTERIM SEAL] By: /s/ Tom Moat
-------------------------------
Tom Moat
President

ATTEST:

/s/ Ellis A. Mansour
- -------------------------------
Ellis A. Mansour
Secretary

NEWNAN HOLDINGS, INC.

[CORPORATE SEAL] By: /s/ Tom Moat
-------------------------------
Tom Moat
President

ATTEST:

/s/ Ellis A. Mansour
- -------------------------------
Ellis A. Mansour
Secretary

-9-

<PAGE>

APPENDIX B

ACQUISITION AGREEMENT

<PAGE>

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

NEWNAN SAVINGS BANK, FSB,

NEWNAN HOLDINGS, INC.,

SOUTHSIDE FINANCIAL GROUP, INC.,

CITIZENS BANK AND TRUST OF FAYETTE COUNTY,

AND

INTERIM CITIZENS CORPORATION

DATED AS OF NOVEMBER 2, 1995

<PAGE>

TABLE OF CONTENTS

Page
----

Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Time and Place of Closing. . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 2
TERMS OF MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Articles of Incorporation. . . . . . . . . . . . . . . . . . . . . 2
2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 3
MANNER OF CONVERTING SHARES. . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . 4
3.3 Shares Held by Southside or Holdings . . . . . . . . . . . . . . . 4
3.4 Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Southside Stock Options. . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 4
EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Rights of Former Southside Shareholders. . . . . . . . . . . . . . 5

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SOUTHSIDE. . . . . . . . . . . . . . . . . 6
5.1 Organization, Standing, and Power. . . . . . . . . . . . . . . . . 6
5.2 Authority; No Breach by Agreement. . . . . . . . . . . . . . . . . 6
5.3 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4 Southside Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . 9
5.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 9
5.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9 Allowance for Possible Loan Losses . . . . . . . . . . . . . . . . 10
5.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.11 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 11

<PAGE>

Page
----

5.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 12
5.13 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 13
5.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . 14
5.16 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 15
5.17 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.18 Statements True and Correct. . . . . . . . . . . . . . . . . . . . 15
5.19 Accounting Tax and Regulatory Matters. . . . . . . . . . . . . . . 16
5.20 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . 16
5.21 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . 16
5.22 Registration Obligations . . . . . . . . . . . . . . . . . . . . . 16
5.23 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND NEWNAN. . . . . . . . . . . . 17
6.1 Organization, Standing, and Power. . . . . . . . . . . . . . . . . 18
6.2 Authority; No Breach by Agreement. . . . . . . . . . . . . . . . . 18
6.3 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Newnan Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . 21
6.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 21
6.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Allowance for Possible Loan Losses . . . . . . . . . . . . . . . . 22
6.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 23
6.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 24
6.13 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 25
6.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . 26
6.16 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 27
6.17 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.18 Statements True and Correct. . . . . . . . . . . . . . . . . . . . 27
6.19 Accounting, Tax and Regulatory Matters . . . . . . . . . . . . . . 28
6.20 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . 28
7.1 Affirmative Covenants of Southside . . . . . . . . . . . . . . . . 28
7.2 Negative Covenants of Southside. . . . . . . . . . . . . . . . . . 29
7.3 Covenants of Holdings and Newnan . . . . . . . . . . . . . . . . . 31
7.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . 31

<PAGE>

Page
----

7.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE 8
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.1 Registration Statement; Proxy Statement; Shareholder Approval. . . 31
8.2 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 Filings with State Offices . . . . . . . . . . . . . . . . . . . . 32
8.4 Agreement as to Efforts to Consummate. . . . . . . . . . . . . . . 32
8.5 Investigation and Confidentiality. . . . . . . . . . . . . . . . . 33
8.6 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7 Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.8 Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . 34
8.9 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . 34
8.10 Agreement of Affiliates. . . . . . . . . . . . . . . . . . . . . . 35
8.11 Employee Benefits and Contracts. . . . . . . . . . . . . . . . . . 35
8.12 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.13 Certain Modifications. . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE. . . . . . . . . . . . . . 37
9.1 Conditions to Obligations of Each Party. . . . . . . . . . . . . . 37
9.2 Conditions to Obligations of Holdings and Newnan . . . . . . . . . 38
9.3 Conditions to Obligations of Southside . . . . . . . . . . . . . . 40
9.4 Holdings Reorganization Agreement. . . . . . . . . . . . . . . . . 40

ARTICLE 10
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 43
10.3 Non-Survival of Representations and Covenants. . . . . . . . . . . 43

ARTICLE 11
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.3 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 51
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.6 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 53

iii

<PAGE>
Page
----

11.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.11 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.12 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . 53
11.13 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.14 Previously Disclosed. . . . . . . . . . . . . . . . . . . . . . . 54

<PAGE>

LIST OF EXHIBITS

EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
1. Form of agreement of affiliates of Southside. (Section
8.10).

2. Form of Covenant Not to Compete and Indemnification
Agreement

3. Matters as to which Counsel for Southside will opine.
(Section 9.2(d)).

4. Matters as to which Powell, Goldstein, Frazer & Murphy will
opine. (Section 9.3(d)).

"PREVIOUSLY DISCLOSED" REFERENCES

SECTION NUMBER DESCRIPTION
- -------------- -----------
5.3 Capital Stock (Southside)

5.5 Financial Statements (Southside)

5.10 Assets (Southside)

5.14 Employee Benefit Plans (Southside)

5.15 Material Contracts (Southside)

6.3(c) Capital Stock (Newnan)

6.4 Financial Statements (Newnan)

6.9 Assets (Newnan)

6.13 Employee Benefit Plans (Newnan)

6.14 Material Contracts (Newnan)

7.2(d)(g) Negative Covenants of Southside

8.10 Agreement of Affiliates (Southside)

8.11 Employee Benefits and Contracts (Newnan)

11.1 Definitions

<PAGE>

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of this 2nd day of November, 1995, by and among NEWNAN SAVINGS BANK, FSB
("Newnan"), a federal savings bank organized under the laws of the United States
of America, NEWNAN HOLDINGS, INC. ("Holdings"), a corporation organized and
existing under the laws of the State of Georgia, SOUTHSIDE FINANCIAL GROUP, INC.
("Southside"), a corporation organized and existing under the laws of the State
of Georgia, CITIZENS BANK AND TRUST OF FAYETTE COUNTY, a bank organized and
existing under the laws of the State of Georgia, and INTERIM CITIZENS
CORPORATION ("Interim Citizens"), a corporation organized and existing under the
laws of the State of Georgia.

PREAMBLE

The Boards of Directors of Newnan, Holdings, Southside, Citizens and
Interim Citizens are of the opinion that the transactions described herein are
in the best interests of the parties and their respective shareholders. This
Agreement provides for the combination of Southside with Holdings pursuant to
the merger of Southside with and into Interim Citizens. At the effective time
of such merger, the outstanding shares of the capital stock of Southside shall
be converted into the right to receive either cash or, in limited circumstances
as described herein, shares of the common stock of Holdings. Concurrently with
the merger of Southside into Holdings, Holdings will acquire Newnan by means of
merging Interim Newnan Corporation ("Interim Newnan") with and into Newnan
pursuant to a Plan of Reorganization by and among Holdings, Newnan and Interim
Newnan (the "Holdings Reorganization Agreement"). The transactions described in
this Agreement are subject to the approvals of the shareholders of Newnan and
Southside, the Board of Governors of the Federal Reserve System, the Georgia
Department of Banking and Finance and the Office of Thrift Supervision, and the
satisfaction of certain other conditions described in this Agreement.

Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.

NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the parties agree as
follows:

ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER

1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, Southside shall be merged with and into Interim Citizens in
accordance with the provisions of Section 14-2-1101 of the GBCC and with the
effect provided in Section 14-2-1106 of the GBCC (the "Merger"). Interim
Citizens shall be the Surviving Corporation resulting from the Merger. The
Merger shall be consummated pursuant to the terms of this Agreement, which

<PAGE>

has been approved and adopted by the respective Boards of Directors of Newnan,
Southside, Interim Citizens and Holdings.

1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 10:00 a.m.
on the date that the Effective Time occurs (or the immediately preceding day if
the Effective Time is earlier than 10:00 a. m.), or at such other time as the
Parties, acting through their chief executive officers may mutually agree. The
place of Closing shall be at the offices of Powell, Goldstein, Frazer & Murphy,
Atlanta, Georgia, or such other place as may be mutually agreed upon by the
Parties.

1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by
this Agreement shall become effective on the date and at the time the Articles
of Merger reflecting the Merger shall become effective with the Secretary of
State of the State of Georgia (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the chief
executive officers of each Party, the Parties shall use their reasonable efforts
to cause the Effective Time to occur on the last business day of the month in
which occurs the last to occur of (a) the effective date (including expiration
of any applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (b)
the date on which the shareholders of Newnan, Holdings, Interim Citizens and
Southside approve this Agreement to the extent such approval is required by
applicable Law; or such later date as may be mutually agreed upon in writing by
the chief executive officers of each Party.

ARTICLE 2
TERMS OF MERGER

2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of Holdings
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until otherwise amended or repealed;
provided, that the Articles of Incorporation may be amended at the Effective
Time to change the name of Holdings to "Southside Financial Group, Inc."

2.2 BYLAWS. The Bylaws of Holdings in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed.

2.3 DIRECTORS AND OFFICERS. The directors of Holdings in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of Holdings in office immediately prior
to the Effective Time, together with such additional persons as may thereafter

-2-

<PAGE>

be elected, shall serve as the officers of Holdings from and after the Effective
Time in accordance with the Bylaws of Holdings.

ARTICLE 3
MANNER OF CONVERTING SHARES

3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof the shares of the constituent corporations shall be
converted as follows:

(a) Except as provided in the Holdings Reorganization Agreement, each
share of Holdings Capital Stock issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding from and after the Effective
Time.

(b) Each share of Southside Common Stock issued and outstanding at
the Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive the Merger Consideration. The Merger
Consideration shall be cash in the amount of $41.00 per share of Southside
Common Stock, except that at the election of certain holders of the shares of
Southside Common Stock described in Section 3.1(c), the Merger Consideration may
also include shares of Holdings Common Stock.

(c) Any holder of Southside Common Stock who Owns or Controls (as
described in Section 11.1 hereof) 5,000 or more shares of said stock may elect
(not later than the adjournment of the special meeting referred to in Section
8.1 hereof), to receive up to but not more than fifty percent of his or her
Merger Consideration in the form of shares of Holdings Common Stock as provided
in Section 3.1(d) hereof.

(d) At the Effective Time, each share of Southside Common Stock which
is to be converted into Holdings Common Stock pursuant to Section 3.1(c) shall
be converted into the number of shares, or such fractions of a share (subject to
Section 3.4 hereof) of Holdings Common Stock which shall be equal to $41 divided
by the Market Value (the "Exchange Ratio"), subject to adjustment as hereinafter
provided; however, the aggregate number of shares of Holdings Common Stock that
Holdings shall issue in the Merger shall not exceed 145,000 shares. The Market
Value shall represent the per share market value of the Newnan Common Stock at
the Effective Time and shall be determined by calculating the average of the
closing prices (or, if there are no reported trades, the average of the closing
bid and asked prices) of the Newnan Common Stock as reported on the Nasdaq NMS
on each of the twenty (20) trading days ending on the fifth (5th) trading day
immediately preceding the Effective Time, provided that, for purposes of
calculating the Exchange Ratio in this Section 3.1(d), the Market Value shall
not be less than $15.50 per share nor greater than $20 per share. Thus, as an
illustration only, and subject to the maximum number of shares that shall be
issued, if the Market Value is

-3-

<PAGE>

$22, then the Exchange Ratio will be 2.05 and each one share of Southside Common
Stock shall be converted into 2.05 shares of Holdings Common Stock (i.e., $41
divided by 20 [the maximum Market Value hereunder]), and a shareholder of
Southside converting 100 shares of Southside Common Stock would receive in the
aggregate 205 shares of Holdings Common Stock. To the extent that this
calculation results in fractional shares, such fractional shares shall be
converted into cash equal to $41 multiplied by the fractional share as provided
in Section 3.4. The shares of Holdings Common Stock to be issued pursuant to
Section 3.1(c) shall be pro-rated if the total number of shares shall exceed
145,000 shares, with the balance being payable in cash pursuant to Section
3.1(b).

3.2 ANTI-DILUTION PROVISIONS. In the event Southside changes the number
of shares of Southside Common Stock or Holdings Common Stock, respectively,
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or similar recapitalization with respect to such stock and the
record date therefor (in the case of a stock dividend) or the effective date
therefor (in the case of a stock split or similar recapitalization) shall be
prior to the Effective Time, the Merger Consideration per Share shall be
proportionately adjusted.

3.3 SHARES HELD BY SOUTHSIDE OR HOLDINGS. Each of the shares of Southside
Common Stock held by any Southside Company or by any Holdings Company, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.

3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of Southside Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Holdings Common Stock (after taking into account all certificates
delivered by such holder) shall receive in lieu thereof cash (without interest)
in an amount equal to such fractional part of a share of Holdings Common Stock
multiplied by $41 per share. No such holder will be entitled to dividends,
voting rights, or any other rights as a shareholder in respect of any fractional
shares.

3.5 SOUTHSIDE STOCK OPTIONS. At or prior to the Effective Time, Southside
shall cause all options to purchase Southside Common Stock pursuant to stock
options ("Southside Options") granted by Southside under the Southside Stock
Plans to have been exercised and shares of Southside Common Stock shall have
been duly issued.

ARTICLE 4
EXCHANGE OF SHARES

4.1 EXCHANGE PROCEDURES. Unless the parties otherwise agree, promptly
after the Effective Time, Holdings shall cause the agent selected by it (the
"Exchange Agent") to mail to the former shareholders of Southside appropriate
transmittal materials which shall specify that

-4-

<PAGE>

delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of Southside Common Stock shall pass, only upon
proper delivery of such certificates to the Exchange Agent. After the Effective
Time, each holder of shares of Southside Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement) issued and outstanding at
the Effective Time shall surrender the certificate or certificates representing
such shares to Holdings and shall promptly upon surrender thereof receive in
exchange therefor the consideration provided in Section 3.1 of this Agreement,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2 of this Agreement. To
the extent required by Section 3.4 of this Agreement, each holder of shares of
Southside Common Stock issued and outstanding at the Effective Time also shall
receive, upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of Holdings Common Stock to which
such holder may be otherwise entitled (without interest). The Exchange Agent
shall not be obligated to deliver the consideration to which any former holder
of Southside Common Stock is entitled as a result of the Merger until such
holder surrenders his certificate or certificates representing the shares of
Southside Common Stock for exchange as provided in this Section 4.1. The
certificate or certificates of Southside Common Stock so surrendered shall be
duly endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, Holdings shall not be liable to a holder of Southside
Common Stock for any amounts paid or property delivered in good faith to a
public official pursuant to any applicable abandoned property Law.

4.2 RIGHTS OF FORMER SOUTHSIDE SHAREHOLDERS. At the Effective Time, the
stock transfer books of Southside shall be closed as to holders of Southside
Common Stock immediately prior to the Effective Time and no transfer of
Southside Common Stock by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore representing shares
of Southside Common Stock (other than shares to be canceled pursuant to Section
3.3 of this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive the consideration provided in Sections 3.1
and 3.4 of this Agreement in exchange therefor. To the extent permitted by Law,
former shareholders of record of Southside who receive shares of Holdings Common
Stock pursuant to Section 3.1(c) of this Agreement shall be entitled to vote
after the Effective Time at any meeting of Holdings shareholders the number of
whole shares of Holdings Common Stock into which their respective shares of
Southside Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing Southside Common Stock for
certificates representing Holdings Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by Holdings on the Holdings Common Stock, the record date for which is
at or after the Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement, but no dividend
or other distribution payable to the holders of record of Holdings Common Stock
as of any time subsequent to the Effective Time shall be delivered to the holder
of any certificate representing shares of Southside Common Stock issued and
outstanding at the Effective Time until such

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holder surrenders such certificate for exchange as provided in Section 4.1 of
this Agreement. However, upon surrender of such Southside Common Stock
certificate, both the Holdings Common Stock certificate (together with all such
undelivered dividends or other distributions without interest) and any
undelivered cash payments to be paid for fractional share interests (without
interest) shall be delivered and paid with respect to each share represented by
such certificate.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SOUTHSIDE

Southside hereby jointly and severally represent and warrant to Holdings,
Newnan and Interim Citizens as follows:

5.1 ORGANIZATION, STANDING, AND POWER. Southside is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. Southside is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Southside. Southside is duly
registered as a bank holding company with the Federal Reserve Board and the
Georgia Department of Banking and Finance.

5.2 AUTHORITY; NO BREACH BY AGREEMENT.

(a) Southside has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Southside,
subject to the approval of this Agreement by the holders of a majority of the
outstanding Southside Common Stock. Subject to such requisite shareholder
approval, this Agreement represents a legal, valid and binding obligation of
Southside, enforceable against Southside in accordance with its terms (except in
all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).

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(b) Neither the execution and delivery of this Agreement by
Southside, nor the consummation by Southside of the transactions contemplated
hereby, nor compliance by Southside with any of the provisions hereof will (i)
conflict with or result in a breach of any provision of Southside's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Southside Company under, any Contract or Permit of any Southside
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southside, or (iii) subject to receipt of the requisite approvals
referred to in Section 9.1 (b) of this Agreement, violate any Law or Order
applicable to any Southside Company or any of their respective Assets.

(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service with respect
to any employee benefit plans, and other than Consents, filings or notifications
which, if not obtained or made, are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Southside, no notice to,
filing with, or Consent of any public body or authority is necessary for the
consummation by Southside of the Merger and the other transactions contemplated
in this Agreement.

5.3 CAPITAL STOCK.

(a) The authorized capital stock of Southside consists of 5,000,000
shares of Southside Common Stock, of which 369,607 shares are issued and
outstanding as of the date of this Agreement and not more than 401,382 shares
will be issued and outstanding at the Effective Time. All of the issued and
outstanding shares of capital stock of Southside are duly and validly issued and
outstanding and are fully paid and nonassessable under the GBCC. None of the
outstanding shares of capital stock of Southside has been issued in violation of
any preemptive rights of the current or past shareholders of Southside.
Southside has reserved 31,775 shares of Southside Common Stock for issuance
under the Southside Stock Plans, pursuant to which options to purchase 31,775
shares of Southside Common Stock are outstanding as of the date of this
Agreement. All outstanding Southside Options shall be exercised on or prior to
the Effective Time.

(b) Except as set forth in Section 5.3(a) of this Agreement, or as
Previously Disclosed, there are no shares of capital stock or other equity
securities of Southside outstanding and no outstanding options, warrants, scrip,
rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of Southside or contracts, commitments,
understandings, or arrangements by which Southside is or may be bound to issue
additional shares of its capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock.

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5.4 SOUTHSIDE SUBSIDIARIES. Citizens Bank & Trust of Fayette County
("Citizens") is the only subsidiary of Southside as of the date of this
Agreement and will be the only subsidiary of Southside at the Effective Time.
Southside owns all of the issued and outstanding shares of capital stock of
Citizens. No equity securities of Citizens are or may become required to be
issued (other than to Southside) by reason of any options, warrants, scrip,
rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of Citizens, and there are no Contracts by which
Citizens is bound to issue (other than to Southside) additional shares of its
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock or by which any Southside Company is or
may be bound to transfer any shares of the capital stock of Citizens (other than
to Southside). There are no Contracts relating to the rights of any Southside
Company to vote or to dispose of any shares of the capital stock of Citizens.
All of the shares of capital stock of Citizens held by Southside are fully paid
and nonassessable under the applicable corporation Law of the jurisdiction in
which Citizens is organized and are owned by Southside free and clear of any
Lien. Citizens is a bank that is duly organized and validly existing and in
good standing under the Laws of the jurisdiction in which it is organized.
Citizens has the corporate power and authority necessary for it to own, lease
and operate its Assets and to carry on its business as now conducted, and
Citizens is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southside. Citizens is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder.

5.5 FINANCIAL STATEMENTS. Southside has Previously Disclosed, and
delivered to Holdings and Newnan prior to the execution of this Agreement copies
of all Southside Financial Statements for periods ended prior to the date hereof
and will deliver to Holdings copies of all Southside Financial Statements
prepared subsequent to the date hereof. The Southside Financial Statements (as
of the dates thereof and for the periods covered thereby) (a) are or, if dated
after the date of this Agreement, will be in accordance with the books and
records of the Southside Companies, which are or will be, as the case may be,
complete and correct and which have been or will have been, as the case may be,
maintained in accordance with good business practices, and (b) present or will
present, as the case may be, fairly the consolidated financial position of the
Southside Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the Southside
Companies for the periods indicated, in accordance with GAAP (subject to any
exceptions as to consistency specified therein or as may be indicated in the
notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material).

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5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Southside Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Southside except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Southside as
of December 31, 1994 and September 30, 1995, included in the Southside Financial
Statements or reflected in the notes thereto. No Southside Company has incurred
or paid any Liability since September 30, 1995, except for such Liabilities
incurred or paid in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Southside.

5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
(a) there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southside, and (b) the Southside Companies have not taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken after the date of this Agreement, would represent or result
in a breach or violation of any of the covenants and agreements of Southside
provided in Article Seven of this Agreement.

5.8 TAX MATTERS.

(a) All Tax returns required to be filed by or on behalf of any of
the Southside Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 1994, and on or before the date of most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on Southside and all returns filed are complete and accurate to
the Knowledge of Southside. All Taxes shown on filed returns have been paid. As
of the date of this Agreement, there is no audit examination, deficiency, refund
Litigation, or other matter in controversy with respect to any Taxes that is
reasonably likely to result in a determination that would have, individually or
in the aggregate, a Material Adverse Effect on Southside, except as reserved
against in the Southside Financial Statements delivered prior to the date of
this Agreement. All Taxes and other Liabilities due with respect to completed
and settled examinations or concluded Litigation have been paid.

(b) None of the Southside Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect, and no unpaid tax deficiency has been asserted
in writing against or with respect to any Southside Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southside.

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(c) Adequate provision for any Taxes due or to become due for any of
the Southside Companies for the period or periods through and including the date
of the respective Southside Financial Statements has been made and is reflected
on such Southside Financial Statements.

(d) Deferred Taxes of the Southside Companies have been provided for
in accordance with GAAP.

(e) Each of the Southside Companies is in compliance with, and its
records contain all information and documents (including, without limitation,
properly completed IRS Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements under federal, state and
local Tax Laws, and such records identify with specificity all accounts subject
to backup withholding under Section 3406 of the Internal Revenue Code, except
for such instances of noncompliance and such omissions as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Southside.

(f) Effective January 1, 1993, Southside adopted Financial Accounting
Standards Board Statement 109, "Accounting for Income Taxes."

5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible loan
or credit losses (the "Allowance") shown on the consolidated balance sheets of
Southside included in the most recent Southside Financial Statements dated prior
to the date of this Agreement was, and the Allowance shown on the consolidated
balance sheets of Southside included in the Southside Financial Statements as of
dates subsequent to the execution of this Agreement will be, as of the dates
thereof, adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for losses relating to or inherent in the
loan and lease portfolios (including accrued interest receivables) of the
Southside Companies and other extensions of credit (including letters of credit
and commitments to make loans or extend credit) by the Southside Companies as of
the dates thereof except where the failure of such Allowance to be so adequate
is not reasonably likely to have a Material Adverse Effect on Southside.

5.10 ASSETS. Except as Previously Disclosed or as disclosed or reserved
against in the Southside Financial Statements, the Southside Companies have good
and marketable title, free and clear of all Liens, to all of their respective
Assets. All material tangible properties used in the businesses of the
Southside Companies are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with Southside's
past practices. All Assets which are material to Southside's business on a
consolidated basis, held under leases or subleases by any of the Southside
Companies, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which

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any proceedings may be brought), and each such Contract is in full force and
effect. The policies of fire, theft, liability, and other insurance maintained
with respect to the Assets or businesses of the Southside Companies provide
adequate coverage under current industry practices against loss or Liability,
and the fidelity and blanket bonds in effect as to which any of the Southside
Companies is a named insured are reasonably sufficient. The Assets of the
Southside Companies include all assets required to operate the business of the
Southside Companies as presently conducted.

5.11 ENVIRONMENTAL MATTERS.

(a) To the Knowledge of Southside, each Southside Company, its
Participation Facilities and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southside.

(b) There is no Litigation pending or, to the Knowledge of Southside,
threatened before any court, governmental agency or authority or other forum in
which any Southside Company or any of its Participation Facilities has been or,
with respect to threatened Litigation, may be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous Material
(as defined below) or oil, whether or not occurring at, on, under or involving a
site owned, leased or operated by any Southside Company or any of its
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Southside.

(c) There is no Litigation pending or, to the Knowledge of Southside,
threatened before any court, governmental agency or board or other forum in
which any of its Loan Properties (or any Southside Company in respect of such
Loan Property) has been or, with respect to threatened Litigation, may be named
as a defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material or oil, whether or
not occurring at, on, under or involving a Loan Property, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Southside.

(d) To the Knowledge of Southside, there is no reasonable basis for
any Litigation of a type described in subsections (b) or (c), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Southside.

(e) During the period of (i) any Southside Company's ownership or
operation of any of their respective current properties, (ii) any Southside
Company's participation in the management of any Participation Facility, or
(iii) any Southside Company's holding of a security

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interest in a Loan Property, there have been no releases of Hazardous Material
or oil in, on, under or affecting any such property, Participation Facility, or
Loan Property, except such as are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Southside. Prior to the period of
(i) any Southside Company's ownership or operation of any of their respective
current properties, (ii) any Southside Company's participation in the management
of any Participation Facility, or (iii) any Southside Company's holding of a
security interest in a Loan Property, there were no releases of Hazardous
Material or oil in, on, under or affecting any such property, Participation
Facility or Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Southside.

5.12 COMPLIANCE WITH LAWS. Southside is duly registered as a bank holding
company under the BHC Act. Each Southside Company has in effect all Permits
necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southside, and there has occurred no Default under any such Permit,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Southside. No Southside Company:

(a) is in violation of any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Southside; and

(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any Southside Company is not in compliance
with any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Southside, (ii)
threatening to revoke any Permits, the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
Southside, or (iii) requiring any Southside Company to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive,
commitment or memorandum of understanding, or to adopt any Board resolution or
similar undertaking, which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.

5.13 LABOR RELATIONS. No Southside Company is the subject of any
Litigation asserting that it or any other Southside Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Southside Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any Southside Company,
pending or threatened, or to its Knowledge, is there any activity involving any

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Southside Company's employees seeking to certify a collective bargaining unit
or engaging in any other organization activity.

5.14 EMPLOYEE BENEFIT PLANS.

(a) Southside has Previously Disclosed, and delivered or made
available to Holdings prior to the execution of this Agreement copies in each
case of all pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus, or other
incentive plans all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including, without limitation, "employee benefit plans" as that term is defined
in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in whole
or in part by, or contributed to by any Southside Company or Affiliate thereof
for the benefit of employees, retirees, former employees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Southside
Benefit Plans"). Any of the Southside Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "Southside Pension Plan." No Southside Pension Plan is
or has been a multiemployer plan within the meaning of Section 3(37) of ERISA.

(b) All Southside Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Southside. No Southside Company
nor, to the Knowledge of Southside, any other party has engaged in a transaction
with respect to any Southside Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof would subject any Southside
Company to a tax or penalty imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA in amounts which are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
Southside.

(c) Neither Southside nor any entity which is considered one employer
with Southside under Section 414 of the Internal Revenue Code (an "ERISA
Affiliate of Southside") maintains or has ever maintained a Southside Pension
Plan.

(d) No Southside Company has any obligations for retiree health and
life benefits under any of the Southside Benefit Plans and there are no
restrictions on the rights of such Southside Company to amend or terminate any
such Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a Material Adverse Effect on Southside.

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(e) Except as Previously Disclosed, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
director or any employee of any Southside Company from any Southside Company
under any Southside Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Southside Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.

(f) The actuarial present values of all accrued deferred compensation
entitlements (including, without limitation, entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Southside Company and their respective beneficiaries
have been fully reflected on the Southside Financial Statements to the extent
required by and in accordance with GAAP.

(g) Southside and each ERISA Affiliate of Southside has complied with
the continuation of coverage requirements of Section 1001 of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601
through 608.

(h) Neither Southside nor any ERISA Affiliate of Southside is
obligated, contingently or otherwise, under any agreement to pay any amount
which would be treated as a "parachute payment," as defined in Section 280G(b)
of the Internal Revenue Code (determined without regard to Section
280G(b)(2)(A)(ii) of the Internal Revenue Code).

(i) Other than routine claims for benefits, there are no actions,
audits, investigations, suits or claims pending, or threatened against any
Southside Benefit Plan, any trust or other funding agency created thereunder, or
against any fiduciary of any Southside Benefit Plan or against the assets of any
Southside Benefit Plan.

5.15 MATERIAL CONTRACTS. Except as Previously Disclosed or otherwise
reflected in the Southside Financial Statements, none of the Southside
Companies, nor any of their respective Assets, businesses or operations, is a
party to, or is bound or affected by, or receives benefits under, (a) any
employment, severance, termination, consulting or retirement Contract providing
for aggregate payments to any Person in any calendar year in excess of $10,000,
excluding "at will" employment arrangements, (b) any Contract relating to the
borrowing of money by any Southside Company or the guarantee by any Southside
Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase agreements,
trade payables, and Contracts relating to borrowings or guarantees made in the
ordinary course of business), (c) any Contracts between or among Southside
Companies, or (d) any other material contract. None of the Southside Companies
is in Default under any Southside Contract, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southside. All of the indebtedness of any

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Southside Company for money borrowed is prepayable at any time by such Southside
Company without penalty or premium.

5.16 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of Southside, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Southside Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Southside, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any Southside Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Southside.

5.17 REPORTS. Since December 31, 1990, each Southside Company has timely
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (a) applicable
Regulatory Authorities and (b) any applicable state securities or banking
authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Southside). As of their respective dates, each of
such reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document to Southside's
Knowledge did not, in all material respects, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.

5.18 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument,
other writing or other information furnished or to be furnished by any Southside
Company or any Affiliate thereof to Holdings or Newnan pursuant to this
Agreement or any other document, agreement or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any Southside Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by Holdings with
the SEC will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not misleading. None of the
information supplied or to be supplied by any Southside Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to Southside's
shareholders in connection with the Shareholders' Meeting, and any other
documents to be filed by a Southside Company or any Affiliate thereof with the
SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Proxy Statement, when first mailed to the shareholders of
Southside, be false or misleading with respect to any material fact, or omit to
state any material fact necessary

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to make the statements therein, in light of the circumstances under which they
were made, not misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any Southside Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.

5.19 ACCOUNTING TAX AND REGULATORY MATTERS. No Southside Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that would prevent the transactions contemplated hereby from
qualifying, as to Newnan and Holdings, as a reorganization within the meaning of
Section 368 of the Code, or that is reasonably likely to materially impede or
delay receipt of any Consents of Regulatory Authorities referred to in Section
9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the second sentence of such Section. To
the Knowledge of Southside, there exists no fact, circumstance, or reason why
the requisite Consents referred to in Section 9.1(b) of this Agreement cannot be
received in a timely manner without the imposition of any condition of the type
described in the second sentence of such Section 9.1(b).

5.20 CHARTER PROVISIONS. Each Southside Company has taken all action so
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any Southside Company or restrict or
impair the ability of Holdings to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any Southside Company that may be
acquired or controlled by it.

5.21 INTELLECTUAL PROPERTY. Southside and each of the Southside
Subsidiaries own or possess valid and binding license and other rights to use
without payment all material patents, copyrights, trade secrets, trade names,
service marks and trademarks used in its businesses, and neither Southside nor
any Southside Subsidiary has received any notice of conflict with respect
thereto that asserts the right of others. Southside and each Southside
Subsidiary have in all material respects performed all the obligations required
to be performed by them and are not in default in any material respect under any
material contract, agreement, arrangement or commitment relating to any of the
foregoing.

5.22 REGISTRATION OBLIGATIONS. Except as Previously Disclosed to Newnan,
neither Southside nor any of its Subsidiaries is under any obligation,
contingent or otherwise, which will survive the Merger by reason of any
Agreement to register any of its securities under the 1933 Act.

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5.23 LOANS. Southside has Previously Disclosed a true, correct and
complete listing, by account or other identifying number, of (i) all loans in
excess of $100,000 of Southside or any of the Southside Subsidiaries which have
been accelerated during the past twelve months; (ii) all loan commitments or
lines of credit of Southside or any of the Southside Subsidiaries in excess of
$100,000 which have been terminated by Southside or any of the Southside
Subsidiaries during the past twelve months by reason of default or adverse
developments in the condition of the borrower or other events or circumstances
affecting the credit of the borrower; (iii) all loans, lines of credit and loan
commitments in excess of $100,000 as to which Southside or any of the Southside
Subsidiaries has given written notice of its intent to terminate during the past
twelve months; (iv) with respect to all loans in excess of $100,000, all
notification letters and other written communications from Southside or any of
the Southside Subsidiaries to any of their respective borrowers, customers or
other parties during the past twelve months wherein Southside or any of the
Southside Subsidiaries has requested or demanded that actions be taken to
correct existing defaults or facts or circumstances which may become defaults;
(v) each borrower, customer, or other party which has notified Southside or any
of the Southside Subsidiaries during the past twelve months of, or has asserted
against Southside or any of the Southside Subsidiaries, in writing, any "lender
liability" or similar claim, and to the best knowledge of Southside, each
borrower, customer or other party which has given Southside or any of the
Southside Subsidiaries any oral notification of, or which has orally asserted
against Southside or any of the Southside Subsidiaries, any such claim; (vi) all
loans in excess of $25,000 (A) that are contractually past due ninety (90) days
or more in the payment of principal and/or interest, (B) that are on nonaccrual
status, (C) that have been classified "substandard," "doubtful" or "loss," or
the equivalent thereof, by any Regulatory Authority, (D) for which a reasonable
doubt exists as to the timely future collectibility of principal and/or
interest, whether or not interest is still accruing or the loan is less than
ninety (90) days past due, (F) for which the interest rate terms have been
reduced and/or the maturity dates have been extended subsequent to the agreement
under which the loan was originally created due to concerns regarding the
borrower's ability to pay in accordance with such initial terms, or (f) where a
specific reserve allocation exists in connection thereto; and (vii) all loans or
debts payable or owing by any executive officer or director of Southside or any
of the Southside Subsidiaries or any other person or entity deemed an "executive
officer" or a "related interest" of any of the foregoing, as such terms are
defined in Regulation O of the Federal Reserve Board.

ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND NEWNAN

Holdings and Newnan hereby jointly and severally represent and warrant to
Southside as follows:

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6.1 ORGANIZATION, STANDING, AND POWER.

(a) Holdings is a corporation duly organized, validly existing, and
in good standing under the Laws of the State of Georgia. Holdings has the
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its Assets. Holdings is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Holdings.

(b) Newnan is a federal savings bank duly organized, validly existing
and in good standing under the laws of the United States of America. Newnan has
the corporate power and authority to carry on its business as now conducted and
to own, lease and operate its Assets. Newnan is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Newnan.

6.2 AUTHORITY; NO BREACH BY AGREEMENT.

(a) Holdings and Newnan have the corporate power and authority
necessary to execute, deliver and perform their obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger and the Reorganization, have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of Holdings and Newnan. This Agreement represents a legal, valid and
binding obligation of Holdings and Newnan, enforceable against Holdings and
Newnan in accordance with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).

(b) Neither the execution and delivery of this Agreement by Holdings
and Newnan, nor the consummation by Holdings and Newnan of the transactions
contemplated hereby, nor compliance by Holdings with any of the provisions
hereof will (i) conflict with or result in a breach of any provision of
Holdings's Articles of Incorporation or Bylaws or Newnan's Charter or Bylaws, or
(ii) constitute or result in a Default under, or require any Consent pursuant
to, or result in the creation of any Lien on any Asset of any Holdings Company
under, any Contract or Permit of any Holdings Company, where such Default or
Lien,

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or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holdings Company,
or (iii) subject to receipt of the requisite approvals referred to in Section
9.1(b) of this Agreement, violate any Law or Order applicable to any Holdings
Company or any of their respective Assets.

(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Holdings or Newnan, no notice to, filing with, or
Consent of any public body or authority is necessary for the consummation by
Holdings or Newnan of the Merger, by Newnan of the Reorganization and the other
transactions contemplated in this Agreement.

6.3 CAPITAL STOCK.

(a) The authorized capital stock of Holdings consists of (i)
8,000,000 shares of Holdings Common Stock. On the date of this Agreement, there
was one share of Holdings Common Stock issued and outstanding. All of the
issued and outstanding shares of Holdings Capital Stock are, and all of the
shares of Holdings Common Stock to be issued in exchange for shares of Southside
Common Stock upon consummation of the Merger, when issued in accordance with the
terms of this Agreement, will be, duly and validly issued and outstanding and
fully paid and nonassessable under the GBCC. None of the outstanding shares of
Holdings Capital Stock has been, and none of the shares of Holdings Common Stock
to be issued in exchange for shares of Southside Common Stock upon consummation
of the Merger will be, issued in violation of any preemptive rights of the
current or past shareholders of Holdings.

(b) The authorized capital stock of Newnan consists of (i) 8,000,000
shares of Newnan Common Stock and (ii) 2,000,000 shares of Newnan Preferred
Stock. On the date of this Agreement, there were 1,445,756 shares of Newnan
Common Stock (and no shares of Preferred Stock) issued and outstanding. All of
the issued and outstanding shares of Newnan Capital Stock are, and all of the
shares of Newnan Common Stock to be issued in exchange for shares of Holdings
Common Stock upon consummation of the Holdings Reorganization Agreement, when
issued in accordance with the terms of Holdings Reorganization Agreement, will
be, duly and validly issued and outstanding and fully paid and nonassessable
under the GBCC. None of the outstanding shares of Newnan Capital Stock has been
issued in violation of any preemptive rights of the current or past shareholders
of Newnan. Newnan has reserved 326,500 shares of Newnan Common Stock for
issuance under the Newnan Stock Plans, pursuant to which options to purchase not
more than 218,169 shares of Newnan Common Stock are outstanding as of the date
of this Agreement.

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(c) Except as set forth in Sections 6.3(a) and (b) of this Agreement,
or as Previously Disclosed, there are no shares of capital stock or other equity
securities of Holdings or Newnan outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of Holdings or Newnan or contracts,
commitments, understandings, or arrangements by which Holdings or Newnan is or
may be bound to issue additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its capital
stock.

6.4 NEWNAN SUBSIDIARIES. Except as previously disclosed, Newnan has
no Subsidiaries as of the date of this Agreement and at the Effective Time.
Newnan owns all of the issued and outstanding shares of capital stock of the
Newnan Subsidiaries. No equity securities of any Newnan Subsidiary are or may
become required to be issued (other than to Newnan), by reason of any options,
warrants, script, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of the Newnan Subsidiaries, and there are no
Contracts by which any Subsidiary is bound to issue (other than to Newnan)
additional shares of its capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock by which Newnan
or any Newnan Subsidiary is or may be bound to transfer any shares of capital
stock of such Newnan Subsidiary (other than to Newnan). There are no contracts
relating to the rights of any Newnan Subsidiary to vote or dispose of any shares
of the capital stock of such Newnan Subsidiary. All of the shares of each
Newnan Subsidiary held by Newnan are fully paid and nonassessable under the
applicable Corporation Law of the jurisdiction in which such Newnan Subsidiary
is organized and are owned by Newnan free and clear of any Lien. Each such
Newnan Subsidiary is duly organized and validly existing and in good standing
under the Laws of the jurisdiction in which it is organized, and has the
corporate power and authority necessary for it to own, lease and operate its
Assets to carry on its business as now conducted, and each Newnan Subsidiary is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdiction where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Newnan.

6.5 FINANCIAL STATEMENTS. Newnan has Previously Disclosed and delivered
to Southside prior to the execution of this Agreement copies of all Newnan
Financial Statements for periods ended prior to the date hereof and will deliver
to Southside copies of all Holdings and Newnan Financial Statements prepared
subsequent to the date hereof. The Holdings and Newnan Financial Statements (as
of the dates thereof and for the periods covered thereby) (a) are or, if dated
after the date of this Agreement, will be in accordance with the books and
records of the Holdings Companies, which are or will be, as the case may be,
complete and correct and which have been or will have been, as the case may be,
maintained in accordance with good

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business practices, and (b) present or will present, as the case may be, fairly
the consolidated financial position of the Holdings Companies as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows of the Holdings Companies for the periods indicated, in
accordance with GAAP (subject to exceptions as to consistency specified therein
or as may be indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments that are not material).

6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Holdings Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Holdings or Newnan, except Liabilities
which are accrued or reserved against in the consolidated balance sheets of
Newnan as of September 30, 1995 and March 31, 1995, included in the Newnan
Financial Statements or reflected in the notes thereto. No Holdings Company has
incurred or paid any Liability since September 30, 1995, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Holdings or Newnan.

6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1995, except as
disclosed in SEC Documents filed by Newnan prior to the date of this Agreement,
(a) there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Holdings or Newnan, and (b) the Holdings Companies have not taken any
action, or failed to take any action, prior to the date of this Agreement, which
action or failure, if taken after the date of this Agreement, would represent or
result in a breach or violation of any of the covenants and agreements of
Holdings or Newnan provided in Article Seven of this Agreement.

6.8 TAX MATTERS.

(a) All Tax returns required to be filed by or on behalf of any of
the Holdings Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
March 31, 1995, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on Holdings or Newnan, and all returns filed are complete and
accurate to the Knowledge of Holdings and Newnan. All Taxes shown on filed
returns have been paid. As of the date of this Agreement, there is no audit
examination, deficiency, refund Litigation, or other matter in controversy with
respect to any Taxes that is reasonably likely to result in a determination that
would have, individually or in the aggregate, a Material Adverse Effect on
Holdings or Newnan, except as reserved against in the Newnan Financial
Statements delivered prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.

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(b) None of the Holdings Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect, and no unpaid tax deficiency has been asserted
in writing against or with respect to any Holdings Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Holdings or Newnan.

(c) Adequate provision for any Taxes due or to become due for any of
the Holdings Companies for the period or periods through and including the date
of the respective Newnan Financial Statements has been made and is reflected on
such Newnan Financial Statements.

(d) Deferred Taxes of the Holdings Companies have been provided for
in accordance with GAAP.

(e) Effective April 1, 1993, Newnan adopted Financial Accounting
Standards Board Statement 109, "Accounting for Income Taxes."

6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The Allowance shown on the
consolidated balance sheets of Newnan included in the most recent Newnan
Financial Statements dated prior to the date of this Agreement was, and the
Allowance shown on the consolidated balance sheets of Newnan included in the
Newnan Financial Statements as of dates subsequent to the execution of this
Agreement will be, as of the dates thereof, adequate (within the meaning of GAAP
and applicable regulatory requirements or guidelines) to provide for losses
relating to or inherent in the loan and lease portfolios (including accrued
interest receivables) of the Holdings Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
the Holdings Companies as of the dates thereof except where the failure of such
Allowance to be so adequate is not reasonably likely to have a Material Adverse
Effect on Holdings or Newnan.

6.10 ASSETS. Except as Previously Disclosed or as disclosed or reserved
against in the Newnan Financial Statements, the Holdings Companies have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. All tangible properties used in the businesses of the Holdings
Companies are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with Newnan's past
practices. All Assets which are material to Holdings's or Newnan's business on
a consolidated basis, held under leases or subleases by any of the Holdings
Companies, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The policies of fire, theft,
liability, and other insurance maintained with respect to the Assets or

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businesses of the Holdings Companies provide adequate coverage under current
industry practices against loss or Liability, and the fidelity and blanket bonds
in effect as to which any of the Holdings Companies is a named insured are
reasonably sufficient. The Assets of the Holdings Companies include all assets
required to operate the business of the Holdings Companies as presently
conducted.

6.11 ENVIRONMENTAL MATTERS.

(a) To the Knowledge of Holdings and Newnan, each Holdings Company,
its Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Holdings or Newnan.

(b) There is no Litigation pending or, to the knowledge of Holdings
and Newnan, threatened before any court, governmental agency or authority or
other forum in which any Holdings Company or any of its Participation Facilities
has been or, with respect to threatened Litigation, may be named as a defendant
(i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material (as defined below) or oil, whether or not occurring at, on,
under or involving a site owned, leased or operated by any Holdings Company or
any of its Participation Facilities, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Holdings or Newnan.

(c) There is no Litigation pending or, to the knowledge of Holdings
and Newnan, threatened before any court, governmental agency or board or other
forum in which any of its Loan Properties (or any Holdings Company in respect of
such Loan Property) has been or, with respect to threatened Litigation, may be
named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material or oil,
whether or not occurring at, on, under or involving a Loan Property, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holdings or
Newnan.

(d) To the Knowledge of Holdings or Newnan, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c), except
such as is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Holdings or Newnan.

(e) During the period of (i) any Holdings Company's ownership or
operation of any of their respective current properties, (ii) any Holdings
Company's participation in the management of any Participation Facility, or
(iii) any Holdings Company's holding of a security interest in a Loan Property,
there have been no releases of Hazardous Material or oil in, on,

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under or affecting such properties, except such as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Holdings or
Newnan. Prior to the period of (i) any Holdings Company's ownership or
operation of any of their respective current properties, (ii) any Holdings
Company's participation in the management of any Participation Facility, or
(iii) any Holdings Company's holding of a security interest in a Loan Property,
to the Knowledge of Holdings or Newnan, there were no releases of Hazardous
Material or oil in, on, under or affecting any such property, Participation
Facility or Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holdings or
Newnan.

6.12 COMPLIANCE WITH LAWS. Each Holdings Company has in effect all Permits
necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Holdings or Newnan, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holdings or
Newnan. No Holdings Company:

(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any Holdings Company is not in compliance
with any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holdings or
Newnan, (ii) threatening to revoke any Permits, the revocation of which is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Holdings or Newnan, or (iii) requiring any Holdings Company to enter
into or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.

6.13 LABOR RELATIONS. No Holdings Company is the subject of any Litigation
asserting that it or any other Holdings Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other Holdings Company to bargain with
any labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any Holdings Company, pending or
threatened, or to its Knowledge, is there any activity involving any Holdings

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Company's employees seeking to certify a collective bargaining unit or engaging
in any other organization activity.

6.14 EMPLOYEE BENEFIT PLANS.

(a) Holdings and Newnan have Previously Disclosed and delivered or
made available to Southside prior to the execution of this Agreement copies in
each case of all pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including, without limitation, "employee benefit plans" as that term is defined
in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in whole
or in part by, or contributed to by any Holdings Company or Affiliate thereof
for the benefit of employees, retirees, former employees, dependents, spouses,
directors., independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses. directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Holdings
Benefit Plans"). Any of the Holdings Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "Holdings Pension Plan." No Holdings Pension Plan is or
has been a multiemployer plan within the meaning of Section 3(37) of ERISA.

(b) All Holdings Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Holdings or Newnan. Each Holdings
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and Holdings or Newnan are not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. To the Knowledge of Holdings or Newnan, no Holdings Company nor any
other party has engaged in a transaction with respect to any Holdings Benefit
Plan that, assuming the taxable period of such transaction expired as of the
date hereof would subject any Holdings Company to a tax or penalty imposed by
either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in
amounts which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Holdings or Newnan.

(c) Except as Previously Disclosed, Neither Holdings, Newnan nor any
entity which is considered one employer with Holdings or Newnan under Section
414 of the Internal Revenue Code (an "ERISA Affiliate of Holdings or Newnan")
maintains or has ever maintained a "defined benefit plan," as defined in Section
414(j) of the Internal Revenue Code.

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(d) Except as Previously Disclosed, (i) no Holdings Company has any
obligations for retiree health and life benefits under any of the Holdings
Benefit Plans and (ii) there are no restrictions on the rights of such Holdings
Company to amend or terminate any such Plan without incurring any Liability
thereunder, which Liability is reasonably likely to have a Material Adverse
Effect on Holdings or Newnan.

(e) Except as Previously Disclosed, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
director or any employee of any Holdings Company from any Holdings Company under
any Holdings Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any Holdings Benefit Plan, or (iii) result in any acceleration of
the time of payment or vesting of any such benefit.

(f) Holdings, Newnan and each ERISA Affiliate of Holdings or Newnan
have complied with the continuation of coverage requirements of Section 1001 of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and
ERISA Sections 601 through 608.

(g) Neither Holdings, Newnan nor any ERISA Affiliate of Holdings or
Newnan is obligated, contingently or otherwise, under any agreement to pay any
amount which would be treated as a "parachute payment," as defined in Section
280G(b) of the Internal Revenue Code (determined without regard to Section
280G(b)(2)(A)(ii) of the Internal Revenue Code).

(h) Other than routine claims for benefits, there are no actions,
audits, investigations, suits or claims pending, or threatened against any
Holdings Benefit Plan, any trust or other funding agency created thereunder, or
against any fiduciary of any Holdings Benefit Plan or against the assets of any
Holdings Benefit Plan.

6.15 MATERIAL CONTRACTS. Except as Previously Disclosed or otherwise
reflected in the Newnan Financial Statements, none of the Holdings Companies,
nor any of their respective Assets, businesses or operations, is a party to, or
is bound or affected by, or receives benefits under, (a) any employment,
severance, termination, consulting or retirement Contract providing for
aggregate payments to any Person in any calendar year in excess of $10,000,
excluding "at will" employment arrangements, (b) any Contract relating to the
borrowing of money by any Holdings Company or the guarantee by any Holdings
Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase agreements,
trade payables, and Contracts relating to borrowings or guarantees made in the
ordinary course of business), (c) any Contracts between or among Holdings
Companies, and (d) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by Newnan with the OTS
as of the date of this Agreement that has not been filed as an exhibit to
Newnan's Form 10-K filed for the fiscal year ended March 31, 1995, or

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in an SEC Document and identified by Holdings or Newnan (together with all
Contracts referred to in Sections 6.9 and 6.13(a) of this Agreement, the
"Holdings Contracts"). None of the Holdings Companies is in Default under any
Holdings Contract, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holdings or
Newnan. All of the indebtedness of any Holdings Company for money borrowed is
prepayable at any time by such Holdings Company without penalty or premium.

6.16 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of Holdings or Newnan, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Holdings Company, or against
any Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holdings. nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Holdings Company, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Holdings or Newnan.

6.17 REPORTS. Since September 30, 1995, each Holdings Company has timely
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (a) the OTS or the
SEC, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy
statements, (b) other Regulatory Authorities, and (c) any applicable state
securities or banking authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holdings or
Newnan). As of their respective dates, each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied in
all material respects with all applicable Laws. As of its respective date, each
such report and document to Holdings's or Newnan's Knowledge did not, in all
material respects, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.

6.18 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument,
other writing or other information furnished or to be furnished by any Holdings
Company or any Affiliate thereof to Southside pursuant to this Agreement or any
other document, agreement or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied or
to be supplied by any Holdings Company or any Affiliate thereof for inclusion in
the Registration Statement to be filed by Holdings with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Holdings Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Southside's shareholders in connection with the

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Shareholders' Meeting, and any other documents to be filed by any Holdings
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of Southside, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Shareholders' Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Shareholders' Meeting.
All documents that any Holdings Company or any Affiliate thereof is responsible
for filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.

6.19 ACCOUNTING, TAX AND REGULATORY MATTERS. No Holdings Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to materially impede or delay receipt of
any Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement. To the Knowledge of Holdings or Newnan, there exists no fact,
circumstance, or reason why the requisite Consents referred to in Section 9.1(b)
of this Agreement cannot be received in a timely manner without the imposition
of any condition or restriction of the type described in the second sentence of
such Section 9.1(b).

6.20 CHARTER PROVISIONS. Each Holdings Company has taken all action so
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any Holdings Company or restrict or
impair the ability of any Southside shareholder to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares of Holdings Common
Stock that may be acquired or controlled by it.

ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION

7.1 AFFIRMATIVE COVENANTS OF SOUTHSIDE. Unless the prior written consent
of Holdings shall have been obtained, and except as otherwise contemplated
herein, Southside shall, and shall cause Citizens: (a) to operate its business
in the usual, regular and ordinary course consistent with past practice; (b) to
preserve intact its business organization, employees, and advantageous business
relationships and to retain the services of its officers and key employees
(other than Jack Bowdoin, who has submitted his resignation) and Assets and
maintain its rights and franchises; (c) to use its reasonable efforts to cause
its representations and warranties to be correct at all times; and (d) to take
no action which would (i) adversely affect the ability of any

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Party to obtain any Consents required for the transactions contemplated hereby
without imposition of a condition or restriction of the type referred to in the
last sentence of Section 9.1(b) of this Agreement or (ii) adversely affect in
any material respect the ability of either Party to perform its covenants and
agreements under this Agreement.

7.2 NEGATIVE COVENANTS OF SOUTHSIDE. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
Southside covenants and agrees that it will not do or agree or commit to do, or
permit Citizens to do or agree or commit to do, any of the following without the
prior written consent of the chief executive officer of Holdings, which consent
shall not be unreasonably withheld:

(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any Southside Company, or

(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Southside Company to another
Southside Company) in excess of an aggregate of $100,000 (for the Southside
Companies on a consolidated basis) except in the ordinary course of the
business of Citizens consistent with past practices (which shall include
creation of deposit liabilities, purchases of federal funds, and entry into
repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any share of stock
held by any Southside Company of any Lien or permit any such Lien to exist;
or

(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any Southside Company, or declare or pay any dividend
or make any other distribution in respect of Southside's capital stock; or

(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof
in existence on the date hereto, or as Previously Disclosed, issue, sell,
pledge, encumber, authorize the issuance of or enter into any Contract to
issue, sell, pledge, encumber, or authorize the issuance of or otherwise
permit to become outstanding, any additional shares of Southside Common
Stock or any other capital stock of any Southside Company, or any stock
appreciation rights, or any option, warrant, conversion, or other right to
acquire any such stock, or any security convertible into any such stock; or

(e) adjust, split, combine or reclassify any capital stock of any
Southside Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Southside Capital
Stock or sell, lease, mortgage or otherwise dispose of or otherwise
encumber (i) any shares of capital stock of Citizens (unless any

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such shares of stock are sold or otherwise transferred to Southside) or
(ii) any Asset having a book value in excess of $25,000 other than in the
ordinary course of business of Citizens for reasonable and adequate
consideration; or

(f) acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, or
(ii) acquisitions of control by Citizens in its fiduciary capacity; or

(g) grant any increase in compensation or benefits to the employees
or officers of any Southside Company (including such discretionary
increases as may be contemplated by existing employment agreements), except
in accordance with past practice Previously Disclosed or as required by
Law; pay any bonus except in accordance with past practice Previously
Disclosed or the provisions of any applicable program or plan adopted by
its Board of Directors prior to the date of this Agreement as Previously
Disclosed; enter into or amend any severance agreements with officers of
any Southside Company; grant any increase in fees or other increases in
compensation or other benefits to directors of any Southside Company except
in accordance with past practice Previously Disclosed; or

(h) enter into or amend any employment Contract between any Southside
Company and any Person (unless such amendment is required by Law) that the
Southside Company does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered), at
any time on or after the Effective Time; or

(i) adopt any new employee benefit plan of any Southside Company or
make any material change in or to any existing employee benefit plans of
any Southside Company other than any such change that is required by Law or
that, in the opinion of counsel, is necessary or advisable to maintain the
tax qualified status of any such plan; or

(j) make any significant change in any accounting methods or systems
of internal accounting controls, except as may be appropriate to conform to
changes in regulatory accounting requirements or GAAP; or

(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Southside
Company for money damages in excess of $50,000 or material restrictions
upon the operations of any Southside Company; or

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(l) except in the ordinary course of the business of Citizens,
purchase, acquire, lease or agree to purchase, acquire or lease any Asset
having a value of more than $25,000 [except for the purchase of a future
branch site in Fayette Pavilion for approximately $325,000]; or

(m) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive, release, compromise or assign any
material rights or claims.

7.3 COVENANTS OF HOLDINGS AND NEWNAN. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
Holdings and Newnan covenant and agree that they shall continue to conduct their
business and the business of their Subsidiaries in a manner designed in its
reasonable judgment, to enhance the long-term value of the Holdings Common Stock
and the business prospects of the Holdings Companies and to the extent
consistent therewith use all reasonable efforts to preserve intact the Holdings
Companies' core businesses and goodwill with their respective employees and the
communities they serve.

7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (a) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (b) is reasonably likely to cause
or constitute a material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.

7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.

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ARTICLE 8
ADDITIONAL AGREEMENTS

8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL. As
soon as practicable after execution of this Agreement, Holdings shall file the
Registration Statement with the SEC, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the 1933 Act and take
any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of Holdings Common
Stock upon consummation of the Reorganization and Merger and upon consummation
of the Holdings Reorganization Agreement. Southside shall furnish all
information concerning it and the holders of its capital stock as Holdings may
reasonably request in connection with such action. Southside shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Shareholders' Meeting, (a) Holdings,
on behalf of Southside, shall prepare and file with the SEC a Proxy Statement
(which shall be included in the Registration Statement) and mail it to
Southside's shareholders, (b) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection with
such Proxy Statement, (c) the Board of Directors of Southside shall recommend
(subject to compliance with their fiduciary duties as advised in writing by
counsel) to their shareholders the approval of this Agreement, (d) the Board of
Directors and officers of Southside shall use their reasonable efforts to obtain
such shareholders' approval (subject to compliance with their fiduciary duties
as advised by counsel), and (e) the members of the Board of Directors of
Southside shall vote all of their shares of Southside Common Stock in favor of
approval of this Agreement.

8.2 APPLICATIONS. Holdings shall promptly prepare and file, and Southside
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement and the Holdings Reorganization
Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement.

8.3 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Holdings shall execute and file the Articles of
Merger with the Secretary of State of the State of Georgia in connection with
the Closing.

8.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws, as promptly as practicable so as to permit
consummation of the Merger and the Holdings Reorganization Agreement at the
earliest possible date and to otherwise enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other Party hereto to
that end (it being understood that any

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amendments to the Registration Statement filed by Holdings in connection with
the Holdings Common Stock to be issued in the Reorganization and Merger or a
resolicitation of proxies as a consequence of an acquisition agreement by
Holdings or any of its Subsidiaries shall not violate this covenant), including,
without limitation, using its reasonable efforts to lift or rescind any Order
adversely affecting its ability to consummate the transactions contemplated
herein and to cause to be satisfied the conditions referred to in Article 9 of
this Agreement. Each Party shall use, and shall cause each of its Subsidiaries
to use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.

8.5 INVESTIGATION AND CONFIDENTIALITY.

(a) Prior to the Effective Time, each Party will keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party. Each Party shall
promptly notify the others in writing of any matter which is or has the
reasonable potential to be material.

(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations, and
financial positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return all documents and copies thereof and all work papers containing
confidential information received from the other Party, except for one copy of
any materials prepared by that Party or any attorney for or other representative
of that Party based upon such confidential information.

(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Material Adverse Effect on
the other Party.

8.6 PRESS RELEASES. Prior to the Effective Time, the Parties shall
consult with each other and agree as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided,

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however, that nothing in this Section 8.6 shall be deemed to prohibit any Party
from making any disclosure which its counsel deems necessary or advisable in
order to satisfy such Party's disclosure obligations imposed by Law.

8.7 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Southside Company nor any Affiliate thereof
nor any investment banker, attorney, accountant or other representative
(collectively, "Representatives") retained by any Southside Company shall
directly or indirectly (including, without limitation, through its officers,
directors, employees or other representatives) solicit any Acquisition Proposal
by any Person. Except to the extent necessary to comply with the fiduciary
duties of Southside's Board of Directors as advised by counsel, no Southside
Company or any Affiliate or Representative thereof shall furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, or enter into any Contract with respect to, any Acquisition Proposal, but
Southside may communicate information about such an Acquisition Proposal to its
shareholders if and to the extent that it is required to do so in order to
comply with its legal obligations as advised by counsel. Southside shall
promptly notify Holdings orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction. Southside shall (a)
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (b) direct and use its reasonable efforts to cause
all of its Representatives not to engage in any of the foregoing.

8.8 ACCOUNTING AND TAX TREATMENT. The parties intend, and shall use their
reasonable best efforts to insure, that the exchanges of Southside Common Stock
for cash and Holdings Common Stock in connection with the merger of Interim
Citizens with and into Southside and of Newnan Common Stock for Holdings Common
Stock in connection with the merger of Interim Newnan with and into Newnan will
be simultaneous exchanges that together qualify for non-recognition treatment as
transfers to a controlled corporation within the meaning of Section 351 of the
Internal Revenue Code. To that end, the parties agree that neither one of the
mergers shall be consummated until such time as all approvals required to
consummate both mergers have been obtained. When such approvals have been
obtained, or when the plan of merger of Interim Citizens with and into Southside
has been abandoned, the certificates of merger and other documents required to
effectuate the merger of Interim Newnan with and into Newnan and Interim
Citizens with and into Southside (if such plan of merger has not been abandoned)
shall be filed on the same day, or as near in time so as to be considered
simultaneous, with the appropriate governmental and/or regulatory authorities.

8.9 CHARTER PROVISIONS. Each Southside Company shall take all necessary
action to ensure that the entering into of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby do not and will not
result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any Southside Company or
restrict or impair the ability of Holdings to vote, or otherwise to exercise

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the rights of a shareholder with respect to, shares of any Southside Company
that may be acquired or controlled by it. Each Holdings Company shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby do not
and will not result in the grant of any rights to any Person under the Articles
of Incorporation, Bylaws or other governing instruments of any Holdings Company
or restrict or impair the ability of any Southside shareholder to vote, or
otherwise exercise the rights of a shareholder with respect to, shares of
Holdings Common Stock that may be acquired or controlled by it.

8.10 AGREEMENT OF AFFILIATES. Southside has Previously Disclosed all
Persons whom it reasonably believes is an "affiliate" of Southside for purposes
of Rule 145 under the 1933 Act. Southside shall use its best efforts to cause
each such Person who will receive shares of Holdings Common Stock pursuant to
Section 3.1(c) hereof to deliver to Holdings not later than thirty (30) days
after the date of this Agreement, a written agreement, substantially in the form
of EXHIBIT 1, providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of Southside Common Stock held by such Person
except as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of Holdings Common Stock to
be received by such Person upon consummation of the Merger except in compliance
with applicable provisions of the 1933 Act and the rules and regulations
thereunder. Holdings shall be entitled to place restrictive legends upon
certificates for shares of Holdings Common Stock issued to affiliates of
Southside pursuant to this Agreement to enforce the provisions of this Section
8.10). Holdings shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of Holdings
Common Stock by such affiliates.

8.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
Holdings shall provide generally to officers and employees of the Southside
Companies who continue employment with the Southside Companies following the
Effective Time employee benefits under employee benefit plans, on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the Holdings Companies to their similarly situated
officers and employees. For purposes of participation and vesting under such
employee benefit plans, the service of the employees of the Southside Companies
prior to the Effective Time shall be treated as service with a Holdings Company
participating in such employee benefit plans, provided that, with respect to any
employee benefit plan where the benefits are funded through insurance, the
granting of such service shall be subject to the consent of the appropriate
insurer and may be conditioned upon an employee's participation in a Southside
Benefit Plan of the same type immediately prior to the Effective Time. Holdings
also shall honor in accordance with their terms all employment, severance,
consulting and other compensation Contracts Previously Disclosed to Holdings
between any Southside Company and any current or former director, officer, or
employee thereof and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Time under the Southside Benefit Plans.

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8.12 INDEMNIFICATION.

(a) Holdings shall use reasonable efforts to obtain a directors' and
officers' liability insurance policy covering persons who are Directors and
officers of Citizens at the date hereof currently covered for a period of three
years after the Effective Time on terms no less favorable than those in effect
on the date hereof, provided that Holdings shall not be obligated to make annual
premium payments in respect of such policy (or coverage replacing such policy)
which exceed, for the portion related to Southside's directors and officers,
150% of the annual premium payments on Southside's current policy in effect as
of the date of this Agreement.

(b) For a period of six years after the Effective Time, if Holdings
fails to maintain the coverage under paragraph (a) of this Section 8.12,
Holdings shall indemnify, defend and hold harmless the present and former
directors, officers, employees and agents of the Southside Companies (each, an
"Indemnified Party") against all Liabilities arising out of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the full extent permitted under
Georgia Law and by Southside's Articles of Incorporation and Bylaws as in effect
on the date hereof including provisions relating to advances of expenses
incurred in the defense of any Litigation. Without limiting the foregoing, in
any case in which approval by Holdings is required to effectuate any
indemnification, Holdings shall direct, at the election of the Indemnified
Party, that the determination of any such approval shall be made by independent
counsel mutually agreed upon between Holdings and the Indemnified Party.

(c) Any Indemnified Party wishing to claim indemnification under
paragraph (b), upon learning of any such Liability or Litigation, shall promptly
notify Holdings thereof. In the event of any such Litigation (whether arising
before or after the Effective Time), (i) Holdings shall have the right to assume
the defense thereof and Holdings shall not be liable to such Indemnified Parties
for any legal expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Parties in connection with the defense thereof,
except that if Holdings elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between Holdings and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Holdings shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that Holdings
shall be obligated pursuant to this paragraph (c) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction, (ii) the Indemnified
Parties will cooperate in the defense of any such Litigation, and (iii) Holdings
shall not be liable for any settlement effected without its prior written
consent; and provided further that Holdings shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law.

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(d) If Holdings or any of its successors or assigns shall consolidate
with or merge into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger or shall transfer all or substantially
all of its assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of Holdings shall assume the
obligations set forth in this Section 8.12.

8.13 CERTAIN MODIFICATIONS. Holdings, Southside and Citizens shall consult
with respect to their loan, litigation, and real estate valuation policies and
practices (including loan classifications and levels of reserves) and Citizens
shall make such modifications or changes to its policies and practices, if any,
prior to the Effective Time, as may be mutually agreed upon. Holdings,
Southside and Citizens also shall consult with respect to the character, amount
and timing of restructuring and Merger-related expense charges to be taken by
each of the Parties in connection with the transactions contemplated by this
Agreement and the Plan of Merger, and shall take such charges in accordance with
GAAP, prior to the Effective Time, as may be mutually agreed upon by the
Parties. Neither Parties' representations, warranties and covenants contained
in this Agreement shall be deemed to be inaccurate or breached in any respect as
a consequence of any modifications or charges undertaken solely on account of
this Section 8.13.

ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE

9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:

(a) SHAREHOLDER APPROVAL. The shareholders of Southside and Newnan
shall have approved this Agreement, and the consummation of the
transactions contemplated hereby, including the Merger, as and to the
extent required by Law, or by the provisions of any governing instruments.

(b) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including, without limitation,
requirements relating to the raising of additional capital or the
disposition of Assets) which in the reasonable judgment of the Board of
Directors of either Party would so materially adversely impact the economic
or business benefits of the transactions contemplated by this Agreement so
as to render inadvisable the consummation of the Merger.

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(c) CONSENTS AND APPROVALS. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.

(d) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated by
this Agreement.

(e) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the
issuance or trading of the shares of Holdings Common Stock issuable
pursuant to the Merger shall have been received.

(f) REGISTRATION. The shares of Holdings Common Stock issuable
pursuant to Section 3.1(c) of this Agreement shall have been approved for
listing on the Nasdaq NMS.

9.2 CONDITIONS TO OBLIGATIONS OF HOLDINGS AND NEWNAN. The obligations of
Holdings and Newnan to perform this Agreement and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Holdings and Newnan pursuant to
Section 11.6(a) of this Agreement:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Southside set forth or referred to in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date), except (i) as expressly
contemplated by this Agreement, or (ii) for representations and warranties
(other than the representations and warranties set forth in Section 5.3 of
this Agreement, which shall be true in all material respects) the
inaccuracies of which relate to matters that are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
Southside.

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(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Southside to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.

(c) CERTIFICATES. Southside shall have delivered to Holdings (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer, to the effect that the conditions of its
obligations set forth in Section 9.2(a) and 9.2(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
Southside's Board of Directors and shareholders evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Holdings and its
counsel shall request.

(d) OPINION OF COUNSEL. Southside shall have delivered to Holdings
an opinion of Murphy & Sams, counsel to Southside, dated as of the Closing
Date, in substantially the form of EXHIBIT 3 hereto.

(e) AFFILIATES AGREEMENTS. Holdings shall have received from each
affiliate of Southside the affiliates letter referred to in Section 8.10
hereof.

(f) DISSENTING SHARES. The aggregate number of shares of Southside
Common Stock dissenting to the Merger shall not exceed ten (10%) percent of
the outstanding shares of Southside Common Stock unless Holdings, in its
sole discretion, shall agree to a larger number.

(g) COVENANTS NOT TO COMPETE. The members of the Board of Directors
of Southside and Gary P. McGaha shall have executed and delivered covenants
not to compete in the form attached as Exhibit 2.

(h) TERMINATION OF OPTIONS. The holders of the Southside Stock
Options shall have exercised or terminated such options.

9.3 CONDITIONS TO OBLIGATIONS OF SOUTHSIDE. The obligations of Southside
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Southside pursuant to Section 11.6(b) of this Agreement:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Holdings and Newnan set forth or referred to in this
Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and

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as of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such date),
except (i) as expressly contemplated by this Agreement, or (ii) for
representations and warranties (other than the representations and
warranties set forth in Section 6.3 of this Agreement, which shall be true
in all material respects) the inaccuracies of which relate to matters that
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Holdings or Newnan.

(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Holdings or Newnan to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.

(c) CERTIFICATES. Holdings and Newnan shall have delivered to
Southside (i) a certificate, dated as of the Effective Time and signed on
their behalf by its chief executive officer, to the effect that the
conditions of its obligations set forth in Section 9.3(a) and 9.3(b) of
this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Holdings's and Newnan's Boards of Directors
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, all in such reasonable detail as
Southside and its counsel shall request.

(d) OPINION OF COUNSEL. Holdings and Newnan shall have delivered to
Southside an opinion of Glover & Davis, counsel to Holdings and Newnan,
dated as of the Closing Date, in substantially the form of EXHIBIT 3
hereto.

9.4 HOLDINGS REORGANIZATION AGREEMENT. Contemporaneously with the
execution of this Agreement, Holdings, Newnan, and Interim Newnan Corporation
will enter into the Holdings Reorganization Agreement pursuant to which Newnan
shall become a wholly owned subsidiary of Holdings by virtue of merging Newnan
and Interim Newnan.

(a) OBLIGATION OF NEWNAN. Newnan and the undersigned individual
members of the Board of Directors of Newnan hereby agree to use their best
efforts to cause the Holdings Reorganization Agreement to be duly approved
by the shareholders of Newnan and by all applicable regulatory authorities,
and to cause consummation of the transactions contemplated by the Holdings
Reorganization Agreement. Upon consummation thereof, contemporaneously
with consummation of this Agreement, each outstanding share of Newnan
Common Stock shall be converted into one share of Holdings Common Stock.

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(b) ALTERNATE TRANSACTION. Newnan may at any time change the method
of effecting the acquisition of Southside if and to the extent it deems
such change to be desirable; provided, however, that no such change shall
(i) alter or change the amount or kind of consideration to be issued to the
holders of Southside Common Stock as provided in this Agreement or
(ii) materially impede or delay receipt of any regulatory approval or the
consummation of the transactions contemplated by the Agreement.
Specifically, and not in limitation of the foregoing, to the extent that
the Board of Directors of Southside or Newnan, acting in reasonable good
faith, determines that the formation of Holdings pursuant to the Holdings
Reorganization Agreement and the acquisition by Holdings of Southside
pursuant hereto cannot be reasonably accomplished on or before June 30,
1996, this transaction shall be restructured so that Newnan shall be merged
into and with an Interim Subsidiary of Southside pursuant to a transaction
qualifying as a merger within the meaning of Section 368 of the Code in
which each outstanding share of Newnan shall be converted into one new
share of Southside and each outstanding share of Southside shall be
converted into either $41 or, under conditions comparable to those provided
in Section 3.1(c), number of shares of Southside stock calculated as
provided in Section 3.1(c). Such alternate transaction shall contain
representations and warranties, covenants, conditions and other provisions
comparable to those contained in this Agreement, to the end that, INTER
ALIA, the resulting holding company has as its officers and Board of
Directors the officers and members of the Newnan Board of Directors.

ARTICLE 10
TERMINATION

10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of
Southside and Newnan, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:

(a) By mutual consent of the Boards of Directors of Holdings, Newnan
and Southside; or

(b) By the Board of Directors of any Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching Party
of such breach and which breach would provide the non-breaching party the
ability to refuse to consummate the Merger under the standard set forth in
Section 9.2(a) of this

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Agreement in the case of Holdings or Newnan and Section 9.3(a) of this
Agreement in the case of Southside; or

(c) By the Board of Directors of any Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event (i) any Consent of any Regulatory Authority required for consummation
of the Merger and the other transactions contemplated hereby shall have
been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for
appeal, or (ii) if the shareholders of Southside or Newnan fail to vote
their approval of this Agreement and the transactions contemplated hereby
as required by the GBCC and the Rules and Regulations of the OTS at the
Shareholders' Meeting where the transactions were presented to such
shareholders for approval and voted upon; or

(d) By the Board of Directors of any Party in the event that the
Merger shall not have been consummated on or before September 30, 1996, but
only if the failure to consummate the transactions contemplated hereby on
or before such date is not caused by any breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(d); or

(e) By the Board of Directors of any Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event that any of the conditions precedent to the obligations of such Party
to consummate the Merger cannot be satisfied or fulfilled by the date
specified in Section 10.1(d) of this Agreement.

(f) By the Board of Directors of Newnan, at any time prior to 5:00
p.m. on Tuesday, November 14, 1995, without any Liability if, as a result
of its due diligence review of the Southside Companies, it determines that
the condition of the Southside Companies is materially less favorable to
Newnan and Holdings than as disclosed in the financial statements and other
written material furnished to Newnan by Citizens.

10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (a) the provisions
of this Section 10.2 and Article 11 and Section 8.5(b) of this Agreement shall
survive any such termination and abandonment, and (b) a termination pursuant to
Sections 10.1(b) or 10.1(f) of this Agreement shall not relieve the breaching
Party from Liability for an uncured willful breach of a representation,
warranty, covenant, or agreement giving rise to such termination.

10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not

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survive the Effective Time except for this Section 10.3 and Articles 2, 3, 4 and
11 and Sections 8.10 and 8.12 of this Agreement.

ARTICLE 11
MISCELLANEOUS

11.1 DEFINITIONS. Except as otherwise provided herein, the capitalized
terms set forth below (in their singular and plural forms as applicable) shall
have the following meanings:

"ACQUISITION PROPOSAL" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or Assets of, or other business combination involving such Party
or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the Assets of such Party or any of
its Subsidiaries.

"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by
or under common control with such Person or (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person.

"AGREEMENT" shall mean this Agreement and Plan of Merger, including
the Exhibits delivered pursuant hereto and incorporated herein by
reference.

"ALLOWANCE" shall have the meaning provided in Section 5.9 of this
Agreement.

"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.

"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.

"BOOK VALUE" shall mean common stock, surplus, undivided profits,
current year profits, reserves for organizational expenses and reserves for
possible loan losses. Book Value shall not include unrealized gains or
losses from securities portfolios or treasury stock.

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"CITIZENS" shall mean Citizens Bank and Trust of Fayette County, a
Georgia state chartered bank and the sole subsidiary of Southside.

"CLOSING" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.

"CLOSING DATE" shall mean the date on which the Effective Time occurs.

"CONFIDENTIALITY AGREEMENTS" shall mean those certain Confidentiality
Agreements dated October 27, 1995, between Holdings, Newnan, Southside, and
Citizens.

"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.

"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of
any kind or character, or other document to which any Person is a party or
that is binding on any Person or its capital stock, Assets or business.

"DEFAULT" shall mean (a) any breach or violation of or default under
any Contract, Order or Permit, (b) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order or Permit, or
(c) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order or Permit.

"EFFECTIVE TIME" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.

"ENVIRONMENTAL LAWS" shall mean all Laws which are administered,
interpreted or enforced by the United States Environmental Protection
Agency and state and local agencies with primary jurisdiction over
pollution or protection of the environment.

"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

"ERISA AFFILIATE" shall have the meaning provided in Section 5.14 of
this Agreement.

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"ERISA PLAN" shall have the meaning provided in Section 5.14 of this
Agreement.

"EXCHANGE AGENT" shall have the meaning provided in Section 4.1 of
this Agreement.

"EXHIBITS" 1 through 4, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof and may be referred
to in this Agreement and any other related instrument or document without
being attached hereto.

"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.

"GEORGIA ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by Holdings and filed with the Secretary of State of the State of
Georgia relating to the Merger as contemplated by Section 1.1 of this
Agreement.

"GBCC" shall mean the Georgia Business Corporation Code.

"HOLDINGS BENEFIT PLANS" shall have the meaning set forth in Section
6.14 of this Agreement.

"HOLDINGS CAPITAL STOCK" shall mean, collectively, the Holdings Common
Stock and any other class or series of capital stock of Holdings.

"HOLDINGS COMMON STOCK" shall mean the $1.00 par value common stock of
Holdings.

"HOLDINGS COMPANIES" shall mean, collectively, Holdings, all Holdings
Subsidiaries, Newnan and all Newnan Subsidiaries.

"HOLDINGS STOCK PLANS" shall mean the existing stock option and other
stock-based compensation plans of Holdings and Newnan.

"HOLDINGS SUBSIDIARIES" shall mean the Subsidiaries of Holdings.

"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive Environment
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.,
or any similar federal, state or local Law.

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"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.

"KNOWLEDGE" as used with respect to a Person shall mean the knowledge
after due inquiry of the Chairman, President, Chief Financial Officer,
Chief Accounting Officer, Chief Credit Officer, or any Senior or Executive
Vice President of such Person.

"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities or business, including, without limitation, those
promulgated, interpreted or enforced by any of the Regulatory Authorities.

"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection
or deposit in the ordinary course of business) of any type, whether
accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.

"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable. (ii) for depository institution Subsidiaries
of a Party, pledges to secure deposits and other Liens incurred in the
ordinary course of the banking business, and (iii) Liens which are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on a Party.

"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including, without limitation, Contracts
related to it), or the transactions contemplated by this Agreement, but
shall not include regular, periodic examinations of depository institutions
and their Affiliates by Regulatory Authorities.

"LOAN PROPERTY" shall mean any property owned by the Party in question
or by any of its Subsidiaries or in which such Party or Subsidiary holds a
security interest, and, where required by the context, includes the owner
or operator of such property, but only with respect to such property.

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"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.

"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change or
occurrence which has a material adverse impact on (a) as to any Southside
Company, the financial position, business, or results of operations of such
Party and its Subsidiaries, taken as a whole, including but not limited to
a decrease in the Party's Book Value, or (b) as to any Southside Company or
any Holdings Company, the ability of such Party to perform its obligations
under this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "material adverse impact"
shall not be deemed to include the impact of (x) changes in banking and
similar Laws of general applicability or interpretations thereof by courts
or governmental authorities, (y) changes in generally accepted accounting
principles or regulatory accounting principles generally applicable to
banks and their holding companies, and (z) the Merger and compliance with
the provisions of this Agreement on the operating performance of the
Parties.

"MERGER" shall mean the merger of Southside with and into Holdings
referred to in Section 1.1 of this Agreement.

"NASD" shall mean the National Association of Securities Dealers, Inc.

"NASDAQ" shall mean the National Market System or the SmallCap System
of the National Association of Securities Dealers Automated Quotations
System.

"NEWNAN COMMON STOCK" shall mean the $1.00 par value common stock of
Newnan.

"NEWNAN FINANCIAL STATEMENTS" shall mean (a) the consolidated
statements of condition (including related notes and schedules, if any) of
Newnan as of September 30, 1995, and as of March 31, 1995 and 1994, and the
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) for the nine months
ended September 30, 1995, and for each of the three years ended March 31,
1995, 1994 and 1993, as filed by Newnan in SEC Documents and (b) the
consolidated statements of condition of Newnan (including related notes and
schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to September 30, 1995.

"NEWNAN SUBSIDIARIES" shall mean all Subsidiaries of Newnan.

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"1933 ACT" shall mean the Securities Act of 1933, as amended.

"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.

"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or Regulatory Authority.

"OWNS OR CONTROLS" shall refer to all shares of a holder of Southside
Common Stock which are owned of record on the date of this Agreement by
such Holder, by members of such Holder's family or by any entity controlled
by such holders or family members as for their immediate benefit. All
matters pertaining to shares which a holder "owns or controls" shall be
determined by the Board of Directors of Southside, whose decision absent
fraud or malfeasance, shall be final and binding.

"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management (including any property or facility held in a joint venture)
and, where required by the context, said term means the owner or operator
of such facility or property, but only with respect to such facility or
property.

"PARTY" shall mean either Southside, Holdings, Newnan or Interim
Citizens, and "Parties" shall mean all said entities.

"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its capital stock, Assets, Liabilities, or business.

"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.

"PREVIOUSLY DISCLOSED" shall mean information (a) delivered in writing
prior to the date of this Agreement in the manner and to the Party and
counsel described in Section 11.8 of this Agreement and describing in
reasonable detail the matters contained therein, provided that in the case
of Subsidiaries acquired after the date of this Agreement, such information
may be so delivered by the acquiring Party to the other Party prior to the
date of such acquisition, or (b) disclosed prior to the date of this

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Agreement by one Party to the other in an SEC Document delivered to such
other Party in which the specific information has been identified by the
Party making the disclosure.

"PROXY STATEMENT" shall mean the proxy statement used by Newnan and
Southside to solicit the approval of their shareholders of the transactions
contemplated by this Agreement and shall include the prospectus of Holdings
relating to shares of Holdings Common Stock to be issued to the
shareholders of Newnan and Southside.

"REGISTRATION STATEMENT" shall mean the Registration Statement on
Form S-4, or other appropriate form, filed with the SEC by Holdings under
the 1933 Act in connection with the transactions contemplated by this
Agreement.

"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of Thrift Supervision,
the Federal Deposit Insurance Corporation, all state regulatory agencies
having jurisdiction over the Parties and their respective Subsidiaries, the
NASD, and the SEC.

"SEC DOCUMENTS" shall mean all reports and registration statements
filed, or required to be filed, by a Party or any of its Subsidiaries with
any Regulatory Authority pursuant to the Securities Laws.

"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.

"SOUTHSIDE BENEFIT PLANS" shall have the meaning set forth in Section
5.14 of this Agreement.

"SOUTHSIDE COMMON STOCK" shall mean the $10.00 par value common stock
of Southside.

"SOUTHSIDE COMPANIES" shall mean, collectively, Southside and
Citizens.

"SOUTHSIDE FINANCIAL STATEMENTS" shall mean (a) the consolidated
balance sheets (including related notes and schedules, if any) of Southside
as of September 30, 1995, and as of December 31, 1994 and 1993, and the
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) for the nine months
ended September 30, 1995, and for each of the three fiscal years ended
December 31, 1994, 1993 and 1992, and (b) the consolidated balance sheets
of Southside (including related notes and schedules, if any) and related
statements of income, changes

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in shareholders' equity, and cash flows (including related notes and
schedules, if any) with respect to periods ended subsequent to
September 30, 1994. For purposes of this definition, Southside shall refer
to Citizens as to periods ended before September 1, 1994.

"SOUTHSIDE STOCK PLANS" shall mean the existing stock option and other
stock-based compensation plans of Southside.

"SOUTHSIDE STOCK OPTIONS" shall mean the options to purchase an
aggregate of 31,775 shares of Southside Common Stock.

"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of
Southside or Newnan to be held pursuant to Section 8.1 of this Agreement,
including any adjournment or adjournments thereof.

"SUBSIDIARIES" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 5% or
more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 5% or more of the
outstanding equity securities is owned directly or indirectly by its
parent; provided, however, there shall not be included any such entity
acquired through foreclosure or any such entity the equity securities of
which are owned or controlled in a fiduciary capacity.

"SURVIVING CORPORATION" shall mean Holdings as the surviving
corporation resulting from the Merger.

"TAXES" shall mean any federal, state, county, local, foreign and
other taxes, assessments, charges, fares, and impositions, including
interest and penalties thereon or with respect thereto.

11.2 EXPENSES. Except as otherwise provided in this Section 11.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay
one-half of the fees and expenses payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection with
the printing of the Registration Statement and the Proxy Statement.

11.3 BROKERS AND FINDERS. Each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage

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fees, commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by Southside, Holdings or Newnan, each of
Southside and Holdings, as the case may be, agrees to indemnify and hold the
other Party harmless of and from any Liability in respect of any such claim.

11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Section 8.12 of this Agreement.

11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; provided, however, that after
any such approval by the holders of Southside Common Stock, there shall be made
no amendment decreasing the consideration to be received by Southside
shareholders without the further approval of such shareholders.

11.6 WAIVERS.

(a) Prior to or at the Effective Time, Holdings and Newnan, acting
through their Boards of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Southside, to waive or extend the time for the
compliance or fulfillment by Southside of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Holdings or Newnan under this Agreement, except any condition
which, if not satisfied, would result in the violation of any Law. No such
waiver shall be effective unless in writing signed by a duly authorized officer
of Holdings or Newnan.

(b) Prior to or at the Effective Time, Southside, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by Holdings or Newnan, to waive or extend the time for the compliance
or fulfillment by Holdings or Newnan of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Southside under this Agreement, except any condition which, if
not satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by a duly authorized officer of Southside.

(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce

-51-

<PAGE>

the same or any other provision of this Agreement. No waiver of any condition
or of the breach of any term contained in this Agreement in one or more
instances shall be deemed to be or construed as a further or continuing waiver
of such condition or breach or a waiver of any other condition or of the breach
of any other term of this Agreement.

11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.

11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:

Holdings: Newnan Holdings, Inc.
c/o Newnan Savings Bank FSB
19 Jefferson Street
Newnan, Georgia 30263
Attention: Tom Moat

Newnan: Newnan Savings Bank FSB
19 Jefferson Street
Newnan, Georgia 30263
Attention: Tom Moat

Copy to Counsel: Glover & Davis
P.O. Box 1038
Newnan, Georgia 30264
Attention: J. L. Glover, Jr.

Southside and Citizens: Southside Financial Group, Inc.
675 N. Jeff Davis Drive
Fayetteville, Georgia 30214
Attention: ___________________

-52-

<PAGE>

Copy to Counsel: Murphy & Sams
370 West Stonewall Avenue
P.O. Box 26
Fayetteville, Georgia 30214
Attention: B.D. Murphy, III

Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy Number: (404) 572-6999
Attention: Walter G. Moeling, IV

11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws, except to the extent that the federal laws of the
United States may apply to the Merger.

11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.

11.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.

11.13 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.

11.14 PREVIOUSLY DISCLOSED. Notwithstanding the definition of
"Previously Disclosed" contained in Section 11.1 hereof or the other terms and
conditions of this Agreement, the Parties

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<PAGE>

hereto agree that materials reflected as having been Previously Disclosed in
this Agreement have not yet been distributed by each Party to the other. Each
Party shall deliver the appropriate schedule of materials Previously Disclosed
not later than 5:00 p.m. on Friday, November 10, 1995. If the materials
disclosed by either the Southside Companies or the Holding Companies reveals
previously undisclosed matters which, either individually or in the aggregate,
would have a Material Adverse Effect, the recipient of such Previously Disclosed
materials shall have the right to terminate its obligations under this Agreement
on or before 5:00 p.m. on Tuesday, November 14, 1995.

[SIGNATURES ON NEXT PAGE]

-54-

<PAGE>

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.

ATTEST: NEWNAN SAVINGS BANK, FSB

/s/ By: /s/
- ----------------------------------- -----------------------------------
Secretary President

[CORPORATE SEAL]

ATTEST: NEWNAN HOLDINGS, INC.

/s/ By: /s/
- ----------------------------------- -----------------------------------
Secretary President

[CORPORATE SEAL]

ATTEST: SOUTHSIDE FINANCIAL GROUP, INC.

/s/ By: /s/
- ----------------------------------- -----------------------------------
Secretary President

[CORPORATE SEAL]

ATTEST: INTERIM CITIZENS CORPORATION

/s/ By: /s/
- ----------------------------------- -----------------------------------
Secretary President

[CORPORATE SEAL]

[SIGNATURES CONTINUED ON NEXT PAGE]

-55-

<PAGE>

ATTEST: CITIZENS BANK AND TRUST OF FAYETTE
COUNTY

/s/ By: /s/
- ----------------------------------- -----------------------------------
Secretary President

[CORPORATE SEAL]

-56-

<PAGE>

The undersigned individual directors of Newnan Savings Bank have hereunto
set their hand and seal as to their obligations under Sections 8.4, 8.5 and
9.4(a) hereof:

/s/ J. Littleton Glover (SEAL)
-----------------------------
J. Littleton Glover, Jr.

/s/ Tom Moat (SEAL)
-----------------------------
Tom Moat

/s/ Thomas W. Barron (SEAL)
-----------------------------
Thomas W. Barron

/s/ LouAnne A. Connell (SEAL)
-----------------------------
LouAnne A. Connell

/s/ Clifford Cranford, M.D. (SEAL)
-----------------------------
Clifford Cranford, M.D.

/s/ Ellis A. Mansour (SEAL)
-----------------------------
Ellis A. Mansour

/s/ H. Pickens Parks, Jr. (SEAL)
-----------------------------
H. Pickens Parks, Jr.

/s/ Jack M. Reeves, D.D.S. (SEAL)
-----------------------------
Jack M. Reeves, D.D.S.

/s/ Holland M. Ware (SEAL)
-----------------------------
Holland M. Ware

-57-

<PAGE>

The undersigned individual directors of Southside have hereunto set their
hand and seal as to their obligations under Sections 8.4, 8.5, 8.7, 8.10, 9.2(g)
and 9.4 hereof:

/s/ Jack C. Bowdoin (SEAL
-----------------------------
Jack C. Bowdoin

/s/ Huie L. Bray (SEAL
-----------------------------
Huie L. Bray

/s/ Thomas B. Chandler (SEAL
-----------------------------
Thomas B. Chandler

/s/ R. B. Dixon, Jr. (SEAL
-----------------------------
R. B. Dixon, Jr.

/s/ Sam Jones (SEAL
-----------------------------
Sam Jones

/s/ Jackie L. Mask (SEAL
-----------------------------
Jackie L. Mask

/s/ B. D. Murphy, III (SEAL
-----------------------------
B. D. Murphy, III

/s/ H. Wade Pearce (SEAL
-----------------------------
H. Wade Pearce

/s/ Tom Reese (SEAL
-----------------------------
Tom Reese

-58-

<PAGE>

/s/ D. Michael Reid (SEAL
-----------------------------
D. Michael Reid

/s/ James C. Sams, M.D. (SEAL
-----------------------------
James C. Sams, M.D.

/s/ J. M. Snowden (SEAL
-----------------------------
J. M. Snowden

/s/ M. D. Waldrop, Sr. (SEAL
-----------------------------
M. D. Waldrop, Sr.

/s/ Barnard W. Walker (SEAL
-----------------------------
Barnard W. Walker

-59-

<PAGE>

AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NEWNAN SAVINGS BANK, FSB,
NEWNAN HOLDINGS, INC.,
SOUTHSIDE FINANCIAL GROUP, INC.,
CITIZENS BANK AND TRUST OF FAYETTE COUNTY,
AND
INTERIM CITIZENS CORPORATION

THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (this "Amendment") is
made and entered into as of this ________ day of February, 1996, by and among
NEWNAN SAVINGS BANK, FSB ("Newnan"), NEWNAN HOLDINGS, INC. ("Holdings"),
SOUTHSIDE FINANCIAL GROUP, INC. ("Southside"), CITIZENS BANK AND TRUST OF
FAYETTE COUNTY ("Citizens"), and INTERIM CITIZENS CORPORATION ("Interim
Citizens").

WHEREAS, the parties hereto have entered into an Agreement and Plan of
Merger dated November 2, 1995 (the "Merger Agreement") pursuant to which
Holdings will acquire Southside and its subsidiary, Citizens; and

WHEREAS, the parties now desire to amend the Merger Agreement;

NOW, THEREFORE, in consideration of the premises and agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by each party hereto, it is agreed by and among the
parties that the Merger Agreement shall be modified as follows:

1. The second sentence of the Preamble is hereby deleted in its entirety
and the following sentence is inserted in its place:

This Agreement provides for the combination of Southside with
Holdings pursuant to the merger of Interim Citizens with and into
Southside.

2. Section 1.1 of Article 1 shall be deleted in its entirety and the
following Section 1.1 of Article 1 is hereby inserted in its place:

1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, Interim Citizens shall be
merged with and into Southside in accordance with Section 14-2-
1101 of the GBCC and with the effect provided in Section 14-2-
1106 of the GBCC (the "Merger"). Southside shall be the
surviving corporation resulting

<PAGE>

from the Merger. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the
respective Boards of Directors of Newnan, Southside, Citizens, Interim
Citizens and Holdings.

3. Section 3.1 of Article 3 is amended by inserting the following
paragraphs (e) through (h):

(e) In the course of conducting its due diligence with
respect to the loan portfolio of Citizens, Newnan has questioned
the adequacy of the reserves established with respect to the
"Ventura" and "Evans Steel" loans (the "Special Loans") described
on Exhibit 5 to this Agreement. While Citizens and Southside
believe that the existing reserves are adequate, in order to
resolve the concerns of Newnan the parties hereto have decided
that, at the Closing Date, a portion of the cash purchase price
payable to the Southside shareholders (the "Special Reserve")
shall be determined and set aside in a Special Reserve as
follows:

(i) The Special Reserve shall be an amount equal to
$558,000, less (x) the amount of any specific
reserves with respect to the Special Loans, and
(y) the amount by which the general loan loss
reserve at Citizens exceeds the amount which
would be deemed "adequate" pursuant to Citizens'
existing valuation methodology for determination
of the adequacy of the loan loss reserve at the
Closing Date (the "Excess Loan Loss Reserve").

The parties acknowledge that as of December 31,
1995, the loan loss reserve at Citizens contains
a specific reserve for the Evans Steel Special
Loan in the amount of $130,000, and that the
Excess Loan Loss Reserve amount is $111,000.

The formula for the determination of the
adequacy of the loan loss reserve is attached
hereto as part of Exhibit 5.

(ii) From the date hereof until the Closing, Citizens
shall be authorized to contribute any "Excess
Earnings" on a monthly basis to the Citizens
loan loss reserve in addition to its normal
budgeted

-2-

<PAGE>

loan loss provision accruals. For these purposes,
Excess Earnings shall refer to monthly earnings of
Citizens in excess of the projected earnings shown on
the budget for Citizens mutually agreed to by
management of Citizens and Newnan.

(iii) At the Closing Date, the parties shall, based
upon their assessment of the likelihood of loss
in each Special Loan at such date, allocate the
Excess Loan Loss Reserve and the Special Reserve
between the Ventura and Evans Steel Special
Loans.

(f) Any payments received with respect to either Special
Loan following the Closing Date shall be applied first to
repayment of all direct, out-of-pocket collection costs and
expenses payable to third parties with respect to such Special
Loan.

The balance of any such payments, regardless of the
source of such payments, shall be applied to repay the "Net Book
Amount" of each Special Loan in full, and thereafter shall be
payable to the Southside shareholders. The Net Book Amount of
each Loan shall be the face amount of such Loan at the Closing
Date, plus interest thereafter at the non-default rate stated in
the respective Special Loan documents (the "Loan Rate"), less (i)
the amount of any specific reserves allocated to such Special
Loan pursuant to (e)(i)(x) above, (ii) the amount of the Excess
Loan Loss Reserve allocated to each Special Loan pursuant to
(e)(iii) above, and (iii) the amount of the Special Reserve
allocated to each Loan pursuant to (e)(iii) above.
Notwithstanding the foregoing, the payments to the Southside
shareholders with respect to the Special Reserve shall not
exceed, in the aggregate, the net amount of the Special Reserve
set aside at the Closing Date as provided in paragraph (e) above
with respect to such Special Loan, plus interest on such amount
at a rate equal to the average rate paid by Citizens on two year
certificates of deposit on the last 20 business days prior to the
Closing Date. The maximum amount payable to the Southside
shareholders pursuant to this Section 3.1 shall not exceed $41.00
plus any interest as described in the preceding sentence.

(g) During each June and December, management of Newnan
shall meet with B. D. Murphy, Buford Chandler and Gary McGaha (or
their successors appointed by the Citizens Board of

-3-

<PAGE>

Directors) to review the status of the Special Loans and the status of
the Special Reserve, and to calculate and authorize payments, if any,
to the Southside shareholders; provided that no such calculations or
payments shall be finalized or made without the approval of the Newnan
Board or its designee. In addition to the foregoing, if, as a result
of such review, the Citizens Board, with the approval of Newnan
management, determines that the need for maintenance of the Special
Reserve has been abated or eliminated with respect to either Special
Loan, any amount of the Special Reserve with respect to either Special
Loan determined in good faith to be excessive shall be paid to the
Southside shareholders. The parties shall make a final settlement as
of June 30, 1998, based on the amount and condition of the Special
Loans and the Special Reserve at that time.

(h) Notwithstanding Section 10.3, the provisions of
paragraphs 3.1(e)-(g) shall survive the Effective Time.

4. Section 11.14 of Article 11 is hereby deleted in its entirety and the
following Section 11.14 of Article 11 is hereby inserted in its place:

11.14 PREVIOUSLY DISCLOSED. Notwithstanding the definition
of "Previously Disclosed" contained in Section 11.1 hereof or the
other terms and conditions of this Agreement, the Parties hereto
agree that materials reflected as having been Previously
Disclosed in this Agreement have been distributed by each Party
to the other. Each Party has determined that no materials
disclosed by the other Party revealed previously undisclosed
matters which, either individually or in the aggregate, have a
Material Adverse Effect.

-4-

<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
executed this as a document under seal by their duly authorized officers as of
the day and year first above written.

ATTEST: NEWNAN SAVINGS BANK, FSB

/s/ By: /s/
- ----------------------------------- ------------------------------------
Secretary President

[CORPORATE SEAL]

ATTEST: NEWNAN HOLDINGS, INC.

/s/ By: /s/
- ----------------------------------- ------------------------------------
Secretary President

[CORPORATE SEAL]

ATTEST: SOUTHSIDE FINANCIAL GROUP, INC.

/s/ By: /s/
- ----------------------------------- ------------------------------------
Secretary President

[CORPORATE SEAL]

ATTEST: INTERIM CITIZENS CORPORATION

/s/ By: /s/
- ----------------------------------- ------------------------------------
Secretary President

[CORPORATE SEAL]

[SIGNATURES CONTINUED ON NEXT PAGE]

-5-

<PAGE>

ATTEST: CITIZENS BANK AND TRUST OF FAYETTE
COUNTY

/s/ By: /s/
- ----------------------------------- ------------------------------------
Secretary President

[CORPORATE SEAL]

-6-
<PAGE>

APPENDIX C

DISSENTERS' PROVISIONS PURSUANT TO
RULES AND REGULATIONS OF THE
OFFICE OF THRIFT SUPERVISION

<PAGE>

OTS REGULATIONS
DISSENTERS' RIGHTS

Section 552.14 DISSENTER AND APPRAISAL RIGHTS.

(a) RIGHT TO DEMAND PAYMENT OF FAIR OR APPRAISED VALUE. Except as
provided in paragraph (b) of this section, any stockholder of a Federal stock
association combining in accordance with Section 552.13 of this part shall have
the right to demand payment of the fair or appraised value of his stock:
PROVIDED, That such stockholder has not voted in favor of the combination and
complies with the provisions of paragraph (c) of this section.

(b) EXCEPTIONS. No stockholder required to accept only qualified
consideration for his or her stock shall have the right under this section to
demand payment of the stock's fair or appraised value, if such stock was listed
on a national securities exchange or quoted on the National Association of
Securities Dealers' Automated Quotation System ("NASDAQ") on the date of the
meeting at which the combination was acted upon or stockholder action is not
required for a combination made pursuant to Section 552.13(h)(2) of this part.
"Qualified consideration" means cash, shares of stock of any association or
corporation which at the effective date of the combination will be listed on a
national securities exchange or quoted on NASDAQ or any combination of such
shares of stock and cash.

(1) NOTICE. Each constituent Federal stock association shall
notify all stockholders entitled to rights under this section, not less than
twenty days prior to the meeting at which the combination agreement is to be
submitted for stockholder approval, of the right to demand payment of appraised
value of shares, and shall include in such notice a copy of this section. Such
written notice shall be mailed to stockholders of record and may be part of the
management's proxy solicitation for such meeting.

(2) DEMAND FOR APPRAISAL AND PAYMENT. Each stockholder electing to
make a demand under this section shall deliver to the Federal stock association,
before voting on the combination, a writing identifying himself or herself and
stating his or her intention thereby to demand appraisal of and payment for his
or her shares. Such demand must be in addition to and separate from any proxy
or vote against the combination by the stockholder.

(3) NOTIFICATION OF EFFECTIVE DATE AND WRITTEN OFFER. Within ten
days after the effective date of the combination, the resulting association
shall;

(i) Give written notice by mail to stockholders of constituent
Federal Stock associations who have complied with the provisions of paragraph
(c)(2) of this section and have not voted in favor of the combination, of the
effective date of the combination;

C-1

<PAGE>

(ii) Make a written offer to each stockholder to pay for
dissenting shares at a specified price deemed by the resulting association to be
the fair value thereof; and

(iii) Inform them that, within sixty days of such date, the
respective requirements of paragraphs (c)(5) and (6) of this section (set out in
the notice) must be satisfied.

The notice and offer shall be accompanied by a balance sheet and statement of
income of the association the shares of which the dissenting stockholder holds,
for a fiscal year ending not more than sixteen months before the date of notice
and offer, together with the latest available interim financial statements.

(4) ACCEPTANCE OF OFFER. If within sixty days of the effective
date of the combination the fair value is agreed upon between the resulting
association and any stockholder who has complied with the provisions of
paragraph (c)(2) of this section, payment therefor shall be made within ninety
days of the effective date of the combination.

(5) PETITION TO BE FILED IF OFFER NOT ACCEPTED. If within sixty
days of the effective date of the combination the resulting association and any
stockholder who has complied with the provisions of paragraph (c)(2) of this
section do not agree as to the fair value, then any such stockholders may file a
petition with the Office, with a copy by registered or certified mail to the
resulting association, demanding a determination of the fair market value of the
stock of all such stockholders. A stockholder entitled to file a petition under
this section who fails to file such petition within sixty days of the effective
date of the combination shall be deemed to have accepted the terms offered under
the combination.

(6) STOCK CERTIFICATES TO BE NOTED. Within sixty days of the
effective date of the combination, each stockholder demanding appraisal and
payment under this section shall submit to the transfer agent his certificates
of stock for notation thereon that an appraisal and payment have been demanded
with respect to such stock and that appraisal proceedings are pending. Any
stockholders who fails to submit his stock certificates for such notation shall
no longer be entitled to appraisal rights under this section and shall be deemed
to have accepted the terms offered under the combination.

(7) WITHDRAWAL OF DEMAND. Notwithstanding the foregoing, at any
time within sixty days after the effective date of the combination, any
stockholder shall have the right to withdraw his or her demand for appraisal and
to accept the terms offered upon the combination.

(8) VALUATION AND PAYMENT. The Director shall, as he or she may
elect, either appoint one or more independent persons or direct appropriate
Staff of the Office to appraise the shares to determine their fair market value,
as of the effective date of the combination, exclusive of any element of value
arising from the accomplishment or expectation of the combination. Appropriate
staff of the Office shall review and provide an opinion on appraisals prepared
by independent persons as to the suitability of the appraisal methodology and
the adequacy of the analysis and supportive data. The Director after
consideration of the appraisal report and the advice of the appropriate staff
shall, if he or she concurs in the valuation of the shares, direct payment by
the resulting association of the appraised fair market value of the shares, upon
surrender of the certificates representing such stock. Payment shall be made,
together with interest from the effective date of the combination, at a rate
deemed equitable by the Director.

C-2

<PAGE>

(9) COSTS AND EXPENSES. The costs and expenses of any proceeding
under this section may be apportioned and assessed by the Director as he or she
may deem equitable against all or some of the parties. In making this
determination the Director shall consider whether any party has acted
arbitrarily, vexatiously, or not in good faith in respect to the rights provided
by this section.

(10) VOTING AND DISTRIBUTION. Any stockholder who has demanded
appraisal rights as provided in paragraph (c)(2) of this section shall
thereafter neither be entitled to vote such stock for any purpose nor be
entitled to the payment of dividends or other distributions on the stock (except
dividends or other distribution payable to, or a vote to be taken by
stockholders of record at a date which is on or prior to, the effective date of
the combination): PROVIDED, That if any stockholder becomes unentitled to
appraisal and payment of appraised value with respect to such stock and accepts
or is deemed to have accepted the terms offered upon the combination, such
stockholder shall thereupon be entitled to vote and receive the distribution
described above.

(11) STATUS. Shares of the resulting association into which shares
of the stockholders demanding appraisal rights would have been converted or
exchanged, had they assented to the combination, shall have the status of
authorized and unissued shares of the resulting association.

C-3
<PAGE>

APPENDIX D

DISSENTERS' PROVISIONS PURSUANT TO
GEORGIA BUSINESS CORPORATION CODE

<PAGE>

GEORGIA FINANCIAL INSTITUTIONS CODE
SECTION 7-1-537
RIGHT OF SHAREHOLDER TO DISSENT

AND

GEORGIA BUSINESS CORPORATION CODE
ARTICLE 13
DISSENTERS' RIGHTS

7-1-537. Right of shareholder to dissent.

(a) A shareholder of a bank or trust company which is a party to a
plan of proposed merger or consolidation under this part who objects to the plan
shall be entitled to the rights and remedies of a dissenting shareholder as
determined under Chapter 2 of Title 14, known as the "Georgia Business
Corporation Code."

[PART (b) OMITTED.]

14-2-1302. Right to dissent.

(a) A record shareholder of the corporation is entitled to dissent
from, and obtain payment of the fair value of his or her shares in the event of,
any of the following corporate actions:

(1) Consummation of a plan of merger to which the corporation
is a party:

(A) If approval of the shareholders of the corporation
is required for the merger by Code Section 14-2-1103 or the
articles of incorporation and the shareholder is entitled to vote
on the merger; or

(B) If the corporation is a subsidiary that is merged
with its parent under Code Section 14-2-1104;

(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be acquired,
if the shareholder is entitled to vote on the plan;

(3) Consummation of a sale or exchange of all or substantially
all of the property of the corporation if a shareholder vote is required
on the sale or exchange pursuant to Code Section 14-2-1202, but not
including a sale pursuant to court order or a

D-1

<PAGE>

sale for cash pursuant to a plan by which all or substantially all of the
net proceeds of the sale will be distributed to the shareholder within
one year after the date of sale;

(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a dissenter's
shares because it:

(A) Alters or abolishes a preferential right of the
shares;

(B) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for
the redemption or repurchase, of the shares;

(D) Excludes or limits the rights of the shares to vote
on any matter, or to cumulate votes, other than a limitation by
dilution through issuance of shares or other securities with
similar voting rights;

(E) Reduces the number of shares owned by the
shareholder to a fraction of a share if the fractional share so
created is to be acquired for cash under Code Section 14-2-604; or

(F) Cancels, redeems, or repurchases all or part of the
shares of the class; or

(5) Any corporate action taken pursuant to a shareholder vote
to the extent that Article 9 of this chapter, the articles of
incorporation, bylaws, or a resolution of the board of directors provides
that voting or nonvoting shareholders are entitled to dissent and obtain
payment for their shares.

(b) A shareholder entitled to dissent and obtain payment for his or
her shares under this article may not challenge the corporate action creating
his or her entitlement unless the corporate action fails to comply with
procedural requirements of this chapter or the articles of incorporation or
bylaws of the corporation or the vote required to obtain approval of the
corporate action was obtained by fraudulent and deceptive means, regardless of
whether the shareholder has exercised dissenter's rights.

(c) Notwithstanding any other provision of this article, there shall
be no right of dissent in favor of the holder of shares of any class or series
which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at a meeting at which a plan of merger or share
exchange or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:

D-2

<PAGE>

(1) In the case of a plan of merger or share exchange, the
holders of shares of the class or series are required under the plan of
merger or share exchange to accept for their shares anything except
shares of the surviving corporation or another publicly held corporation
which at the effective date of the merger or share exchange are either
listed on a national securities exchange or held of record by more than
2000 shareholders, except for scrip or cash payments in lieu of
fractional shares; or

(2) The articles of incorporation or a resolution of the board
of directors approving the transaction provides otherwise.

14-2-1303. Dissent by nominees and beneficial owners.

A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his or her name only if dissents with respect to all
shares beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf
asserts dissenters' rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which dissents and his or her
other shares were registered in the names of different shareholders.

14-2-1320. Notice of dissenters' rights.

(a) If proposed corporate action creating dissenters' rights under
Code Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the
meeting notice must state that shareholders are or may be entitled to assert
dissenters' rights under this article and be accompanied by a copy of this
article.

(b) If corporate action creating dissenters' rights under Code Section
14-2-1302 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Code Section
14-2-1322.

14-2-1321. Notice of intent to demand payment.

(a) If proposed corporate action creating dissenters' rights under
Code Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a
record shareholder who wishes to assert dissenters' rights:

(1) Must deliver to the corporation before the vote is taken
written notice of his or her intent to demand payment for his or her
shares if the proposed action is effectuated; and

(2) Must not vote his or her shares in favor of the proposed
action.

D-3

<PAGE>

(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his or her
shares under this article.

14-2-1322. Dissenters' notice.

(a) If proposed corporate action creating dissenters' rights under
Code Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.

(b) The dissenters' notice must be sent no later than ten days after
the corporate action was taken and must:

(1) State where the payment demand must be sent and where and
when certificates for certificated shares must be deposited;

(2) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is
received;

(3) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than 30 nor more than 60 days
after the date the notice required in subsection (a) of this Code section
is delivered; and

(4) Be accompanied by a copy of this article.

14-2-1323. Duty to demand payment.

(a) A record shareholder sent a dissenters' notice described in Code
Section 14-2-1322 must demand payment and deposit his or her certificates in
accordance with the terms of the notice.

(b) A record shareholder who demands payment and deposits his or her
shares under subsection (a) of this Code section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.

(c) A record shareholder who does not demand payment or deposit his or
her share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his or her shares under this article.

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<PAGE>

14-2-1324. Share restrictions.

(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is taken or the restrictions released under Code Section 14-2-
1326.

(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.

14-2-1325. Offer of payment.

(a) Except as provided in Code Section 14-2-1327, within ten days of
the later of the date the proposed corporate action is taken or receipt of a
payment demand, the corporation shall offer to pay each dissenter who complied
with Code Section 14-2-1323 the amount the corporation estimates to be the fair
value of his or her shares, plus accrued interest.

(b) The offer of payment must be accompanied by:

(1) The corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity
for that year, and the latest available interim financial statements, if
any;

(2) A statement of the corporation's estimate of the fair value
of the shares;

(3) An explanation of how the interest was calculated;

(4) A statement of the dissenter's right to demand payment
under Code Section 14-2-1327; and

(5) A copy of this article.

(c) If the shareholder accepts the corporation's offer by written
notice to the corporation within 30 days after the corporation's offer, payment
for his or her shares shall be made within 60 days after the making of the offer
or the taking of the proposed corporate action, whichever is later.

D-5

<PAGE>

14-2-1326. Failure to take action.

(a) If the corporation does not take the proposed action within 60
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.

(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1422 and repeat the payment demand
procedure.

14-2-1327. Procedure if shareholder dissatisfied with payment or offer.

(a) A dissenter may notify the corporation in writing of his or her
own estimate of the fair value of his or her shares and amount of interest due,
and demand payment of his or her estimate of the fair value of his or her shares
and interest due, if:

(1) The dissenter believes that the amount offered under Code
Section 14-2-1325 is less than the fair value of his or her shares or
that the interest due is incorrectly calculated; or

(2) The corporation, having failed to take the proposed action,
does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after the
date set for demanding payment.

(b) A dissenter waives his or her right to demand payment under this
Code section unless he notifies the corporation of his or her demand in writing
under subsection (a) of this Code section within 30 days after the corporation
made or offered payment for his or her shares.

(1) The shareholder may demand the information required under
subsection (b) of Code Section 14-2-1325, and the corporation shall
provide the information to the shareholder within ten days after receipt
of a written demand for the information; and

(2) The shareholder may at any time, subject to the limitations
period of Code Section 14-2-1332, notify the corporation of his or her
own estimate of the fair value of his or her shares and the amount of
interest due and demand payment of his or her estimate of the fair value
of his or her shares and interest due.

D-6

<PAGE>

14-2-1330. Court action.

(a) If a demand for payment under Code Section 14-2-1327 remains
unsettled, the corporation shall commence a proceeding within 60 days after
receiving the payment demand and petition the court to determine the fair value
of the shares and accrued interest. If the corporation does not commence the
proceeding within the 60 day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.

(b) The corporation shall commence the proceeding, which shall be a
nonjury equitable valuation proceeding, in the superior court of the county
where a corporation's registered office is located. If the surviving
corporation is a foreign corporation without a registered office in this state,
it shall commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.

(c) The corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unsettled parties to the
proceeding, which shall have the effect of an action quasi in rem against their
shares. The corporation shall serve a copy of the petition in the proceeding
upon each dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons and complaint, and upon each
nonresident dissenting shareholder either by registered or certified mail and
publication, or in any other manner permitted by law.

(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers
described in the order appointing them or in any amendment to it. Except as
otherwise provided in this chapter, Chapter 11 of the Title 9, known as the
"Georgia Civil Practice Act," applies to any proceeding with respect to
dissenters' rights under this chapter.

(e) Each dissenter made a party to the proceeding is entitled to
judgment for the amount which the court finds to be the fair value of his or her
shares, plus interest to the date of judgment.

14-2-1331. Court costs and counsel fees.

(a) The court in an appraisal proceeding commenced under Code Section
14-2-1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section 14-2-
1327.

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<PAGE>

(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:

(1) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not substantially
comply with the requirements of Code Sections 14-2-1320 through 14-2-
1327; or

(2) Against either the corporation or a dissenter, in favor of
any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this article.

(c) If the court finds that the services of attorneys for any
dissenter were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against the
corporation, the court may award to these attorneys reasonable fees to be paid
out of the amounts awarded the dissenters who were benefitted.

14-2-1332. Limitation of actions.

No action by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322.

D-8

<PAGE>

NEWNAN SAVINGS BANK, FSB
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 21, 1996

The undersigned hereby appoints Tom Moat and Douglas L. Hertha, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them or either of them to represent and to vote, as designated
below, all of the Common Stock of Newnan Savings Bank, FSB ("Newnan Savings"),
19 Jefferson Street, Newnan, Georgia, which the undersigned would be entitled to
vote if personally present at the Special Meeting of Shareholders (the
"Meeting") to be held at the main office of Newnan Savings, 19 Jefferson Street,
Newnan, Georgia, on August 21, 1996 at 4:30 p.m., and at any adjournments
thereof, upon the proposal described in the accompanying Notice of the Special
Meeting and the Joint Proxy Statement/Prospectus relating to the Meeting,
receipt of which are hereby acknowledged.

THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR THE PROPOSAL.

PROPOSAL ONE: The reorganization of Newnan Savings into a holding company
structure pursuant to the Plan of Reorganization, as described in
the Joint Proxy Statement/Prospectus.

/ / FOR / / AGAINST / / ABSTAIN

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL
BE VOTED FOR THE PROPOSAL.

DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER MATTERS WHICH MAY
COME BEFORE THE SPECIAL MEETING.

If stock is held in the name of more than one person, all holders should
sign. Signatures should correspond exactly with the name or names appearing on
the stock certificate(s). When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

Date: , 1996
-----------------------------

----------------------------------------
Name(s) of Shareholder(s)

----------------------------------------
Signature(s) of Shareholder(s)

Please mark, date and sign this Proxy, and return it in the enclosed return-
addressed envelope. No postage is necessary.

PLEASE RETURN PROXY BEFORE AUGUST 19, 1996

<PAGE>

SOUTHSIDE FINANCIAL GROUP, INC.
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 21, 1996

The undersigned hereby appoints Gary D. McGaha and Fred L. Faulkner, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them or either of them to represent and to vote, as designated
below, all of the Common Stock of Southside Financial Group, Inc. ("Southside"),
875 North Jeff Davis Drive, Fayetteville, Georgia, which the undersigned would
be entitled to vote if personally present at the Special Meeting of Shareholders
(the "Meeting") to be held at the main office of Southside, 875 North Jeff Davis
Drive, Fayetteville, Georgia, on August 21, 1996 at 4:30 p.m., and at any
adjournments thereof, upon the proposal described in the accompanying Notice of
the Special Meeting and the Joint Proxy Statement/Prospectus relating to the
Meeting, receipt of which are hereby acknowledged.

THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR THE PROPOSAL.

PROPOSAL ONE: The acquisition of Southside by Newnam Holdings, Inc., by merging
Southside with Interim Citizens Corporation, a wholly-owned
subsidiary of Newnan Holdings, Inc., as described in the Joint
Proxy Statement/Prospectus.

/ / FOR / / AGAINST / / ABSTAIN

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL
BE VOTED FOR THE PROPOSAL.

DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER MATTERS WHICH MAY
COME BEFORE THE SPECIAL MEETING.

Date: , 1996
-----------------------------

----------------------------------------
Name(s) of Shareholder(s)

----------------------------------------
Signature(s) of Shareholder(s)

Please mark, date and sign this Proxy, and return it in the enclosed return-
addressed envelope. No postage is necessary.

PLEASE RETURN PROXY BEFORE AUGUST 19, 1996