Current regulations require institutions to keep minimum regulatory tangible capital equal to 1.5% of adjusted assets, minimum core capital to adjusted assets of 3% (the leverage ratio), and risk-based capital to risk-adjusted assets of 8%. The Office of Thrift Supervision (the OTS) may increase the minimum core capital, or leverage ratio, based on its assessment of the institution's risk management systems and the level of total risk in the individual institution. At June 30, 2000, the bank met all three capital requirements.

The Bank's regulatory capital and the required minimum amounts at June 30, 2000 are summarized as follows:

The Federal Deposit Insurance Corporation Improvement Act (FDICIA) required the Federal banking agencies to take "prompt corrective action" in respect to institutions that do not meet minimum capital requirements. Along with the ratios described above, FDICIA also introduced an additional capital measurement, the Tier 1 risk-based capital ratio. The Tier 1 ratio is the ratio of Tier 1 or core capital to total risk-adjusted assets. FDICIA establishes five capital tiers: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized." The regulators summarize their minimum requirements for the five capital tiers established by the FDICIA as follows:

An unsatisfactory examination rating may cause an institution's capitalization category to be lower than suggested by its actual capital position.

At June 30, 2000, the Bank's Tier 1 risk-based capital ratio was 10.23%. If a depository institution should fail to meet its regulatory capital requirements, regulatory agencies can require submission and funding of a capital restoration plan by the institution, place limits on its activities, require the raising of additional capital, and ultimately require the appointments of a conservator or receiver for the institution.

The Bank's capital position changed during the quarter ended June 30, 2000 to well capitalized. Total capital as well as tangible capital, core capital, and risk-based capital continued to increase during the quarter. The mix of risk-based assets and additional earnings are the primary factors for this increase.

RESULTS OF OPERATIONS

INTEREST INCOME

Interest income on loans increased $1,030,547, or 27.4%, for the three-month period ended June 30, 2000 and $2,686,293, or 24.7% for the nine-month period ended June 30, 2000 as compared to the same period in 1999. The Company has been aggressive in attracting new loan business. However, the Bank continues to be selective in the loans that it makes, as evidenced by its low real estate owned balances. Base interest rates increased during the quarter, which increased interest income. Despite increased interest rates, management expects loan demand to maintain healthy levels. Interest on investments increased $37,995, or 15.3% for the quarter and $21,413 or 2.9% for the nine-month period ended June 30, 2000 as compared to the same periods ended June 30, 1999. As the Bank's loan balance grew, Management increased its investment holdings. Average investment balances increased approximately $282,000 from June 30, 2000 as compared to June 30, 1999. Interest on federal funds sold for the quarter ended June 30, 2000 increased $121,157, or 181.6% as compared to the same quarter ended June 30, 1999. For the nine-month period ended June 30, 2000, interest on federal funds sold decreased $115,074 or 30.9% as compared to the same period ended June 30, 1999. This decrease is primarily due to the first three months of the period in which federal funds were purchased nightly for an extended period. During the last six months of the period, more interest income was earned because federal funds were sold on a regular basis. In a trend continued from the prior fiscal year, the Bank has seen significant growth in its deposit balances. The Bank is offering new deposit products, such as free checking, which has been accepted favorably in the marketplace. Consequently, the Bank has been able to invest money into short-term earning vehicles, such as overnight federal funds.

INTEREST EXPENSE

Interest on deposits increased $593,113, or 32.7% for the quarter ended June 30, 2000 and $862,160, or 15.3% for the nine-month period ended June 30, 2000 as compared to the same period in 1999. Average deposit balances increased approximately $39 million in the nine-month period from September 30, 1999 to June 30, 2000. The market place in which the Bank operates is extremely conducive to deposit growth, and the Bank has positioned its deposit products to take full advantage of the area's deposit demand. Interest on advances and other borrowings decreased $52,188 or 43.2 % for the quarter and increased $2,208 or 0.6% for the nine-month period ending June 30, 2000. During the first three months of the year, the Bank was borrowing federal funds daily resulting in an increase in interest expense. The Bank has been able to sell federal funds for the last six months of the period, resulting in a decrease in interest expense for the three months ended June 30, 2000 over the same period in 1999. The increase in deposits has made it possible to pay-off several Federal Home Loan Bank advances and other borrowings.

NET INTEREST INCOME

Net interest income increased $648,116, or 30.3% for the quarter and $1,728,886, or 28.9% for the nine-month period ended June 30, 2000 as compared to the same periods last year. While increases in loan balances offset by interest earning deposits have contributed substantially to the increase, the increase in non-interest bearing deposits held by the Bank has been the main factor contributing to the increase. Management believes this growth will continue throughout fiscal year 2000.

PROVISION FOR LOAN LOSSES

The loan loss provision decreased $334,011 or 65.6% for the quarter and decreased $244,067 or 47.9% for the nine months ended June 30, 2000 as compared to the same periods ended June 30, 1999. The decrease is primarily attributed to a large increase to the provision for loan losses during the quarter ended June 30, 1999. The Bank experienced $297,371 net charge-offs for the quarter and significant loan growth which required an increase to the provision for loan losses during the three-month period ended June 30, 1999. With the growth in loan volume, Management found it necessary to increase the loan loss provision during the period ended June 30, 2000. Net Interest Income after the Provision for Loan Losses for the quarter ended June 30, 2000 increased $982,127, or 60.1% from the same period last year and $1,972,953, or 36.2% for the nine-month period ended June 30, 2000 over June 30, 1999.

OTHER INCOME

Other income for the quarter decreased $459,277 or 39.3% from the same quarter the previous year and $370,432 or 15.9% for the nine-month period ended June 30, 2000 as compared to the same period in the previous year. The decrease is attributable to the $767,011 gain on the sale of the Blackshear branch during the quarter ended June 30, 1999. Excluding this gain, other income increased $332,780 for quarter ended June 30, 2000 over the same period last year and increased $421,625 for the nine-month period. The main factor for this increase is an increase in deposit service charges. As the volume of deposits increased, fee income, such as service charges and insufficient funds fees, increased as well. Deposit service charges increased $143,271, or 40.6% for the quarter and $375,831, or 36.7% for the nine-month period ended June 30, 2000 compared to the same periods in the previous year.

OTHER EXPENSES

Other expenses for the quarter ended June 30, 2000 increased $310,116, or 16.8%, over the quarter ended June 30, 1999. Other expenses for the nine-month period ended June 30, 2000 increased $1,012,602, or 19.6%, over the nine-month period ended June 30, 1999. Salaries and employee benefits increased $175,075, or 21.0% in the three-month period ending June 30, 2000 over the same period ended June 30, 1999, and $453,690, or 18.4% for the nine-month period ended June 30, 2000 over the same period last year. The Bank has added several new employees to help with the growth the Bank is experiencing. Management does not foresee any extraordinary hiring concerns for the remainder of the year. Premises and occupancy costs increased $154,654 or 42.9% for the quarter ended June 30, 2000 over the quarter ended June 30, 1999. Premises and occupancy expenses increased $502,322 or 52.8% over the nine-month period ended June 30, 2000 as compared to the same period last year. This increase results from additional computer, phone, and other office equipment purchased. Other operating expenses decreased $31,349, or 4.9%, for the quarter and increased $18,610, or 1.1% for the nine-month period ended June 30, 2000 as compared to last year. The decrease for the three-month period is related to additional expenses that were incurred during the same period last year related to the sale and disposal of the Blackshear branch. This increase over the nine month period as compared to the same period last year results primarily from additional expenses related to the implementation of Internet banking services and the establishment of additional communication lines.

The Bank increased its provision for income taxes by $114,415, or 32.3% for the quarter and $669,424, or 109.3% for the nine-month period ended June 30, 2000 as compared to the same periods in 1999. The effective tax rate remained consistent at a rate of 40%.

FINANCIAL CONDITION

ASSETS

Cash and cash equivalents increased $9,159,920 or 127.2%, over the nine-month period ended June 30, 2000. With the increase in transaction deposit accounts, the Bank has maintained higher cash and cash equivalents balances. Interest bearing deposits in other banks decreased $212,773 for the nine months ended June 30, 2000 and Federal funds sold increased $7,350,000 over the same period. Investment balances increased $1,661,902, or 11.5%, for the nine months ended June 30, 2000. The Bank is quickly investing new deposit balances. Premises and equipment increased $583,154, or 11.90% resulting from the opening of a new branch and the purchase of new computer equipment. Other assets decreased $189,892 over the nine-month period ended June 30, 2000. This decrease primarily results from an $80,000 decrease in the cash letter adjustments account.

Loans receivable increased $23,290,254, or 13.5% as of the nine months ended June 30, 2000 over September 30, 1999. The Bank has been aggressive, yet selective, in attracting new loan business. The Bank's loan portfolio at June 30, 2000 and September 30, 1999 is summarized as follows:

ALLOWANCE FOR LOAN LOSSES

Management conducts an extensive review of the provision for loan losses on a monthly basis. Additions to the allowance for loan losses are charged to operations based upon management's evaluation of the potential losses in its portfolio. This evaluation considers the estimated value of the underlying collateral and such other factors as, in management's judgement, deserve recognition under existing economic conditions. While management uses the best information available to make evaluations, future adjustments to the allowance 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 loan losses on loan and real estate owned. 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 loan is considered impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Bank's impaired loans include non-accrual loans, troubled debt restructurings, and large loans more than 90 days delinquent in which full payment of principal and interest is not expected. Cash receipts on impaired loans are used to reduce principal balances. Impairment losses are included in the allowance for loan losses through a charge to the provision for loan losses. Impairment losses are measured by the present value of expected future cash flows discounted at the loan's effective interest rate, or at either the loan's observable market price or the fair value of the collateral. Adjustment to impairment losses due to changes in the fair market value of an impaired loan's underlying collateral are included in the provision for losses. Upon disposition of an impaired loan, any related valuation allowance is reversed through a charge-off to the allowance for loan losses.

Large groups of smaller homogenous loans (consumer loans) are collectively evaluated for impairment. Commercial loans and larger balance real estate and other loans are individually evaluated for impairment.

The following tables illustrate the Bank's allowance for loan losses and its problem loans.

LIABILITIES

Deposits have increased $40,664,671 or 23.4%, for the nine-month period ended June 30, 2000. The Bank has been working hard to increase its market share of deposits in Glynn County. This increase reflects that First Georgia has been successful in soliciting new deposit business. With the increase of deposit balances, the Bank has paid-off several of its Federal Home Loan Bank advances, as evidenced by the decrease of $6,100,000, or 70.9%. Much of this money was replaced with the inflow of non-interest bearing deposits. Other borrowings decreased $860,000 from September 30, 1999. The decrease is attributable to a $2,860,000 decrease in the federal funds purchased account. Also, in an effort to raise capital, an agreement was entered into with the Independent Banker's Bank and First Georgia Holding Co., Inc. for a line of credit of $3,000,000 of which $2,000,000 was drawn from the Holding Company and infused into the Bank in order to bring the Bank to the regulatory well-capitalized status.

Accrued expenses and other liabilities decreased $699,984, or 38.5% during the nine-month period ended June 30, 2000. The decrease is primarily attributable professional fees associated with the year-end auditing and tax services, an increase in accrued salaries expenses related to bonuses, and an increase in year 2000 expenses that were accrued for in the prior year that are not necessary in the current year. Accrued interest payable increased $130,009 or 25.1% for the nine-month period ended June 30, 2000. This is due to an increase of approximately $39 million in average interest earning deposits over the nine-month period.

ITEM 5. EXHIBITS AND REPORTS ON FORM 8K

                                      A. Exhibits.

                                       B. Reports on Form 8-K

                                       The Bank filed no reports on Form 8-K for the quarter ended June 30, 2000.