As filed with the Securities and Exchange Commission on January 27, 1998

Registration No. 333-43063

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

Quitman Bancorp, Inc.

(Exact Name of Small Business Issuer as Specified in Charter)

               Georgia                   6035                    58-2365866
---------------------------------   -----------------        -------------------
   (State or Other Jurisdiction     (Primary SIC No.)         (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)

100 West Screven Street, Quitman, Georgia 31643
(912) 263-7538

(Address and Telephone Number of Principal Executive Offices and
Principal Placeof Business)

Mr. Melvin E. Plair
President and Chief Executive Officer
Quitman Bancorp, Inc.
100 West Screven Street, Quitman, Georgia 31643
(912) 263-7538
(Name, Address and Telephone Number of Agent for Service)

Please send copies of all communications to:
Charles E. Sloane, Esq.
Gregory J. Rubis, Esq.
Jean A. Milner, Esq.
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
1301 K Street, N.W., Suite 700 East
Washington, D.C. 20005

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after this registration statement becomes effective.


PROSPECTUS

Up to ^ 661,250 Shares of Common Stock ^

QUITMAN BANCORP, INC.
(Proposed Holding Company for Quitman Federal Savings Bank)

100 West Screven Street
Quitman, Georgia 31643
(912) 263-7538


Quitman Federal Savings Bank is converting from the mutual form to the stock form of organization. As part of the conversion, Quitman Federal Savings Bank will become a wholly owned subsidiary of Quitman Bancorp, Inc. Quitman Bancorp, Inc. was formed in December 1997 and upon consummation of the conversion will own all of the shares of Quitman Federal Savings Bank. The common stock of Quitman Bancorp, Inc. is being offered to the public in accordance with a ^ plan of ^ conversion. The ^ plan of ^ conversion must be approved by a majority of the votes eligible to be cast by members of Quitman Federal Savings Bank and by the Office of Thrift Supervision. No common stock will be sold if Quitman Federal Savings Bank does not receive these approvals ^ or Quitman Bancorp, Inc. does not receive orders for at least the minimum number of shares.


TERMS OF OFFERING

An independent appraiser has estimated the market value of the converted Quitman Federal Savings Bank to be between $4,250,000 and $5,750,000, which establishes the number of shares to be offered. Subject to Office of Thrift Supervision approval, up to 661,250 shares, an additional 15% above the maximum number of shares, may be offered. Based on these estimates, we are making the following offering of shares of common stock:

o        Price Per Share:                                     $10.00

o        Number of Shares
         Minimum/Maximum/Maximum, as adjusted:                425,000 to 575,000 to 661,250

o        Underwriting Commissions and Expenses
         Minimum/Maximum/Maximum, as adjusted:                $324,000 to $358,000 to $378,000

o        Net Proceeds to Quitman Bancorp, Inc.

         Minimum/Maximum/Maximum, as adjusted:                $3,926,000 to ^ $5,391,000 to $6,235,000


o        Net Proceeds per Share
         Minimum/Maximum/Maximum, as adjusted:                $9.24 to $9.38 to $9.43

Please refer to Risk Factors beginning on page 1 of this document.

Any transfer of subscription rights is prohibited.

These securities are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

Neither the Securities and Exchange Commission, Office of Thrift Supervision, nor any state securities regulator has approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

For information on how to subscribe, call the Stock Information Center at (912)___________

TRIDENT SECURITIES, INC.
__________, 1998



TABLE OF CONTENTS

Page

Questions and Answers About the Stock Offering.......................... Summary................................................................. Selected Financial and Other Data.......................................

^Recent Developments.....................................................

Risk Factors............................................................ Proposed Purchases by Directors and Officers............................ Use of Proceeds......................................................... Dividends............................................................... Market for the Common Stock............................................. Capitalization.......................................................... Pro Forma Data.......................................................... Historical and Pro Forma Capital Compliance............................. The Conversion.......................................................... Consolidated Statements of Income of
Quitman Federal Savings Bank.......................................... Management's Discussion and Analysis of
Financial Condition and Results of Operations......................... Business of Quitman Bancorp, Inc........................................ Business of Quitman Federal Savings Bank................................ Regulation.............................................................. Taxation................................................................ Management of Quitman Bancorp, Inc...................................... Management of Quitman Federal Savings Bank.............................. Restrictions on Acquisitions of Quitman Bancorp, Inc.................... Description of Capital Stock............................................ Legal and Tax Matters................................................... Experts................................................................. Change in Auditor....................................................... Registration Requirements............................................... Where You Can Find Additional Information...............................

Index to Consolidated Financial Statements of Quitman Federal Savings Bank..........................................

This document contains forward-looking statements which involve risks and uncertainties. Quitman Bancorp, Inc.'s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in "Risk Factors" beginning on page 1 of this document.




QUESTIONS AND ANSWERS ABOUT THE STOCK OFFERING

Q: What is the purpose of the ^ offering?

A: The offering ^ gives you ^ the chance to become a stockholder of our newly formed holding company, Quitman Bancorp, Inc.^ Stockholders will share indirectly in our future as a federal stock savings bank. The stock offering will increase our capital and funds for lending and investment activities. As a stock savings institution operating through a holding company structure, we will have greater flexibility for investments.

Q: How do I purchase the stock?

A: You must complete and return the ^ stock order form (no copies will be accepted) to us together with your payment, on or before 12:00 noon, __________, __________, 1998. If ^ we do not receive sufficient orders by that time, the offering may be extended until __________ ____, 1998.

Q: How much stock may I purchase?

A: The minimum purchase is 25 shares (or $250). The maximum purchase is 6,000 shares (or $60,000), for any individual person or persons ordering through a single account. No person, related person or persons acting together, may purchase in total more than 10,000 shares (or $100,000). We may decrease or increase the maximum purchase limitation without notifying you. In the event that the offering is oversubscribed, ^ there will not be enough shares to fill all orders.

Q: What happens if there are not enough shares to fill all orders?

A: You might not receive any or all of the shares you want to purchase.

If there is an oversubscription in the ^ subscription offering, the stock will be offered ^ in the following ^ priorities:

o Priority 1 - Persons who had a deposit account with us of at least $50.00 on December 31, 1995.

o Priority 2 - Tax Qualified Employee Plans^ (the employee stock ownership plan of Quitman Federal Savings Bank).

o Priority 3 - Persons who had a deposit account of at least $50.00 with us on December 31, 1997.

o Priority 4 - Other persons entitled to vote on the approval of the conversion.

If the above persons do not subscribe for all of the shares, the remaining shares may be offered ^, with the help of Trident Securities, Inc. ^, in a community offering. In the event of a community offering, we will give a preference to natural persons who reside in Brooks County, Georgia. In a syndicated community offering, we would offer any remaining shares to the general public through a group of brokers/dealers organized by Trident Securities, Inc. We have the right to reject any stock order in the community offering or ^ syndicated community offering.


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Q: What particular factors should I consider when deciding whether to buy the stock?

A: Because of the small size of the offering, there is not expected to be an active market for the shares^. This may make it difficult for you to resell any shares you ^ purchase. Also, before you decide to purchase stock, you should read this ^ prospectus, including the Risk Factors section on pages 1-____.

Q: As a depositor or borrower member of Quitman Federal Savings Bank, what will happen if I do not purchase any stock?

A: You presently have voting rights since we are in the mutual form; however, once we convert, voting rights will be held only by the stockholders. You are not required to purchase stock. Your deposit account, certificate account and any loans you may have with us will be not be affected.

Q: Who can help answer any other questions I may have about the stock offering?

A: In order to make an informed investment decision, you should read this entire document. In addition, you should contact:

Stock Information Center Quitman Bancorp, Inc. 100 W. Screven Street Quitman, Georgia 31643
(912) ____-____


(ii)


SUMMARY

This summary highlights selected information from this document and may not contain all the information that is important to you. To understand the stock offering fully, you should read this entire document carefully, including the financial statements and the notes to the financial statements of Quitman Federal Savings Bank. References is this document to "we", "us", and "our" refer to Quitman Federal Savings Bank. In certain instances where appropriate, "we", "us", or "ours" refers collectively to Quitman Bancorp, Inc. and Quitman Federal Savings Bank. References in this document to "QBI" refers to Quitman Bancorp, Inc.

The Companies
Quitman Bancorp, Inc. 100 West Screven Street Quitman, Georgia 31643 (912) 263-7538

Quitman Bancorp, Inc. is not an operating company and has not engaged in any significant business to date. It was formed in December 1997 as a Georgia-chartered corporation to be the holding company for Quitman Federal Savings Bank. The holding company structure will provide greater flexibility in terms of operations, expansion and diversification. See page __________.

Quitman Federal Savings Bank 100 West Screven Street Quitman, Georgia 31643 (912) 263-7538

Quitman Federal Savings Bank was founded in 1936 under the name "Quitman Federal Savings and Loan Association." In November 1997 we changed our name to Quitman Federal Savings Bank. We are a community and customer oriented federal mutual savings bank. We provide financial services to individuals, families and small businesses. Historically, we have emphasized residential mortgage lending, primarily originating one- to four-family mortgage loans and funded these loans with certificates of deposit. In recent years we have increasingly emphasized consumer, commercial and construction lending and have begun to use borrowings as a source of funding. At September 30, 1997 we had total assets of $39.2 million, deposits of $34.5 million, and total equity of $3.0 million. See pages __________ to __________.

The Stock Offering

^ We are offering between 425,000 and 575,000 shares of common stock ^ at $10.00 per share. ^ We may increase the offering to 661,250 shares without further notice to you. We would do this for two reasons: changes in our financial condition or market conditions that occur before we complete the conversion; or to fill the order ^ from our employee stock ownership plan ^. Any increase over 575,000 shares would require the approval of the OTS. If we do increase the size of the offering, you may not change or cancel any stock order previously delivered to us.


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Stock Purchases

The shares of common stock will be offered on the basis of priorities. As a depositor or borrower member, you will receive subscription rights to purchase the shares. The shares will be offered first in a Subscription Offering and any remaining shares may be offered in a Community Offering^ or Syndicated ^ Community Offering. See pages __________ to __________.

Subscription Rights

You may not sell or assign your subscription rights. Any transfer of subscription rights is prohibited by law.

The Offering Range and Determination of the Price Per Share

The offering range is based on an independent appraisal of the estimated market value of the common stock by FinPro Financial Services, Inc., an appraisal firm experienced in appraisals of savings institutions. FinPro has estimated, that in its opinion as of ^ December 8, 1997 the aggregate pro forma market value of the common stock ranged between $4,250,000 and $5,750,000 (with a mid-point of $5,000,000). The estimated market value of the shares is our estimated market value after giving effect to the sale of shares in this offering.

The appraisal was based in part upon our financial condition and operations and the effect of the additional capital ^ we will raise in this offering. The $10.00 price per share was determined by our board of directors ^. It is the price most commonly used in stock offerings involving conversions of mutual savings institutions. The independent appraisal will be updated ^ before we complete the conversion. If the estimated market value of the common stock is either below $4,250,000 or above $6,612,500^, you will be notified and will have the opportunity to modify or cancel your order. See pages __________ to __________.

Termination of the Offering

The ^ subscription offering will terminate at 12:00 p.m., Eastern Time, on __________ ____, ^ 1998. The community offering or syndicated community offering, if any, may terminate at any time without notice but no later than __________ ____, 1998, without approval by the OTS.

Benefits to Management from the Offering

Our full-time employees will participate in the offering through individual purchases and through purchases of stock by our employee stock ownership plan, which is a type of retirement plan. We also intend to implement a restricted stock plan and a stock option plan, which may benefit the President and other officers and directors. ^ If we adopt the restricted stock plan ^, our officers and directors will be awarded stock at no cost to them. The restricted stock plan and stock option plan may not be adopted until after the conversion and are subject to stockholder approval and compliance with OTS regulations.


(iv)


Use of the Proceeds Raised from the Sale of Common Stock

Quitman Bancorp, Inc. will use a portion of the net proceeds from the ^ offering to purchase all the common stock to be issued by us in the conversion and to make a loan to our employee stock ownership plan to fund its purchase of stock in the conversion. The balance of the funds will be retained as Quitman Bancorp, Inc.'s initial capitalization. See page __________.

Dividends

It is anticipated that ^ Quitman Bancorp, Inc. will pay an annual cash dividend of $.20 per share following the completion of the first quarter of 1999. There are restrictions on dividends. See page __________.

Market for the Common Stock

We expect the Common Stock to be quoted on the OTC Bulletin Board under the symbol "QMAN". Since the size of the offering is relatively small, it is unlikely that an active and liquid trading market will develop and be maintained. Investors should have a long-term investment intent. Persons purchasing shares may not be able to sell their shares when they desire or sell them at a price equal to or above $10.00. See page __________.

Important Risks in Owning Quitman Bancorp, Inc.'s Common Stock

Before you decide to purchase stock in the offering, you should read the Risk Factors section on pages 1 -__________ of this document.


(v)


SELECTED FINANCIAL AND OTHER DATA

We are providing the following summary financial information about us for your benefit. This information is derived from our 1997 and 1996 audited financial statements^. The following information is only a summary and you should read it in conjunction with our financial statements and notes beginning on page F-1.

Selected Financial Data

^

                                                                       At September 30,
                                                                   ------------------------
                                                                     1997            1996
                                                                   --------        --------
                                                                       (Dollars in
                                                                       thousands)
Total amount of:
  Assets...................................................         $39,192         $36,173
  Cash and cash equivalents................................             657             765
  Loans receivable, net....................................          33,326          30,805
  Investment securities available-for-sale.................           3,046           1,781
  Investment securities held-to-maturity...................             805           1,663
  Savings deposits.........................................          34,471          31,729
  Other borrowings.........................................           1,300           1,200
  Total equity(1)..........................................           2,959           2,667

Number of:
  Loans....................................................           1,471           1,421
  Full service offices.....................................               1               1


(1) Includes retained earnings and unrealized gains and losses on available-for-sale securities.


(vi)


Summary of Operations

^

                                                                                    Year Ended September 30,
                                                                                   ---------------------------
                                                                                    1997                1996
                                                                                   ------              -------
                                                                                        (In thousands)
Interest income.....................................................               $3,198              $2,907
Interest expense....................................................                1,978               1,844
                                                                                    -----               -----
Net interest income.................................................                1,220               1,063
Provision for loan losses...........................................                  136                  36
                                                                                    -----               -----
Net interest income after provision for loan losses.................                1,084               1,027
                                                                                    -----               -----
Non-interest income.................................................                   45                  49
 Non-interest expense(1)............................................                  747                 922
                                                                                    -----               -----
Income before income taxes..........................................                  382                 154
 Income tax expense.................................................                  119                  51
                                                                                    -----               -----
Net income .........................................................               $  263              $  103
                                                                                    =====               =====


(1) Includes a non-recurring expense of $185,647 for the year ended September 30, 1996 for a one-time deposit premium to recapitalize the SAIF.


(vii)


Key Operating Ratios

^

                                                                                       At or For the Year Ended
                                                                                              September 30,
                                                                                   ------------------------------------
                                                                                       1997                    1996
                                                                                   -----------              -----------
Performance Ratios:
Return on average assets (net income
  divided by average total assets)..................................                    .70%                    .30%
Return on average equity (net income
  divided by average equity)........................................                   9.34%                   3.93%

^ Average equity to average assets ^(average

  equity divided by average total assets)...........................                   7.46%                   7.58%
Equity to assets at period end......................................                   7.55%                   7.38%
Interest rate spread................................................                   3.07%                   2.78%
Net interest margin.................................................                   3.37%                   3.15%
Average interest-earning assets to average
  interest-bearing liabilities......................................                 105.52%                 106.83%
Net interest income after provision for loan
  losses, to total non-interest expenses............................                 145.07%                 111.35%

Asset Quality Ratios:
Non-performing loans to total assets................................                   1.22%                   2.41%
 Non-performing assets to total assets..............................                   1.38%                   2.41%
Non-performing loans to total loans, net............................                   1.43%                   2.83%
Allowance for loan losses to total loans, net,
  at end of period..................................................                   1.03%                    .68%
Allowance for loan losses to
  non-performing loans..............................................                  72.54%                  24.11%


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RECENT DEVELOPMENTS

Selected Financial and Other Data

Set forth below are the summaries of our historical financial and other data. Financial data as of December 31, 1997 and for the three months ended December 31, 1997 and 1996, are unaudited. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation have been included. The summary of operations and other data for the three months ended December 31, 1997 are not necessarily indicative of the results of operations for the fiscal year ending September 30, 1998.

                                                                                  At                           At
                                                                             December 31,                 September 30,
                                                                                 1997                         1997
                                                                     --------------------------      ----------------------
                                                                                 (Dollars In Thousands)
                                                                                       (unaudited)

Total Amount of:

  Cash and cash equivalents...................................                   $    652                     $    656

  Loans receivable, net.......................................                     33,795                       33,326

Investment Securities:

  Securities held to maturity.................................                        702                          805

  Securities available-for-sale...............................                      3,279                        3,046



Assets........................................................                     40,034                       39,192

Deposits......................................................                     34,992                       34,471

FHLB advances.................................................                      1,600                        1,300

Total equity (substantially restricted).......................                      3,010                        2,959



Number of:

  Real estate loans outstanding...............................                        937                          935

  Deposit accounts............................................                      1,991                        1,968

  Full service offices........................................                          1                            1


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Summary of Operations

                                                                          For The Three Months Ended
                                                                                 December 31,
                                                                      --------------------------------------

                                                                         1997                        1996
                                                                      ----------                 -----------
                                                                                (In Thousands)
                                                                                  (unaudited)

Interest income(1).....................                                 $  855                     $  772

Interest expense.......................                                    533                        478
                                                                         -----                      -----

  Net interest income..................                                    322                        294

Provision for loan losses..............                                      9                          9
                                                                         -----                      -----

  Net interest income after
    provision for loan losses..........                                    313                        285

Non-interest income....................                                     16                         11

Non-interest expense...................                                    247                        212
                                                                         -----                      -----

Income (loss) before income
  taxes (benefit)......................                                     82                         84

Income tax expense (benefit)...........                                     35                         30
                                                                         -----                      -----

Net income.............................                                 $   47                     $   54
                                                                         =====                      =====


(1) Includes amortizable loan origination fees.


(x)


Key Operating Ratios

                                                                                              At or For The
                                                                                            Three Months Ended
                                                                                              December 31,(1)
                                                                                -----------------------------------------
                                                                                     1997                      1996
                                                                                --------------            ---------------
                                                                                               (unaudited)

Performance Ratios:

Return on average assets (net income divided
  by average total assets).........................................                     .12%                      .15%

Return on average equity (net income divided
  by average total equity).........................................                    6.28%                     8.00%

Average interest-earning assets to average
  interest-bearing liabilities.....................................                  105.61%                   106.19%

Net interest income after provision for loan
  losses to average assets.........................................                     .79%                      .78%

Net interest rate spread...........................................                    3.22%                     3.51%



Equity Ratios:

Average assets to average equity (average
  equity divided by average total assets)..........................                    7.54%                     7.37%

Equity to assets at period end.....................................                    7.52%                     7.38%



Asset Quality Ratios:

Non-performing assets to total assets..............................                     .42%                      .44%

 Non-performing loans to net loans.................................                     .50%                      .52%

Allowance for loan losses, REO and other repossessed
  assets to non-performing assets..................................                  208.82%                   127.33%

Allowance for loan losses to total loans...........................                    1.04%                      .70%


(1) Annualized where appropriate.


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RECENT DEVELOPMENTS

Comparison of Financial Condition at December 31, 1997 and September 30, 1997

Total assets increased by $.8 million or 2.2% due primarily to loan growth of $.5 million or 1.4% in residential mortgages and consumer loans.

Deposits increased by $.5 million due primarily to increases in certificates of deposit. Advances from the Federal Home Loan Bank increased by $.3 million or 25.0% as a result of an increase in loan demand.

Total equity increased $51,000 as a result of net income for the three months ended December 31, 1997 and changes in the unrealized gain or loss on available-for-sale securities.

Non-Performing Assets and Delinquencies

Loans accounted for on a non-accrual basis decreased to $27,000 at December 31, 1997 from $124,000 at September 30, 1997. The decrease was the result of three loans being reclassified to performing loans. At December 31, 1997, the Bank had no repossessed assets or real estate owned. The allowance for loan losses was $355,000 at December 31, 1997.

Comparison of the Results of Operations for the Three Months Ended December 31, 1997 and 1996

Net Income. Net income decreased by $7,000 or 13% from net income of $54,000 for the three months ended December 31, 1996 to net income of $47,000 for the same three months of fiscal 1997. The return on average assets decreased from .15% to .12% for the three months ended December 31, 1997 and 1996, respectively.

Net Interest Income. Net interest income increased $28,000, or 9.5%, from $294,000 for the three months ended December 31, 1996 to $322,000 for the three months ended December 31, 1997. The increase was primarily due to an increase in residential mortgages and consumer loans.

Interest Income. Interest income increased $83,000 for the three months ended December 31, 1997 compared to the same three months ended December 31, 1996. The increase in interest income was primarily attributable to an increase in the average balance of interest-earning assets. The average balance of interest-earning assets increased by 7.5%. This increase in average interest-earning assets added an additional $83,000 of interest income. The average yield on interest-earning assets increased moderately to 8.9% from 8.7% for the quarters ended December 31, 1997 and 1996, respectively.

Interest Expense. Interest expense increased $55,000 from $478,000 for the three months ended December 31, 1996 to $533,000 for the three months ended December 31, 1997. The increase in interest expense was attributable to an increase in interest-bearing liabilities of $2.7 million and a slight increase in the cost of funds of 18 basis points (100 basis points equals 1%). The average balances of deposits and advances from the Federal Home Loan Bank increased by $2.5 million and $.3 million, respectively, from the three months ended December 31, 1996 to the three months ended December 31, 1997.

Non-Interest Income. Non-interest income increased by $5,000 primarily from an increase in service charges on deposit accounts of $1,000 and gain on the sale of other real estate of $3,000.


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Non-Interest Expense. Non-interest expense increased by $35,000 primarily due to increased contributions to local charitable and volunteer organizations. Our contributions during the three months ended December 31, 1996 were smaller by comparison due to the one-time deposit premium to recapitalize the SAIF that we paid during the 1996 fiscal year.

Income Taxes. Income tax expense amounted to $30,000 for the three months ended December 31, 1996 compared to $35,000 for the three months ended December 31, 1997.

Capital Resources

Management monitors our risk-based capital and leverage capital ratios in order to assess compliance with regulatory guidelines. At December 31, 1997, the Bank had tangible capital, leverage, and total risk- based capital of 7.50%, 7.50%, and 14.73%, respectively, which exceeded the OTS's minimum requirements of 1.50, 3.00% and 8.00%, respectively.


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RISK FACTORS

In addition to the other information in this document, you should consider carefully the following risk factors in evaluating an investment in our common stock.

Intent to Remain Independent

We have operated as an independent community oriented savings bank since 1936. It is our intention to continue to operate as an independent community institution following the Conversion. Accordingly, you are urged not to subscribe for shares of our common stock if you are anticipating a quick sale by us. See "Business of Quitman Bancorp, Inc."

Increased Construction Lending in Recent Periods

More than 10% of our loan portfolio consists of construction loans. Most of these construction loans have been originated during the past several years to a small number of borrowers to enable each of them to construct multiple homes in our market area. We originate construction loans, which are a form of temporary financing, because we receive higher interest rates from these borrowers. We also typically originate permanent financing loans for the purchase of these homes after they are constructed. We think construction loans have more risk than other loans we originate. We have not always originated the dollar volume of construction loans that we recently have. We do not expect the dollar amount of construction loans to significantly increase in the future. Because most of our construction loan borrowers are building more than one home at a time, including homes for which the ultimate borrower has not yet been identified, these loans are more speculative than our other loans. Construction loans are for relatively greater dollar amounts than we usually extend for other loans. The resulting larger loans with the increased risk could have a material negative impact on our financial condition and results of operations if one or more of these builders were unable to repay the amount they borrowed. See "Business of Quitman Federal Savings Bank -- Lending Activities -- Residential Construction Loans."

Lack of Active Market for Common Stock

Due to the small size of the offering, it is highly unlikely that an active trading market will develop and be maintained. If an active market does not develop, you may not be able to sell your shares promptly or perhaps at all, or sell your shares at a price equal to or above the price you paid for them. The common stock may not be appropriate as a short-term investment. See "Market for the Common Stock."

Limitations on Growth

Economic growth in our market area remains dependent upon a local, agriculture-based economy. Our deposit and loan activity is affected by economic conditions in our market area. Housing values, employment levels, and household income are at lower levels within a five mile radius of our office than they are within a 10 and 20 mile radius of our office. Within a five mile radius of our office, the population is declining and certain areas have extremely low housing values and household income. Most of our growth in recent years has come from outside a five ^ mile ^ radius of our office. We may not be able to ^ maintain our size or continue to grow in our market area if our office is too far from our potential customers. Further, we do not believe that we will substantially increase our consumer lending portfolio without hiring another employee who is experienced in consumer lending or that we will be able to significantly increase our construction lending portfolio, both of which portfolios have grown in recent years. As a result, our continued growth may depend upon such things as opening a branch office, and

1

our success in hiring additional people or creating new products. See "Business of Quitman Federal Savings Bank -- Market Area."

Potential Impact of Changes in Interest Rates and the Current Interest Rate Environment

Our ability to make a profit^ largely depends on our net interest income^. Net interest income is the difference between the interest income we earn on our interest-earning assets (such as mortgage loans and investment securities) and the interest expense we pay on our interest-bearing liabilities (such as deposits and borrowings). Most of our mortgage loans have rates of interest which are fixed for the term of the loan ("fixed rates") and are generally originated with terms of up to five years, while our deposit accounts have significantly shorter terms to maturity. Because our interest-earning assets generally have fixed rates of interest and have longer effective maturities than our interest-bearing liabilities, the yield on our interest-earning assets generally will adjust more slowly to changes in interest rates than the cost of our interest-bearing liabilities. As a result, our net interest income will be adversely affected by material and prolonged increases in interest rates. In addition, rising interest rates may adversely affect our earnings because there may be a lack of customer demand for loans. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Asset/Liability Management."

Changes in interest rates can also affect the average life of loans and mortgage-backed securities. Historically lower interest rates have resulted in increased prepayments of loans and mortgage-backed securities, as borrowers refinanced their mortgages in order to reduce their borrowing cost. Under these circumstances, we are subject to reinvestment risk to the extent that we are not able to reinvest such prepayments at rates which are comparable to the rates on the prepaid loans or securities.

Decreased Return on Average Equity and Increased Expenses Immediately After Conversion

As a result of the conversion, our equity will increase substantially. Our expenses will increase because of the costs associated with our employee stock ownership plan, restricted stock plan, and the costs of being a public company. We also expect to offer checking accounts to our customers during 1998 and may offer the use of an automated teller machine (an "ATM") ^ in the future. Our preparation costs for these products and the costs of soliciting checking account funds will also increase our expenses. We do not know if we will receive sufficient checking account funds or other income to offset these additional costs. Because of the increases in our equity and expenses, our return on equity may decrease as compared to our performance in previous years. Initially, we intend to invest the net proceeds in short term investments which generally have lower yields than residential mortgage loans. A lower return on equity could reduce the trading price of our shares. For 1997 our return on average equity was 9.34%.

Anti-Takeover Provisions and Statutory Provisions That Could Discourage Hostile Acquisitions of Control

Provisions in QBI's articles of incorporation and bylaws, the general corporation law of Georgia, and certain federal regulations may make it difficult for someone to pursue a tender offer, change in control or takeover attempt which is opposed by our management and ^ board of directors. These provisions include: restrictions on the acquisition of QBI's equity securities and limitations on voting rights; the classification of the terms of the members of the board of directors; certain provisions relating to the meeting of stockholders; denial of cumulative voting to stockholders in the election of directors; the issuance of preferred stock and additional shares of common stock without shareholder approval; and supermajority provisions for the approval of certain business combinations. As a result, stockholders who might desire to participate in such a transaction may not have an opportunity to do so. Such provisions will also render the removal of the current board of directors or management of QBI more difficult. In

2

addition, the effect of these provisions could be to reduce the trading price of our stock.^ See "Restrictions on Acquisitions of Quitman Bancorp, Inc."

Possible Voting Control by Directors and Officers

^ Based upon the midpoint of the estimated valuation range, our officers and directors intend to purchase approximately 8% of the common shares offered in the conversion. These purchases together with the purchase of stock by our employee stock ownership plan, as well as the potential acquisition of the common stock through the stock option plan and restricted stock plan, together with the votes of a few supporters, could make it difficult for a stockholder to obtain majority support for stockholder proposals which are opposed by our management and board of directors. ^ In addition, the voting of those shares could block the approval of transactions (i.e., business combinations and amendment to our articles of incorporation and bylaws) requiring the approval of 80% of the stockholders under QBI's articles of incorporation. See "Proposed Purchases by Directors and Officers," "Management of Quitman Federal Savings Bank -- Executive Compensation," "Description of Capital Stock," and "Restrictions on Acquisitions of Quitman Bancorp, Inc."

Possible Dilutive Effect of RSP and Stock Options

If the conversion is completed and shareholders approve the restricted stock plan and stock option plan, we will issue stock to our officers and directors through these plans. If the shares for the restricted stock plan and stock options are issued from our authorized but unissued stock, your voting interests could be cumulatively diluted by up to approximately 12.3% and the trading price of our stock may be reduced. See "Pro Forma Data," "Management of Quitman Federal Savings Bank -- Proposed Future Stock Benefit Plans," and "-- Restricted Stock Plan."

Financial Institution Regulation and Future of the Thrift Industry

We are subject to extensive regulation, supervision, and examination by the OTS and FDIC. Bills have been introduced in Congress that could consolidate the OTS with the Office of the Comptroller of the Currency ("OCC") and require the Bank to adopt a commercial bank charter. If we become a commercial bank, our investment authority and the ability of QBI to engage in diversified activities may be limited, which could adversely affect our value and profitability. See "Regulation."

Restrictions on Repurchase of Shares

Generally, during the first year following the conversion, QBI may not repurchase its shares. During each of the second and third years following the conversion, QBI may repurchase up to 5% of its outstanding shares. During those periods, if we decide that additional repurchases would be a good use of funds, we would not be able to do so without first obtaining OTS approval. There is no assurance that OTS approval would be given. See "The Conversion -- Restrictions on Repurchase of Shares."

3

PROPOSED PURCHASES BY DIRECTORS AND OFFICERS

The following table sets forth the approximate purchases of common stock by each director and executive officer and their associates in the conversion. Shares purchased by officers and directors in the conversion may not be sold for at least one year. The table assumes that 500,000 shares (the midpoint of the estimated valuation range, "EVR") of the common stock will be sold at ^ $10.00 per share and that sufficient shares will be available to satisfy subscriptions in all categories. ^

                                                                                                Aggregate
                                                                            Total               Price of               Percent
                                                                            Shares               Shares               of Shares
   Name                          Position                                Purchased(1)         Purchased(1)          Purchased(1)
   ----                          --------                                ------------         ------------          ------------

Claude R. Butler                 Chairman                                    10,000              $100,000                 2.0%
Larry Cunningham                 Vice Chairman                                5,000                50,000                 1.0%
Walter B. Holwell                Director                                     3,500                35,000                 0.7%
John W. ^ Romine                 Director                                     6,000                60,000               ^ 1.2%
Daniel M. Mitchell, Jr.          Director                                    10,000               100,000                 2.0%
Melvin E. Plair                  Director, President and
                                 Chief Executive
                                 Officer                                      1,500                15,000               ^ 0.3%
Peggy Forgione                   Vice President and
                                 Controller                                   2,500                25,000                 0.5%
                                                                             ------               -------                 ---
                                                                           ^ 38,500              $385,000                 7.7%
                                                                           ========               =======                 ===

(1) Does not include shares purchased by the employee stock ownership plan (the "ESOP"). The numbers in this column have been rounded and do not add to match the total.

4

USE OF PROCEEDS

QBI Bancorp will use 50% of the net proceeds from the offering to purchase all of the capital stock we will issue in connection with the conversion. A portion of the net proceeds to be retained by QBI will be loaned to our employee stock ownership plan to fund its purchase of 8% of the shares sold in the ^ conversion. On a short-term basis, the balance of the net proceeds retained by QBI will initially be invested in short-term investments. Although there are no current plans, the net proceeds may later be used to fund acquisitions of other financial services institutions or to diversify into non-banking activities, such as real estate acquisition and development. The net proceeds may also serve as a source of funds for the payment of dividends to stockholders or for the repurchase of the shares. For a period of one year following the completion of the conversion, we will not pay any dividends that would be treated for tax purposes as a return of capital or take any actions to pursue or propose such dividends. A portion of the net proceeds may also be used to fund the purchase of 4% of the shares for a restricted stock plan (the "RSP") which is anticipated to be adopted following the Conversion. See "Pro Forma ^ Data."

The funds we receive from the sale of our capital stock to QBI will be added to our general funds and will be used for general corporate purposes including: (i) investment in mortgages and other loans, (ii) investment in U.S. Government and federal agency securities, (iii) investment in mortgage-backed securities, (iv) funding loan commitments or (v) repaying FHLB advances. We may also use some of these funds for the preparation costs we expect to incur in connection with offering checking accounts and the use of an ATM to our customers. However, initially we intend to invest the net proceeds in short-term investments until we can deploy the proceeds into higher yielding loans. The funds added to our capital will further strengthen our capital position. We may use a portion of the funds to expand or relocate our office or to establish a branch office; however, we have no definite plans at this time.

The net proceeds may vary because the total expenses of the conversion may be more or less than those estimated. We expect our estimated expenses to range from $324,000 to $358,000 (or up to $378,000 in the event the maximum of the estimated valuation range is increased to up to $6,612,500). Our estimated net proceeds will range from $3,926,000 to ^ $5,391,000 (or up to $6,235,000 in the event the maximum of the estimated valuation range is increased to $6,612,500). See "Pro Forma Data." The net proceeds will also vary if expenses are different or if the number of shares to be issued in the conversion is adjusted to reflect a change in our estimated pro forma market value. Payments for shares made through withdrawals from existing deposit accounts with us will not result in the receipt of new funds for investment by us but will result in a reduction of our liabilities and interest expense as funds are transferred from interest-bearing certificates or accounts.

DIVIDENDS

Upon conversion, QBI's board of directors will have the authority to declare dividends on the shares, subject to statutory and regulatory requirements. It is anticipated that QBI will pay an annual cash dividend of $.20 following completion of the first quarter of 1999. Declarations of dividends by the board of directors will depend upon a number of factors, including: (i) the amount of the net proceeds retained by QBI in the conversion,
(ii) investment opportunities available, (iii) capital requirements, (iv) regulatory limitations, (v) results of operations and financial condition, (vi) tax considerations, and (vii) general economic conditions. Upon review of such considerations, the board may authorize future dividends if it deems such payment appropriate and in compliance with applicable law and regulation. In addition, from time to time in an effort to prevent the accumulation of excess levels of capital, QBI may pay special cash dividends. Special cash dividends, if paid, may be paid in addition to, or instead of, regular cash dividends. For a period of one year following the completion of the conversion, we will not pay

5

any dividends that would be treated for tax purposes as a return of capital ^ or take any actions to pursue or propose such dividends. In addition, there can be no assurance that regular or special dividends will be paid, or, if paid, will continue to be paid. See "Historical and Pro Forma Capital Compliance," "The Conversion -- Effects of Conversion to Stock Form on Depositors and Borrowers of Quitman Federal Savings Bank -- Liquidation Account" and "Regulation -- Dividend and Other Capital Distribution Limitations."

QBI is not subject to OTS regulatory restrictions on the payment of dividends to its stockholders although the source of such dividends will be dependent in part upon the receipt of dividends from us. QBI is subject, however, to the requirements of Georgia law, which generally limit the payment of dividends to amounts that will not affect the ability of QBI, after the dividend has been distributed, to pay its debts in the ordinary course of business.

In addition to the foregoing, the portion of our earnings which has been appropriated for bad debt reserves and deducted for federal income tax purposes cannot be used by us to pay cash dividends to QBI without the payment of federal income taxes by us at the then current income tax rate on the amount deemed distributed, which would include the amount of any federal income taxes attributable to the distribution. See "Taxation -- Federal Taxation" and Note 9 to our financial statements. QBI does not contemplate any distribution by us that would result in a recapture of our bad debt reserve or otherwise create federal tax liabilities.

MARKET FOR THE COMMON STOCK

As a newly organized company, QBI has never issued capital stock, and consequently there is no established market for the common stock. Following the completion of the offering, it is anticipated that the common stock (symbol: ^ QMAN) will be traded on the over-the-counter market with quotations available through the OTC ^ Bulletin Board. Trident is expected to make a market in the common stock by developing and maintaining historical stock trading records, soliciting potential buyers and sellers and attempting to match buy and sell orders. In connection with its market making activities, Trident may buy or sell shares from time to time for its own account. However, Trident will not be subject to any obligation with respect to such efforts. If the common stock cannot be quoted and traded on the OTC Bulletin Board it is expected that the transactions in the common stock will be reported in the pink sheets of the National Quotation Bureau, Inc.

The development of an active trading market depends on the existence of willing buyers and sellers. Due to the small size of the offering, it is highly unlikely that an active trading market will develop and be maintained. You could have difficulty disposing of your shares and you should not view the shares as a short-term investment. You may not be able to sell your shares at a price equal to or above the price you paid for the shares.

6

CAPITALIZATION

The following table presents, as of September 30, 1997, our historical capitalization and the consolidated capitalization of QBI after giving effect to the conversion and the other assumptions set forth below and under "Pro Forma Data," based upon the sale of shares at the minimum, midpoint, maximum, and 15% above the maximum of the EVR at a price of $10.00 per share.

                                                                              Pro Forma Consolidated Capitalization
                                                                                      Based on the Sale of (2)(3)
                                                                  ------------------------------------------------------------------
                                                 Historical
                                               Capitalization
                                               at September 30,         425,000          ^ 500,000     ^ 575,000       ^ 661,250 ^
                                                     1997                Shares             Shares        Shares        ^ Shares
                                                    ------               ------             ------        ------        --------
                                                                                       (In thousands)
Deposits(1) ..................................       $34,471        $    34,471         $   34,471    $   34,471    $    34,471
Other Borrowings..............................         1,300              1,300              1,300         1,300          1,300
                                                      ------         ----------          ---------     ---------     ----------
  Total deposits and other borrowings.........       $35,771        $    35,771         $   35,771    $   35,771    $    35,771
                                                      ======         ==========          =========     =========     ==========

Stockholders' Equity:
 Preferred Stock, no par value per share,
   1,000,000 shares authorized; none to be
   issued.....................................       $    --        $        --         $      --     $       --    $        --
 Common Stock, $.10 par value, 4,000,000
   shares authorized; total shares to be
   issued as reflected........................            --                 43                 50            58             66
Additional paid-in capital....................            --              3,883              4,609         5,334          6,169
  Total equity(4).............................         2,959              2,959              2,959         2,959          2,959
Less:
  Common Stock acquired by ESOP...............            --               (340)              (400)         (460)          (529)
  Common Stock acquired by RSP................                             (170)              (200)         (230)          (265)
                                                     -------         ----------          ---------      --------      ---------
Total stockholders' equity....................       $ 2,959        $     6,375         $    7,018     $   7,661     $    8,400
                                                     =======         ==========          =========      ========      =========


(1) Excludes accrued interest payable on deposits. Withdrawals from savings accounts for the purchase of stock have not been reflected in these adjustments. Any withdrawals will reduce pro forma capitalization by the amount of such withdrawals.
(2) Does not reflect the increase in the number of shares of common stock after the conversion in the event of implementation of the Option Plan or RSP. See "Management of Security Federal Savings Bank - Proposed Future Stock Benefit Plans -- Stock Option Plan" and "-- Restricted Stock Plan."
(3) Assumes that 8% and 4% of the shares issued in the conversion will be purchased by the ESOP and RSP, respectively. No shares will be purchased by the RSP in the conversion. It is assumed on a pro forma basis that the RSP will be adopted by the board of directors, approved by stockholders of QBI, and reviewed by the OTS. It is assumed that the RSP will purchase common stock in the open market within one year of the conversion in order to give an indication of its effect on capitalization. The pro forma presentation does not show the impact of: (a) results of operations after the conversion, (b) changing market prices of shares of common stock after the conversion, or (c) a smaller than 4% purchase by the RSP. Assumes that the funds used to acquire the ESOP shares will be borrowed from QBI for a ten year term at the prime rate as published in The Wall Street Journal. For an estimate of the impact of the ESOP on earnings, see "Pro Forma Data." The Savings Bank intends to make contributions to the ESOP sufficient to service and ultimately retire its debt. The amount to be acquired by the ESOP and RSP is reflected as a reduction of stockholders' equity. The issuance of authorized but unissued shares for the RSP in an amount equal to 4% of the outstanding shares of common stock will have the effect of diluting existing stockholders' interests by 3.9%. There can be no assurance that stockholder approval of the RSP will be obtained. See "Management of Quitman Federal Savings Bank - Proposed Future Stock Benefit Plans - Restricted Stock Plan."
(4) Includes retained earnings and gains and losses on available-for-sale securities. The equity of the Bank will be substantially restricted after the conversion. See "Dividends," "Regulation - Dividends and Other Capital Distribution Limitations," "The Conversion - Effects of Conversion to Stock Form on Depositors and Borrowers of Security Federal Savings Bank - Liquidation Account" and Note 17 to the Financial Statements.

7

PRO FORMA DATA

The actual net proceeds from the sale of the common stock cannot be determined until the conversion is completed. However, net proceeds are currently estimated to be between $3.4 million and $5.4 million at the minimum and maximum, as adjusted, of the EVR, based upon the following assumptions: (i) 8% of the shares will be sold to the ESOP and 38,500 shares will be sold to executive officers, and their associates; (ii) Trident will receive a fee ^ equal to 2.5% of the ^ gross proceeds from the common stock sold in the ^ conversion, excluding the sale of shares to the ESOP, executive officers, directors and their associates; (iii) no shares will be sold in a ^ syndicated community offering; (iv) other conversion expenses, excluding the sales fees paid to Trident, will be $236,000; and (v) 4% of the shares will be sold to the RSP. Because management of the Savings Bank presently intends to adopt the RSP within the first year following the conversion, a purchase by the RSP in the conversion has been included with the pro forma data to give an indication of the effect of a 4% purchase by the RSP, at a $10.00 per share purchase price in the market, even though the RSP does not currently exist and is prohibited by OTS regulation from purchasing shares in the conversion. The pro forma presentation does not show the effect of: (a) results of operations after the conversion, (b) changing market prices of the shares after the conversion, (c) less than a 4% purchase by the RSP, or (d) dilutive effects of newly issued shares under the restricted stock plan and the stock option plan (see footnotes 2 and 3).

The following table sets forth, our historical net earnings and stockholders' equity prior to the conversion and the pro forma consolidated net earnings and stockholders' equity of QBI following the conversion. Unaudited pro forma consolidated net earnings and stockholders' equity have been calculated for the fiscal year ended September 30, 1997 as if the common stock to be issued in the conversion had been sold at October 1, 1996 and the estimated net proceeds had been invested at 5.52%, which was approximately equal to the one-year U.S. Treasury bill rate at September 30, 1997. The one-year U.S. Treasury bill rate, rather than an arithmetic average of the average yield on interest-earning assets and average rate paid on deposits, has been used to estimate income on net proceeds because it is believed that the one-year U.S. Treasury bill rate is a more accurate estimate of the rate that would be obtained on an investment of net proceeds from the offering. In calculating pro forma income, an effective state and federal income tax rate of 37% has been assumed, resulting in an after tax yield of 3.48% for the fiscal year ended September 30, 1997. Withdrawals from deposit accounts for the purchase of shares are not reflected in the pro forma adjustments. The computations are based upon the assumptions that 425,000 shares (minimum of EVR) shares, 500,000 (midpoint of EVR), 575,000 shares (maximum of EVR) or 661,250 shares (maximum, as adjusted, of the EVR) are sold at a price of $10.00 per share. As discussed under "Use of Proceeds," a portion of the net proceeds that QBI will receive will be loaned to the ESOP to fund its anticipated purchase of 8.0% of shares issued in the conversion. It is assumed that the yield on the net proceeds of the conversion retained by QBI will be the same as the yield on the net proceeds of the conversion transferred to us. Historical and pro forma per share amounts have been calculated by dividing historical and pro forma amounts by the indicated number of shares. Per share amounts have been computed as if the shares had been outstanding at the beginning of the periods or at the dates shown, but without any adjustment of per share historical or pro forma stockholders' equity to reflect the earnings on the estimated net proceeds.

8

The stockholders' equity information is not intended to represent the fair market value of the shares, or the current value of our assets or liabilities, or the amounts, if any, that would be available for distribution to stockholders in the event of liquidation. For additional information regarding the liquidation account, see "The Conversion -- Certain Effects of the Conversion to Stock Form on Depositors and Borrowers of Quitman Federal Savings Bank -- Liquidation Account" and Note 17 to the Financial Statements. The pro forma income derived from the assumptions set forth above should not be considered indicative of the actual results of our operations for any period. Such pro forma data may be materially affected by a change in the price per share or number of shares to be issued in the conversion and by other factors. For information regarding investment of the proceeds see "Use of Proceeds" and "The Conversion -- Stock Pricing" and "-- Change in Number of Shares to be Issued in the Conversion."

9

                                                   At or For the Year Ended September 30, 1997
                                                 ------------------------------------------------
                                                    425,000     500,000     575,000     661,250
                                                   Shares at   Shares at   Shares at   Shares at
                                                    $10.00      $10.00      $10.00      $10.00
                                                   Per Share   Per Share   Per Share   Per Share
                                                   ---------   ---------   ---------   ---------
                                                 (Dollars in thousands, except per share amounts)

Gross proceeds ..................................   $ 4,250     $ 5,000     $ 5,750     $ 6,613
Less estimated offering expenses ................       324         341         359         378
                                                    -------     -------     -------     -------
  Estimated net proceeds ........................     3,926       4,659       5,391       6,235
  Less:  ESOP funded by the Company .............      (340)       (400)       (460)       (529)
         RSP funded by the Company ..............      (170)       (200)       (230)       (265)
                                                    -------     -------     -------     -------
  Estimated investable net proceeds: ............   $ 3,416     $ 4,059     $ 4,701     $ 5,441
                                                    =======     =======     =======     =======
Net income:
  Historical net income .........................   $   263     $   263     $   263     $   263
  Pro forma earnings on investable net proceeds .       119         141         164         189
  Pro forma ESOP adjustment(1) ..................       (21)        (25)        (29)        (33)
  Pro forma RSPs adjustment(2) ..................       (21)        (25)        (29)        (33)
                                                    -------     -------     -------     -------
         Total ..................................   $   340     $   354     $   369     $   386
                                                    =======     =======     =======     =======
Net income per share:
  Historical net income per share ...............   $  0.67     $  0.57     $  0.49     $  0.43
  Pro forma earnings on net proceeds ............      0.30        0.30        0.31        0.31
  Pro forma ESOP adjustment(1) ..................     (0.05)      (0.05)      (0.05)      (0.05)
   Pro forma RSP adjustment(2) ..................     (0.05)      (0.05)      (0.05)      (0.05)
                                                    -------     -------     -------     -------
         Total(5) ...............................   $  0.87     $  0.77     $  0.70     $  0.64
                                                    =======     =======     =======     =======
Stockholders' equity:(3)
  Historical ....................................   $ 2,959     $ 2,959     $ 2,959     $ 2,959
  Estimated net proceeds ........................     3,926       4,659       5,391       6,235
  Less:  Common stock acquired by ESOP(1) .......      (340)       (400)       (460)       (529)
         Common stock acquired by RSP(2).........      (170)       (200)       (230)       (265)
                                                    -------     -------     -------     -------
         Total ..................................   $ 6,375     $ 7,018     $ 7,660     $ 8,400
                                                    =======     =======     =======     =======
Stockholders' equity per share:(3)
  Historical ....................................   $  6.96     $  5.92     $  5.15     $  4.47
  Estimated net proceeds ........................      9.24        9.32        9.38        9.43
  Less:  Common Stock acquired by ESOP(1) .......     (0.80)      (0.80)      (0.80)      (0.80)
         Common stock acquired by RSP(2) ........     (0.40)      (0.40)      (0.40)      (0.40)
                                                    -------     -------     -------     -------
         Total ..................................   $ 15.00     $ 14.04     $ 13.33     $ 12.70
                                                    =======     =======     =======     =======
Offering price as percentage of pro forma
stockholders' equity per share(4) ...............     66.67%      71.23%      75.02%      78.74%
                                                    =======     =======     =======     =======
Ratio of offering price to pro forma earnings per
share(5) ........................................     11.49x      12.99x      14.29x      15.63x
                                                    =======     =======     =======     =======

(Footnotes on following page)

10


(1) Assumes 8% of the shares sold in the conversion are purchased by the ESOP, and that the funds used to purchase such shares are borrowed from QBI. The approximate amount expected to be borrowed by the ESOP is not reflected as a liability but is reflected as a reduction of capital. We intend to make annual contributions to the ESOP over a ten year period in an amount at least equal to the principal and interest requirement of the debt. The pro forma net income assumes: (i) that 425,000, 500,000, 575,000 and 661,250 shares at the minimum, mid-point, maximum and maximum, as adjusted of the EVR, were committed to be released during the year ended September 30, 1997 at an average fair value of $10.00 per share in accordance with Statement of Position (SOP) 93-6 of the American Institute of Certified Public Accountants ("AICPA"); (ii) the effective tax rate was 37% for such periods; and (iii) only the ESOP shares committed to be released were considered outstanding for purposes of the per share net earnings. The pro forma stockholders' equity per share calculation assumes all ESOP shares were outstanding, regardless of whether such shares would have been released. Because QBI will be providing the ESOP loan, only principal payments on the ESOP loan are reflected as employee compensation and benefits expense. As a result, to the extent the value of the shares appreciates over time, compensation expense related to the ESOP will increase. For purposes of the preceding tables, it was assumed that a ratable portion of the ESOP shares purchased in the conversion were committed to be released during the period ended September 30, 1997. See Note 5 below. If it is assumed that all of the ESOP shares were included in the calculation of earnings per share for the period ended at September 30, 1997, earnings per share would have been $.80, $.71, and $.64, and $.58, respectively, based on the sale of shares at the minimum, midpoint, maximum and the maximum, as adjusted, of the EVR. See Management of Quitman Federal Savings Bank -- Other Benefits -- Employee Stock Ownership Plan.

(2) Assumes issuance to the RSP of 17,000, 20,000, 23,000, and 26,450 shares at the minimum, mid-point, maximum, and maximum, as adjusted of the EVR. The assumption in the pro forma calculation is that (i) shares were purchased by QBI following the conversion, (ii) the purchase price for the shares purchased by the RSP was equal to the purchase price of $10.00 per share and (iii) 20% of the amount contributed was an amortized expense during such period. Such amount does not reflect possible increases or decreases in the value of such stock relative to the Purchase Price. As we accrue compensation expense to reflect the five year vesting period of such shares pursuant to the RSP, the charge against capital will be reduced accordingly. Implementation of the RSP within one year of conversion would require regulatory and stockholder approval at a meeting of our stockholders to be held no earlier than six months after the conversion. If the shares to be purchased by the RSP are assumed at September 30, 1997, to be newly issued shares purchased from QBI by the RSP at the Purchase Price, at the minimum, midpoint, maximum and maximum, as adjusted, of the EVR, pro forma stockholders' equity per share would have been $14.42, $13.50, $12.81 and $12.21, respectively, and pro forma earnings per share would have been $.84, $.75, $.68 and $.62 for the year ended September 30, 1997. As a result of the RSP from newly issued shares, stockholders' voting interests could be diluted by up to approximately 3.9%. See Management of Quitman Federal Savings Bank -- Proposed Future Stock Benefit Plans -- Restricted Stock Plan.

(3) Assumes that following the consummation of the conversion, QBI will adopt the Option Plan, which if implemented within one year of conversion would be subject to regulatory review and board of director and stockholder approval, and that such plan would be considered and voted upon at a meeting of QBI stockholders to be held no earlier than six months after the conversion. Under the Option Plan, employees and directors could be granted options to purchase an aggregate amount of shares equal to 1096 of the shares issued in the conversion at an exercise price equal to the market price of the shares on the date of grant. In the event the shares issued under the Option Plan were newly issued rather than purchased in the open market, the voting interests of existing stockholders could be diluted by up to approximately 9.1% . At the minimum, midpoint, maximum and the maximum, as adjusted, of the EVR, if all shares under the Option Plan were newly issued at the beginning of the respective periods and the exercise price for the option shares were equal to the Purchase Price, the number of outstanding shares would increase to 467,500, 550,000, 632,500 and 727,375, respectively, pro forma stockholders' equity per share would have been $14.55, $13.67, $13.02 and $12.46, respectively and pro forma earnings per share would have been $.78, $.69 $.62 and $.57, respectively.

11

(4) Consolidated stockholders' equity represents the excess of the carrying value of the assets of the over its liabilities. The calculations are based upon the number of shares issued in the conversion, without giving effect to SOP 93-6. The amounts shown do not reflect the federal income tax consequences of the potential restoration to income of the tax bad debt reserves for income tax purposes, which would be required in the event of liquidation. The amounts shown also do not reflect the amounts required to be distributed in the event of liquidation to eligible depositors from the liquidation account which will be established upon the consummation of the conversion. Pro forma stockholders' equity information is not intended to represent the fair market value of the shares, the current value of our assets or liabilities or the amounts, if any, that would be available for distribution to stockholders in the event of liquidation. Such pro forma data may be materially affected by a change in the number of shares to be sold in the conversion and by other factors.

(5) Pro forma net income per share calculations include the number of shares assumed to be sold in the conversion and, in accordance with SOP 93-6, exclude ESOP shares which would not have been released during the period. Accordingly, 30,600, 36,000, 41,400, and 47,610 shares have been subtracted from the shares assumed to be sold at the minimum, mid-point, maximum, and maximum, as adjusted, of the EVR, respectively, and 3,400, 4,000, 4,600, and 5,290 shares are assumed to be outstanding at the minimum, mid-point, maximum, and maximum, as adjusted of the EVR. See Note 1 above.

12

HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE

The following table presents our historical and pro forma capital position relative to our capital requirements as of September 30, 1997. For a discussion of the assumptions underlying the pro forma capital calculations presented below, see "Use of Proceeds," "Capitalization" and "Pro Forma Data." The definitions of the terms used in the table are those provided in the capital regulations issued by the OTS. For a discussion of the capital standards applicable to us, see "Regulation -- Savings Institution Regulation -- Regulatory Capital Requirements."

                                                                                     Pro Forma(1)
                                               -------------------------------------------------------------------------------------
                                                   $4,250,000            $5,000,000             $5,750,000          $6,612,500
                                                    Minimum               Midpoint               Maximum        Maximum, as adjusted
                                               ------------------    --------------------  -------------------- --------------------
                                  Percentage           Percentage            Percentage            Percentage           Percentage
                         Amount  of Assets(2)   Amount of Assets(2)  Amount   of Assets(2)  Amount of Assets(2)  Amount of Assets(2)
                         ------  ------------   ------ ------------  ------   ------------  ------ ------------  ------ ------------
                                                                   (Dollars in Thousands)

GAAP Capital............ $2,959      7.55%      $4,412     10.86%    $4,689     11.46%     $4,965    12.05%     $5,283      12.73%
                          =====     =====        =====     =====      =====     =====       =====    =====       =====      =====

  Tangible Capital...... $2,953      7.54%      $4,406     10.84%    $4,683     11.44%     $4,959    12.04%     $5,277      12.71%
  Tangible Capital
    Requirement.........    588      1.50          610      1.50        614      1.50         618     1.50         623       1.50
                          -----     -----        -----     -----      -----     -----       -----    -----       -----     ------
  Excess................ $2,365      6.04%      $3,796      9.34%    $4,069      9.94%     $4,341    10.54%     $4,654      11.21%
                          =====     =====        =====     =====      =====     =====       =====    =====       =====      =====


  Core Capital(3)....... $2,953      7.54%      $4,406     10.84%    $4,683     11.44%     $4,959    12.04%     $5,277      12.71%
  Core Capital
    Requirement(4)......  1,176      3.00        1,219      3.00      1,227      3.00       1,236     3.00       1,245       3.00
                          -----     -----        -----     -----      -----     -----       -----    -----       -----     ------
  Excess................ $1,777      4.54%      $3,187      7.84%    $3,455      8.44%     $3,723     9.04%     $4,031       9.71%
                          =====     =====        =====     =====      =====     =====       =====    =====       =====      =====



  Total Risk-Based
    Capital(4).......... $3,299     14.25%    ^ $4,752    20 .39%    $5,029     21.40%     $5,305    22.48%     $5,623      23.73%
  Risk-Based Capital
    Requirement.........  1,852      8.00        1,876      8.00      1,880     8 .00       1,885     8.00       1,890       8.00
                          -----     -----        -----     -----      -----    ------       -----    -----       -----     ------
  Excess................ $1,447      6.25%    ^ $2,876     12.39%    $3,149     13.40%     $3,420    14.48%     $3,733      15.73%
                          =====     =====        =====     =====      =====     =====       =====    =====       =====      =====


(1) Institutions must value available-for-sale debt securities at amortized cost, rather than at fair value, for purposes of calculating regulatory capital. Institutions are still required to comply with SFAS No. 115 for financial reporting purposes. The pro forma data has been adjusted to reflect reductions in our capital that would result from an assumed 8% purchase by the ESOP and 4% purchase by the RSP as of September 30, 1997. It is assumed that QBI will retain 50% of net ^ proceeds from the offering. See "Use of Proceeds."

(2) GAAP, adjusted, or risk-weighted assets as appropriate.
(3) The unrealized gain on securities available-for-sale of $6,000 has been added to GAAP Capital to arrive at our Tangible and Core Capital.
(4) Proposed regulations of the OTS could increase the core capital requirements to a ratio between 4% and 5%, based upon an association's regulatory examination rating. See "Regulation - Regulatory Capital Requirements." Our Risk-Based Capital includes our Tangible Capital plus $346,000 of our allowance for loan losses. Our Risk-weighted assets as of September 30, 1997 totaled approximately $23.2 million. Net proceeds available for investment by us are assumed to be invested in interest earning assets that have a 20% risk-weighting.

13

THE CONVERSION

Our board of directors and the OTS have approved the Plan subject to it's approval by our members, and subject to the satisfaction of certain other conditions imposed by the OTS in its approval. OTS approval, however, does not constitute a recommendation or endorsement of the Plan.

General

On October 14, 1997, our board of directors adopted a Plan of Conversion, pursuant to which we will convert from a federally chartered mutual savings bank to a federally chartered stock savings bank and become a wholly owned subsidiary of QBI. The conversion will include adoption of the proposed Federal Stock charter and Bylaws which will authorize the issuance of capital stock by us. Under the Plan, our capital stock is being sold to QBI and the common stock of QBI is being offered to our eligible depositors and members and then to the public. The conversion will be accounted for at historical cost in a manner similar to a pooling of interests. The OTS has approved QBI's application to become a savings and loan holding company and to acquire all of our common stock to be issued in the conversion.

The shares are first being offered in a Subscription Offering to holders of subscription rights. To the extent shares of common stock remain available after the Subscription Offering, shares of common stock may be offered in a Community Offering ^ on a best efforts basis through Trident in such a manner as to promote a wide distribution of the shares. The Community Offering ^, if any, may commence anytime subsequent to the commencement of the Subscription Offering. Shares not subscribed for in the Subscription^ and Community ^ Offerings may be offered for sale by QBI on a best efforts basis in a Syndicated ^ Community Offering conducted by Trident. We have the right, in our sole discretion, to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the Community^ and Syndicated ^ Community Offering. See "-- Community ^ Offering."

Shares of common stock in an amount equal to our pro forma market value as a stock savings institution must be sold in order for the conversion to become effective. The Community Offering^ or Syndicated ^ Community Offering must be completed within 45 days after the last day of the Subscription Offering period unless such period is extended by us with the approval of the OTS. The Plan provides that the conversion must be completed within 24 months after the date of the approval of the Plan by our members.

In the event that we are unable to complete the sale of common stock and effect the conversion within 45 days after the end of the Subscription Offering, we may request an extension of the period by the OTS. No assurance can be given that the extension would be granted if requested. Due to the volatile nature of market conditions, no assurances can be given that our valuation would not substantially change during any such extension. If the EVR of the shares must be amended, no assurance can be given that such amended EVR would be approved by the OTS. Therefore, it is possible that if the conversion cannot be completed within the requisite period, we may not be permitted to complete the conversion. A substantial delay caused by an extension of the period may also significantly increase the expense of the conversion. No sales of the shares may be completed in the offering unless the Plan is approved by our members.

The completion of the offering is subject to market conditions and other factors beyond our control. No assurance can be given as to the length of time following approval of the Plan at the meeting of our members that will be required to complete the sale of shares being offered in the conversion. If

14

delays are experienced, significant changes may occur in our estimated pro forma market value upon conversion together with corresponding changes in the offering price and the net proceeds to be realized by us from the sale of the shares. In the event the conversion is terminated, we will charge all conversion expenses against current income and any funds collected by us in the offering will be promptly returned, with interest, to each potential investor.

Effects of Conversion to Stock Form on Depositors and Borrowers of Quitman Federal Savings Bank

Voting Rights. Currently in our mutual form, our depositor and certain borrower members have voting rights and may vote for the election of directors. Following the conversion, all voting rights will be held solely by stockholders.

Savings Accounts and Loans. The balances, terms and FDIC insurance coverage of savings accounts will not be affected by the conversion. Furthermore, the amounts and terms of loans and obligations of the borrowers under their individual contractual arrangements with us will not be affected by the conversion.

Tax Effects. We have received an opinion from our counsel, Malizia, Spidi, Sloane & Fisch, P.C. on the federal tax consequences of the conversion. The opinion has been filed as an exhibit to the registration statement of which this Prospectus is a part and covers those federal tax matters that are material to the transaction. The opinion provides, in part, that: (i) the conversion will qualify as a reorganization under Section 368(a)(1)(F) of the Code, and no gain or loss will be recognized by us by reason of the proposed conversion; (ii) no gain or loss will be recognized by us upon the receipt of money from QBI for our stock, and no gain or loss will be recognized by QBI upon the receipt of money for the shares; (iii) our assets will have the same basis before and after the conversion; (iv) the holding period of our assets will include the period during which the assets were held by us in our mutual form; (v) no gain or loss will be recognized by the Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members upon the issuance to them of withdrawable savings accounts in us in the stock form in the same dollar amount as their savings accounts in us in the mutual form plus an interest in the liquidation account of us in the stock form in exchange for their savings accounts in us in the mutual form; (vi) provided that the amount to be paid for the shares pursuant to the subscription rights is equal to the fair market value of such shares, no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members under the Plan upon the distribution to them of nontransferable subscription rights; (vii) the basis of each account holder's savings accounts after the conversion will be the same as the basis of his savings accounts prior to the conversion, decreased by the fair market value of the nontransferable subscription rights received and increased by the amount, if any, of gain recognized on the exchange; (viii) the basis of each account holder's interest in the liquidation account will be zero; (ix) the holding period of the common stock acquired through the exercise of subscription rights shall begin on the date on which the subscription rights are exercised; (x) we will succeed to and take into account the earnings and profits or deficit in earnings and profits of us as of the date of conversion; (xi) immediately after conversion, we will succeed to the bad debt reserve accounts previously held by us, and the bad debt reserves will have the same character in our hands after conversion as if no distribution or transfer had occurred; and (xii) the creation of the liquidation account will have no effect on our taxable income.

The opinion from Malizia, Spidi, Sloane & Fisch, P.C. is based in part on the assumption that the exercise price of the subscription rights will be approximately equal to the fair market value of those shares at the time of the completion of the proposed conversion. We have received an opinion of FinPro which, based on certain assumptions, concludes that the subscription rights to be received by Eligible

15

Account Holders and other eligible subscribers do not have any economic value at the time of distribution or at the time the subscription rights are exercised. Such opinion is based on the fact that such rights are: (i) acquired by the recipients without payment therefor, (ii) non-transferable, (iii) of short duration, and (iv) afford the recipients the right only to purchase shares at a price equal to their estimated fair market value, which will be the same price at which shares for which no subscription right is received in the Subscription Offering will be offered in ^ a public offering. If the subscription rights granted to Eligible Account Holders or other eligible subscribers are deemed to have an ascertainable value, receipt of such rights would be taxable only to those Eligible Account Holders or other eligible subscribers who exercise the subscription rights in an amount equal to such value (either as a capital gain or ordinary income), and we could recognize gain on such distribution.

We are also subject to Georgia income taxes and have received an opinion from Daniel M. Mitchell, Jr., Esq. that the conversion will be treated for Georgia state tax purposes similar to the conversion's treatment for federal tax purposes. The opinion has been filed as an exhibit to the registration statement to which this Prospectus is a part and covers those state tax matters that are material to the transaction.

Unlike a private letter ruling, the opinions of Malizia, Spidi, Sloane & Fisch, P.C., Daniel M. Mitchell, Esq. and FinPro have no binding effect or official status, and no assurance can be given that the conclusions reached in any of those opinions would be sustained by a court if contested by the IRS or the Georgia tax authorities. Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members are encouraged to consult with their own tax advisers as to the tax consequences in the event the subscription rights are deemed to have an ascertainable value.

Liquidation Account. In the unlikely event of our complete liquidation in our present mutual form, each depositor is entitled to equal distribution of any of our assets, pro rata to the value of his accounts, remaining after payment of claims of all creditors (including the claims of all depositors to the withdrawal value of their accounts). Each depositor's pro rata share of such remaining assets would be in the same proportion as the value of his deposit accounts was to the total value of all deposit accounts in us at the time of liquidation.

Upon a complete liquidation after the conversion, each depositor would have a claim, as a creditor, of the same general priority as the claims of all other general creditors of ours. Therefore, except as described below, a depositor's claim would be solely in the amount of the balance in his deposit account plus accrued interest. A depositor would not have an interest in the residual value of our assets above that amount, if any.

The Plan provides for the establishment, upon the completion of the conversion, of a special "liquidation account" for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders. Each Eligible Account Holder and Supplemental Eligible Account Holder, if he continues to maintain his deposit account with us, would be entitled on a complete liquidation of us after conversion, to an interest in the liquidation account prior to any payment to stockholders. Each Eligible Account Holder would have an initial interest in such liquidation account for each deposit account held in us on the qualifying date, December 31, 1995. Each Supplemental Eligible Account Holder would have a similar interest as of the qualifying date, December 31, 1997. The interest as to each deposit account would be in the same proportion of the total liquidation account as the balance of the deposit account on the qualifying dates was to the aggregate balance in all the deposit accounts of Eligible Account Holders and Supplemental Eligible Account Holders on such qualifying dates. However, if the amount in the deposit account on any annual closing date of ours (September 30) is less than the amount in such account on the respective qualifying dates, then the interest in this special liquidation account would be reduced

16

from time to time by an amount proportionate to any such reduction, and the interest would cease to exist if such deposit account were closed. The interest in the special liquidation account will never be increased despite any increase in the related deposit account after the respective qualifying dates.

No merger, consolidation, purchase of bulk assets with assumptions of savings accounts and other liabilities, or similar transactions with another insured institution in which transaction we in our converted form are not the surviving institution shall be considered a complete liquidation. In such transactions, the liquidation account shall be assumed by the surviving institution.

Subscription Rights and the Subscription Offering

Non-transferable subscription rights to purchase shares of the common stock have been granted to persons and entities entitled to purchase shares in the Subscription Offering under the Plan. If the Community Offering^ or Syndicated ^ Community Offering, as described below, extends beyond 45 days following the completion of the Subscription Offering, subscribers will be resolicited. Subscription priorities have been established for the allocation of stock to the extent that shares are available after satisfaction of all subscriptions of all persons having prior rights and subject to the purchase limitations set forth in the Plan and as described below under "-- Limitations on Purchases of Shares." The following priorities have been established:

Category 1: Eligible Account Holders (First Priority). Eligible Account Holders are persons who had a deposit account of at least $50 with us on December 31, 1995. Each Eligible Account Holder will receive non-transferable subscription rights on a priority basis to purchase that number of shares of common stock which is equal to the greater of 6,000 shares ($60,000), or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the Eligible Account Holder and the denominator is the total amount of qualifying deposits of all Eligible Account Holders. If such allocation results in an oversubscription, shares shall be allocated among subscribing Eligible Account Holders so as to permit each such account holder, to the extent possible, to purchase the lesser of 100 shares or the total amount of his subscription. Any shares not so allocated shall be allocated among the subscribing Eligible Account Holders on an equitable basis, related to the amounts of their respective qualifying deposits as compared to the total qualifying deposits of all subscribing Eligible Account Holders. Only a person(s) with a qualifying deposit as of the eligibility record date (or a successor entity or estate) shall receive subscription rights. Any Person(s) added to a Savings Account after the Eligibility Record Date is not an Eligible Account Holder. Subscription rights received by officers and directors in this category based on their increased deposits in us in the one-year period preceding December 31, 1995, are subordinated to the subscription rights of other Eligible Account Holders. See "-- Limitations on Purchases and Transfer of Shares."

Category 2: Tax-Qualified Employee Benefit Plans (Second Priority). Our tax-qualified employee benefit plans ("Employee Plans") have been granted subscription rights to purchase up to 8% of the total shares issued in the conversion. The ESOP is an Employee Plan.

The right of Employee Plans to subscribe for shares is subordinate to the right of the Eligible Account Holders to subscribe for shares. However, in the event the offering result in the issuance of shares above the maximum of the EVR (i.e., more than 575,000 shares), the Employee Plans have a priority right to fill their subscription (the ESOP, the only Employee Plan, currently intends to purchase up to 8 % of the common stock issued in the conversion). The Employee Plans may, however, determine to purchase some or all of the shares covered by their subscriptions after the conversion in the open

17

market or, if approved by the OTS, out of authorized but unissued shares in the event of an oversubscription.

Category 3: Supplemental Eligible Account Holders (Third Priority). Supplemental Eligible Account Holders are persons who had a deposit account of at least $50 with us on December 31, 1997. Each Supplemental Eligible Account Holder who is not an Eligible Account Holder will receive non-transferable subscription rights to purchase that number of shares which is equal to the greater of 6,000 shares
($60,000) or 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of qualifying deposits of all Supplemental Eligible Account Holders. If the allocation made in this paragraph results in an oversubscription, shares shall be allocated among subscribing Supplemental Eligible Account Holders so as to permit each such account holder, to the extent possible, to purchase the lesser of 100 shares or the total amount of his subscription. Any shares not so allocated shall be allocated among the subscribing Supplemental Eligible Account Holders on an equitable basis, related to the amounts of their respective qualifying deposits as compared to the total qualifying deposits of all subscribing Supplemental Eligible Account Holders. See "-- Limitations on Purchases and Transfer of Shares."

The right of Supplemental Eligible Account Holders to subscribe for shares is subordinate to the rights of the Eligible Account Holders and Employee Plans to subscribe for shares.

Category 4: Other Members (Fourth Priority). Other Members are persons who have a deposit account of at least $50 on the voting record date of our special meeting and certain borrowers whose loans were outstanding as of , 1997 and continue to be outstanding, on the voting record date of our special meeting. Each Other Member who is not an Eligible Account Holder or Supplemental Eligible Account Holder, will receive non-transferable subscription rights to purchase up to 6,000 shares ($60,000) to the extent such shares are available following subscriptions by Eligible Account Holders, Employee Plans, and Supplemental Eligible Account Holders. In the event there are not enough shares to fill the orders of the Other Members, the subscriptions of the Other Members will be allocated so that each subscribing Other Member will be entitled to purchase the lesser of 100 shares or the number of shares ordered. Any remaining shares will be allocated among Other Members whose subscriptions remain unsatisfied on a 100 share (or whatever lesser amount is available) per order basis until all orders have been filled on the remaining shares have been allocated. See "-- Limitations on Purchases and Transfer of Shares."

Members in Non-Qualified States. We will make reasonable efforts to comply with the securities laws of all states in the United States in which persons entitled to subscribe for the shares pursuant to the Plan reside. However, no person will be offered or allowed to purchase any shares under the Plan if he resides in a foreign country or in a state with respect to which any of the following apply: (i) a small number of persons otherwise eligible to subscribe for shares under the Plan reside in that state or foreign country;
(ii) the granting of subscription rights or offer or sale of shares of common stock to those persons would require either us, or our employees to register, under the securities laws of that state or foreign country, as a broker or dealer or to register or otherwise qualify our securities for sale in that state or foreign country; or (iii) such registration or qualification would be impracticable for reasons of cost or otherwise. No payments will be made in lieu of the granting of subscription rights to any person.

Restrictions on Transfer of Subscription Rights and Shares. Persons are prohibited from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of their subscription rights. Subscription rights may be exercised only by the person to whom they are granted and only for his account. Each person subscribing for shares will be required to certify that he

18

is purchasing shares solely for his own account and has not entered into an agreement or understanding regarding the sale or transfer of those shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock prior to the completion of the conversion.

We will pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights and will not honor orders believed by us to involve the transfer of subscription rights.

Expiration Date. The Subscription Offering will expire at ____:____
p.m., Eastern Time, on __________ ____, 1998, (Expiration Date). Subscription rights will become void if not exercised prior to the Expiration Date.

Community ^ Offering

To the extent that shares remain available and subject to market conditions at or near the completion of the Subscription Offering, we may offer shares in a Community Offering, with a preference to natural persons who reside in Brooks County, Georgia, ^ on a best-efforts basis through Trident in such a manner as to promote a wide distribution of the Common Stock. Any orders received in connection with the Community Offering ^, if any, will receive a lower priority than orders properly made in the Subscription Offering by persons exercising Subscription Rights. Common Stock sold in the Community Offering ^ will be sold at the same price as all other shares in the Subscription Offering. We have the right to reject any orders in the Community Offering ^.

No person will be permitted to purchase more than 6,000 shares or $60,000 of Common Stock in the Community Offering ^. In addition, no person, related person or persons acting together, may purchase in all categories more than 10,000 shares of stock sold in the conversion. To order Common Stock in connection with the Community Offering ^, if held, an executed stock order and account withdrawal authorization (if applicable) must be received prior to the termination of the Community Offering ^. Promptly upon receipt of available funds, together with a properly executed stock order and account withdrawal authorization, if applicable, and certification, Trident will forward funds for any order in a Community Offering ^ to the Bank to be deposited in a subscription escrow account.

The date by which orders must be received in the Community Offering
^("Community ^ Offering Expiration Date") will be set by us at the time of commencement of the Community Offering ^; provided however, if the ^ offering is extended beyond __________ ____, 1998, each purchaser will have the opportunity to maintain, modify, or rescind his order. In such event, all funds received in the Community Offering ^ will be promptly returned with interest unless the subscriber affirmatively indicates otherwise.

If an order in the Community Offering ^ is accepted, promptly after the completion of the conversion, a certificate for the appropriate amount of shares will be forwarded to Trident as nominee for the beneficial owner. In the event that an order is not accepted in the Community Offering or ^ the conversion is not consummated, the Savings Bank will promptly refund with interest the funds received to Trident which will then return the funds to purchasers' accounts. If the appraisal of the aggregate estimated pro forma market value of the Savings Bank and QBI is less than $4,250,000 or more than $6,612,500, each purchaser will have the right to modify or rescind his order. The Plan also permits Trident to conduct a Syndicated ^ Community Offering, which is not expected to occur. If a Syndicated ^ Community Offering does occur, it will occur on a best-efforts basis through Trident on terms negotiated prior to commencement of the Syndicated ^ Community Offering and, therefore, Trident will not be committed to purchase any shares.

19

Ordering and Receiving Shares

Use of Order Forms. Rights to subscribe in the Subscription Offering or purchase stock in the Community Offering ^(if any) may only be exercised by completion of an original order form. Persons ordering shares in the Subscription Offering must deliver by mail or in person a properly completed and executed original order form to us prior to the Expiration Date. Order forms must be accompanied by full payment for all shares ordered. See "-- Payment for Shares." Subscription rights under the Plan will expire on the Expiration Date, whether or not we have been able to locate each person entitled to subscription rights. Once submitted, subscription orders cannot be revoked without our consent unless the conversion is not completed within 45 days of the Expiration Date.

In the event an order form (i) is not delivered and is returned to us by the United States Postal Service or we are unable to locate the addressee,
(ii) is not received or is received after the Expiration Date, (iii) is defectively completed or executed, or (iv) is not accompanied by full payment for the shares subscribed for (including instances where a savings account or certificate balance from which withdrawal is authorized is insufficient to fund the amount of such required payment), the subscription rights for the person to whom such rights have been granted will lapse as though that person failed to return the completed order form within the time period specified. We may, but will not be required to, waive any irregularity on any order form or require the submission of corrected order forms or the remittance of full payment for subscribed shares by such date as we specify. The waiver of an irregularity on an order form in no way obligates us to waive any other irregularity on that, or any irregularity on any other, order form. Waivers will be considered on a case by case basis. Photocopies of order forms, payments from private third parties, or electronic transfers of funds will not be accepted. Our interpretation of the terms and conditions of the Plan and of the acceptability of the order forms will be final. We have the right to investigate any irregularity on any order form.

To ensure that each purchaser receives a prospectus at least 48 hours before the Expiration Date in accordance with Rule 15c2-8 of the Exchange Act, no prospectus will be mailed any later than five days prior to such date or hand delivered any later than two days prior to such date. Execution of the order form will confirm receipt or delivery in accordance with Rule l5c2-8. Order forms will only be distributed with a prospectus.

Payment for Shares. Payment for shares of common stock may be made (i) in cash, if delivered in person, (ii) by check or money order, or (iii) by authorization of withdrawal from savings accounts (including certificates of deposit) maintained with us or (iv) by an IRA not held by us. Appropriate means by which such withdrawals may be authorized are provided in the order form. Once such a withdrawal has been authorized, none of the designated withdrawal amount may be used by the subscriber for any purpose other than to purchase the shares. Where payment has been authorized to be made through withdrawal from a savings account, the sum authorized for withdrawal will continue to earn interest at the contract rate until the conversion has been completed or terminated. Interest penalties for early withdrawal applicable to certificate accounts will not apply to withdrawals authorized for the purchase of shares; however, if a partial withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate evidencing the remaining balance will earn interest at the passbook savings account rate subsequent to the withdrawal. Payments made in cash or by check or money order, will be placed in a segregated savings account and interest will be paid by us at our passbook savings account rate from the date payment is received until the conversion is completed or terminated. An executed order form, once received by us, may not be modified, amended, or rescinded without our consent, unless the conversion is not completed within 45 days after the conclusion of the Subscription Offering, in which event subscribers may be given an opportunity to increase,

20

decrease, or rescind their order. In the event that the conversion is not consummated, all funds submitted pursuant to the offering will be refunded promptly with interest.

Owners of self-directed IRAs may use the assets of such IRAs to purchase shares in the offering, provided that such IRAs are not maintained on deposit with us. Persons with IRAs maintained with us must have their accounts transferred to an unaffiliated institution or broker to purchase shares in the offering. The Stock Information can assist you in transferring your self-directed IRA. Because of the paperwork involved, persons owning IRAs with us who wish to use their IRA account to purchase stock in the offering, must contact the Stock Information Center no later than __________ ____, 1998.

The ESOP may subscribe for shares by submitting its order form along with evidence of a loan commitment from a financial institution or QBI for the purchase of the shares during the Subscription Offering and by making payment for shares on the date of completion of the conversion.

Federal regulations prohibit us from lending funds or extending credit to any person to purchase shares in the conversion.

Delivery of Stock Certificates. Certificates representing shares of common stock issued in the conversion will be mailed to the person(s) at the address noted on the order form, as soon as practicable following consummation of the conversion. Any certificates returned as undeliverable will be held until properly claimed or otherwise disposed. Persons ordering shares might not be able to sell their shares until they receive their stock certificates.

Plan of Distribution

Materials for the offering have been distributed to eligible subscribers by mail. Additional copies are available at our stock information center. Our officers may be available to answer questions about the conversion. Responses to questions about us will be limited to the information contained in this document. Officers will not be authorized to render investment advice. All subscribers for the shares being offered will be instructed to send payment directly to us. The funds will be held in a segregated special escrow account and will not be released until the closing of the conversion or its termination.

Marketing Arrangements

Trident has been engaged as our financial advisor in connection with the offering. Trident has agreed to exercise its best efforts to assist us in the sale of the shares in the offering. Trident will receive a fee of 2.5% of the aggregate dollar amount of Common Stock sold in the Offerings, excluding shares sold to the Bank's directors and executive officers and their associates and the ESOP. We will also reimburse Trident for its out-of-pocket expenses (up to $10,000) and legal expenses (up to $27,500). Also, we have agreed to indemnify Trident for reasonable costs and expenses in connection with certain claims or liabilities which might be asserted against Trident. This indemnification covers the investigation, preparation of defense and defense of any action, proceeding or claim relating to, among other things, misrepresentation or breach of warranty of the written agreement among Trident and us or the omission or alleged omission of a material fact required to be stated or necessary in the prospectus or other documents. We will negotiate the fees and reimbursement of expenses for Trident before we begin any Syndicated ^ Community Offering.

The shares will be offered principally by the distribution of this document and through activities conducted at the Stock Information Center. The Stock Information Center is expected to operate during our normal business hours throughout the offering. A registered representative employed by Trident will

21

be working at, and supervising the operation of, the Stock Information Center. Trident will assist us in responding to questions regarding the conversion and the offering and processing order forms. Our personnel will be present in the Stock Information Center to assist Trident with clerical matters and to answer questions related solely to our business.

Stock Pricing

FinPro, an independent economic consulting and appraisal firm, which is experienced in the evaluation and appraisal of business entities, including savings institutions involved in the conversion process has been retained by us to prepare an appraisal of our estimated pro forma market value. FinPro will receive fees of $12,000 for preparing the appraisal and $10,000 for its assistance in connection with the preparation of a business plan and also will be reimbursed reasonable out-of-pocket expenses. We have agreed to indemnify FinPro under certain circumstances against liabilities and expenses arising out of or based on any misstatement or untrue statement of a material fact contained in the information supplied by us to FinPro.

The appraisal was prepared by FinPro in reliance upon the information contained herein, including the financial statements. The appraisal contains an analysis of a number of factors including, but not limited to, our financial condition and operating trends, the competitive environment within which we operate, operating trends of certain savings institutions and savings and loan holding companies, relevant economic conditions, both nationally and in the State of Georgia which affect the operations of savings institutions, and stock market values of certain savings institutions. In addition, FinPro has advised us that it has considered the effect of the additional capital raised by the sale of the shares on our estimated aggregate pro forma market value.

On the basis of the above, FinPro has determined, in its opinion, that as of ^ December 8, 1997, our estimated aggregate pro forma market value was $5,000,000. OTS regulations require, however, that the appraiser establish a range of value for the stock to allow for fluctuations in the aggregate value of the stock due to changing market conditions and other factors. Accordingly, FinPro has established a range of value from $4,250,000 to $5,750,000 for the offering, the EVR. The EVR will be updated prior to consummation of the conversion and the EVR may increase to $6,612,500.

The board of directors has reviewed the independent appraisal, including the stated methodology of the independent appraiser and the assumptions used in the preparation of the independent appraisal. The board of directors is relying upon the expertise, experience and independence of the appraiser and is not qualified to determine the appropriateness of the assumptions.

In order for stock sales to take place FinPro must confirm to the OTS that, to the best of FinPro's knowledge and judgment, nothing of a material nature has occurred which would cause FinPro to conclude that the Purchase Price on an aggregate basis was incompatible with FinPro's estimate of our pro forma market value of us in converted form at the time of the sale. If, however, facts do not justify such a statement, an amended EVR may be established.

The appraisal is not a recommendation of any kind as to the advisability of purchasing these shares. In preparing the appraisal, FinPro has relied upon and assumed the accuracy and completeness of financial and statistical information provided by us. FinPro did not independently verify the financial statements and other information provided by us, nor did FinPro value independently our assets and liabilities. The appraisal considers us only as a going concern and should not be considered as our liquidation value. Moreover, because the appraisal is based upon

22

estimates and projections of a number of matters which are subject to change, the market price of the common stock could decline below $10.00.

Change in Number of Shares to be Issued in the Conversion

Depending on market and financial conditions at the time of the completion of the offerings, we may significantly increase or decrease the number of shares to be issued in the conversion. In the event of an increase in the valuation, we may increase the total number of shares to be issued in the conversion. An increase in the total number of shares to be issued in the conversion would decrease a subscriber's percentage ownership interest and the pro forma net worth (book value) per share and increase the pro forma net income and net worth (book value) on an aggregate basis. In the event of a material reduction in the valuation, we may decrease the number of shares to be issued to reflect the reduced valuation. A decrease in the number of shares to be issued in the conversion would increase a subscriber's percentage ownership interest and the pro forma net worth (book value) per share and decrease pro forma net income and net worth on an aggregate basis.

Persons ordering shares will not be permitted to modify or cancel their orders unless the change in the number of shares to be issued in the conversion results in an offering which is either less than $4,250,000 or more than $6,612,500. If the offering is either less than $4,250,000 or more than $6,612,500, only, persons who subscribed for shares will have an opportunity to modify or cancel their orders. Persons who did not subscribe for shares will not have the opportunity to do so.

Limitations on Purchases and Transfer of Shares

The Plan provides for certain additional purchase limitations. The minimum purchase is 25 shares and the maximum purchase for any individual person or persons ordering through a single account, is 6,000 shares. In addition, no person or persons ordering through a single account, together with their associates, or group of persons acting together, may purchase more than 10,000 shares. However, the Employee Plans may purchase up to 8% of the shares sold. The OTS regulations governing the conversion provide that officers and directors and their associates may not purchase, in the aggregate, more than 35% of the shares issued pursuant to the conversion.

Depending on market conditions and the results of the offering, the board of directors may, if the OTS agrees, increase or decrease any of the purchase limitations without the approval of our members and without resoliciting subscribers. If the maximum purchase limitation is increased, persons who ordered the maximum amount will be given the first opportunity to increase their orders. In doing so the preference categories in the offerings will be followed.

In the event of an increase in the total number of shares offered in the conversion due to an increase in the EVR of up to 15% (the "Adjusted Maximum"), the additional shares will be allocated in the following order of priority: (i) to fill the Employee Plans' subscription of up to 8% of the Adjusted Maximum number of shares (the ESOP currently intends to subscribe for 8%); (ii) in the event that there is an oversubscription by Eligible Account Holders, to fill unfulfilled subscriptions of Eligible Account Holders; (iii) in the event that there is an oversubscription by Supplemental Eligible Account Holders, to fill unfulfilled subscriptions to Supplemental Eligible Account Holders; (iv) in the event that there is an oversubscription by Other Members, to fill unfulfilled subscriptions of Other Members; and (v) to fill unfulfilled subscriptions in the Community Offering ^ to the extent possible.

The term "associate" of a person means (i) any corporation or organization (other than us or a majority-owned subsidiary of ours) of which such person is an officer or partner or is, directly or

23

indirectly, the beneficial owner of 10% or more of any class of equity securities, (ii) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as director or in a similar fiduciary capacity (excluding tax-qualified employee stock benefit plans), and (iii) any relative or spouse of such person or any relative of such spouse, who has the same home as such person or who is a director or officer of us, or any of our subsidiaries. For example, a corporation of which a person serves as an officer would be an associate of that person, and therefore all shares purchased by that corporation would be included with the number of shares which that person individually could purchase under the above limitations.

The term "officer" may include our chairman of the board, president, vice presidents in charge of principal business functions, Secretary and Treasurer and any other person performing similar functions. All references herein to an officer have the same meaning as used for an officer in the Plan.

To order shares in the conversion, persons must certify that their purchase does not conflict with the purchase limitations. In the event that the purchase limitations are notated by any person (including any associate or group of persons affiliated or otherwise acting in concert with such persons), we will have the right to purchase from that person at $10.00 per share all shares acquired by that person in excess of the purchase limitations. If the excess shares have been sold by that person, we may recover the profit from the sale of the shares by that person. We may assign our right either to purchase the excess shares or to recover the profits from their sale.

Shares of common stock purchased pursuant to the conversion will be freely transferable, except for shares purchased by our directors and officers. For certain restrictions on the shares purchased by directors and officers, see "-- Restrictions on Sales and Purchases of Shares by Directors and Officers." In addition, under guidelines of the NASD, members of the NASD and their associates are subject to certain restrictions on the transfer of securities purchased in accordance with subscription rights and to certain reporting requirements upon purchase of such securities.

Restrictions on Repurchase of Shares

Generally, during the first year following the conversion, QBI may not repurchase its shares and during each of the second and third years following the conversion, QBI may repurchase five percent of the outstanding shares provided they are purchased in open-market transactions. Repurchases must not cause us to become undercapitalized and at least 10 days prior notice of the repurchase must be provided to the OTS. The OTS may disapprove a repurchase program upon a determination that (1) the repurchase program would adversely affect our financial condition, (2) the information submitted is insufficient upon which to base a conclusion as to whether the financial condition would be adversely affected, or (3) a valid business purpose was not demonstrated. However, the OTS may grant special permission to repurchase shares after six months following the conversion and to repurchase more than five percent during each of the second and third years. In addition, SEC rules also govern the method, time, price, and number of shares of common stock that may be repurchased by QBI and affiliated purchasers. If, in the future, the rules and regulations regarding the repurchase of stock are liberalized, QBI may utilize the rules and regulations then in effect.

Restrictions on Sales and Purchases of Shares by Directors and Officers

Shares purchased by directors and officers of QBI may not be sold for one year following the conversion, except in the event of the death of the director or officer. Any shares issued to directors and officers as a stock dividend, stock split, or otherwise with respect to restricted stock shall be subject to the same restrictions.

24

For three years following the conversion, directors and officers may purchase shares only through a registered broker or dealer. Exceptions are available only if the OTS has approved the purchase or the purchase is an arm's length transaction and involves more than one percent of the outstanding shares.

Interpretation and Amendment of the Plan

We have the authority to interpret and amend the Plan. Our interpretations are final. Amendments to the Plan after the receipt of member approval will not need further member approval unless required by the OTS.

Conditions and Termination

Completion of the conversion requires (i) the approval of the Plan by the affirmative vote of not less than a majority of the total number of votes eligible to be cast by our members, and (ii) completion of the sale of shares within 24 months following approval of the Plan by our members If these conditions are not satisfied, the Plan will be terminated and we will continue our business in the mutual form of organization. We may terminate the Plan at any time prior to the meeting of members to vote on the Plan or at any time thereafter with the approval of the OTS.

Other

All statements made in this document are hereby qualified by the contents of the Plan of Conversion, the material terms of which are set forth herein. The Plan of Conversion is attached to the proxy statement mailed to certain depositors and borrowers. Copies of the Plan are available from us and should be consulted for further information. Adoption of the Plan by our members authorizes us to interpret, amend or terminate the Plan.

25

Quitman Federal Savings and Loan Association

Statements of Income

                                                                                             YEARS ENDED
                                                                                             SEPTEMBER 30,
                                                                                    ----------------------------------
                                                                                      1997                     1996
                                                                                    ----------               ---------
Interest Income:
  Loans receivable:
    First mortgage loans....................................................        $2,833,489               2,615,633
    Consumer and other loans................................................           108,748                  38,644
  Interest on FHLMC Pool....................................................               219                     636
  Investment securities.....................................................           233,416                 214,266
  Interest-bearing deposits.................................................            21,552                  37,560
  Federal funds sold........................................................               520                       0
                                                                                     ---------               ---------
      Total Interest Income.................................................         3,197,944               2,906,739
                                                                                     ---------               ---------

Interest Expense:
  Deposits, Note 7..........................................................         1,913,045               1,828,770
  Interest on Federal Home Loan Bank advances...............................            65,418                  14,900
                                                                                     ---------               ---------
      Total Interest Expense................................................         1,978,463               1,843,670
                                                                                     ---------               ---------

Net Interest Income.........................................................         1,219,481               1,063,069
Provision for loan losses, Notes 1 and 4....................................           136,000                  36,000
                                                                                     ---------               ---------
Net Interest Income After Provision for Losses..............................         1,083,481               1,027,069
                                                                                     ---------               ---------
 Non-Interest Income:
  Gain (loss) on sale of securities.........................................             (133)                       0
  Other income..............................................................            45,536                  49,196
                                                                                     ---------               ---------
    Total Non-Interest Income...............................................            45,403                  49,196
                                                                                     ---------               ---------

 Non-Interest Expense:
  Compensation..............................................................           255,966                 221,056
  Other personnel expenses, Note 11.........................................           150,382                 138,188
  Occupancy expenses of premises............................................            22,900                  22,042
  Furniture and equipment expenses..........................................            69,892                  67,268
  Federal deposit insurance.................................................            29,553                  69,874
  Special SAIF Assessment, Note 13..........................................                 0                 185,647
  Other operating expenses..................................................           218,181                 218,283
                                                                                     ---------               ---------
      Total Non-Interest Expense............................................           746,874                 922,358
                                                                                     ---------               ---------
Income Before Income Taxes..................................................           382,010                 153,907
Provision for Income Taxes, Note 9..........................................           119,211                  50,621
                                                                                     ---------               ---------
Net Income..................................................................        $  262,799                 103,286
                                                                                     =========               =========

Note: The accompanying notes to financial statements beginning on page F-5 are an integral part of this statement.

26

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

Management's discussion and analysis of financial condition results of operations is intended to assist you in understanding our financial condition and results of operations. The information in this section should also be read with our Financial Statements and Notes to the Financial Statements elsewhere in this document.

QBI has recently been formed and, accordingly, has no results of operations. The following discussion relates only to our financial condition and results of operations.

Our results of operations depend primarily on net interest income, which is determined by (i) the difference between rates of interest we earn on our interest-earning assets and the rates we pay on interest-bearing liabilities (interest rate spread), and (ii) the relative amounts of interest-earning assets and interest-bearing liabilities. Our results of operations are also affected by non-interest income, including, primarily, income from customer deposit account service charges, gains and losses from the sale of investments and mortgage-backed securities and non-interest expense, including, primarily, compensation and employee benefits, federal deposit insurance premiums, office occupancy costs, and data processing cost. Our results of operations also are affected significantly by general and economic and competitive conditions, particularly changes in market interest rates, government policies and actions of regulatory authorities, all of which are beyond our control.

Asset/Liability Management

Our assets and liabilities may be analyzed by examining the extent to which our assets and liabilities are interest rate sensitive and by monitoring the expected effects of interest rate changes on our net portfolio value.

An asset or liability is interest rate sensitive within a specific time period if it will mature or reprice within that time period. If our assets mature or reprice more quickly or to a greater extent than our liabilities, our net portfolio value and net interest income would tend to increase during periods of rising interest rates but decrease during periods of falling interest rates. Conversely, if our assets mature or reprice more slowly or to a lesser extent than our liabilities, our net portfolio value and net interest income would tend to decrease during periods of rising interest rates but increase during periods of falling interest rates. As described in the following paragraph, our policy has been to address the interest rate risk inherent in the historical savings institution business of originating long-term loans funded by short-term deposits by maintaining liquid assets in excess of regulatory minimums for material and prolonged changes in interest rates. At September 30, 1997, our liquid asset ratio was 13%.

We originate fixed rate real estate loans which approximated 88.7% of our loan portfolio at September 30, 1997. To manage the interest rate risk of this type of loan portfolio, generally we limit maturities of fixed rate loans to no more than 5 years and maintain a portfolio of liquid assets. Our liquid assets include cash and cash equivalents and investment securities available-for-sale. At September 30, 1997, these liquid assets totalled $3.7 million, which was more than 10% of our total liabilities of $36.2 million. We maintain these liquid assets to protect us in the event market interest rates rise and we experience losses because we are paying more for our liabilities than we are earning on our assets. If this happens, we may need liquid assets to continue paying our liabilities and to continue operating with required capital levels. However, maintaining liquid assets tends to reduce potential net income because

27

liquid assets usually provide a lower yield than less liquid assets. In the past several years we have increased the size of our construction lending portfolio through, in part, the use of short term borrowings from the FHLB. Construction loans have a shorter duration than most of our other loans and this type of lending and borrowing has somewhat reduced our interest rate risk. At September 30, 1997, the average weighted term to maturity of our mortgage loan portfolio was slightly more than 3 years and the average weighted term of our deposits was slightly less than 17 months. See "Business of Quitman Federal Savings Bank -- Lending Activities."

Net Portfolio Value

In recent years, we have measured our interest rate sensitivity by computing the "gap" between the assets and liabilities which were expected to mature or reprice within certain time periods, based on assumptions regarding loan prepayment and deposit decay rates formerly provided by the OTS. However, we now receive computations of amounts by which our net interest income over the next 12 months ("NII") would change in the event of assumed changes in market interest rates. These computations indicate to us how the net present value of our cash flow from assets, liabilities and off balance sheet items (our net portfolio value or "NPV") would change in the event of assumed changes in market interest rates. These computations estimate the effect on an our NII from instantaneous and permanent increases and decreases in market interest rates. In our interest rate risk management policy we have set maximum decreases in net interest income (over a 12 month period) and NPV that we would be willing to tolerate under these assumed conditions. In addition, we have also received computations of how these assumed conditions would impact our NPV.

                                       Board Limit of a
                                      Percentage Change In                           Change in NPV
                                -------------------------------         ----------------------------------
                                                                           Dollars
     Changes                     ^  NII                  NPV            (in thousands)         Percentages
    in Market                    ---------           ----------         --------------         -----------
Interest Rates(1)
-----------------
 (basis points)

        +400                        -60%                 -65%               -$1,717             -54.87%

        +300                        -60%                 -60%               -$1,279             -40.88%

        +200                        -40%                 -40%               -$  815             -26.05%

        +100                        -20%                 -25%               -$  350             -11.19%

        -100                        -25%                 -25%                $  371              11.86%

        -200                        -40%                 -40%                $  762              24.35%

        -300                        -50%                 -50%                $1,201              38.38%

        -400                        -60%                 -60%                $1,798              57.46%


(1) 100 basis points equals 1%.

28

Because most of our loans have a longer term than most of our deposits, the computation of the impact on our net income indicated we would earn more income if interest rates were to fall and we would earn less income if interest rates were to rise. Specifically, the computation of an instantaneous and permanent 200 basis point decrease in market interest rates indicated an approximately 15% increase in estimated pre-tax income. The computation of an instantaneous and permanent 200 basis point increase in market interest rates indicated an approximately 18% decrease in estimated pre-tax income. Both of these computations (1) were based on financial information at September 30, 1997, (2) assumed net income over the 12 months following September 30, 1997 and
(3) resulted in financial results within the guidelines shown in the table above.

While we cannot predict future interest rates or their effects on our NPV or net interest income, we do not expect current interest rates, assuming rates remain stable, to have a material adverse effect on our NPV or net interest income. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates resulting in specific interest rates for our various investment securities, loan portfolios and liabilities. These assumptions also include estimates of other components of our income and the duration of certain of our investment securities as well as prepayments, deposit run-offs and growth rates and should not be relied upon as indicative of actual results. Certain shortcomings are inherent in such computations. Although certain assets and liabilities may have similar maturity or periods of repricing they may react at different times and in different degrees to changes in the market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while rates on other types of assets and liabilities may lag behind changes in market interest rates. In the event of a change in interest rates, prepayments and early withdrawal levels could deviate significantly from those assumed in making the calculations discussed above. Additionally, an increased credit risk may result as the ability of many borrowers to service their debt may decrease in the event of an interest rate increase.

The board of directors reviews our asset and liability policies. The board of directors meets quarterly to review interest rate risk and trends, as well as liquidity and capital ratios and requirements. Management administers the policies and determinations of the board of directors with respect to our asset and liability goals and strategies. We expect that our asset and liability policies and strategies will continue as described so long as competitive and regulatory conditions in the financial institution industry and market interest rates continue as they have in recent years.

Financial Condition

Total consolidated assets increased $3.0 million, or 8.3 % to $39.2 million at September 30, 1997, from $36.2 million at September 30, 1996. The increase in total assets reflects a $2.5 million increase in loans receivable, a $406,000 increase in investment securities, and a $109,000 increase in the cash value of life insurance. Our increase in loans receivable is mainly due to increased demand for loans in our market area.

Deposits increased $2.7 million or 8.5% to $34.5 million at September 30, 1997 from $31.7 million at September 30, 1996. The increase in fiscal 1997 was a result of competitive pricing to fund loan demand. Advances from the Federal Home Loan Bank ("FHLB") of Atlanta increased $100,000 to $1.3 million. Other liabilities decreased by $188,000 primarily due to the one time SAIF special assessment of $185,000 in fiscal 1996. As a result of the conversion, our equity will increase significantly. Initially, this will result in greater liquid assets and in reduced interest rate risk.

29

Average Balance Sheet

The following table sets forth certain information relating to the Savings Bank's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated and the average yields earned and rates paid. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are derived from month-end balances. Management does not believe that the use of month-end balances instead of daily average balances has caused any material differences in the information presented.

                                                                 Year Ended September 30,                        At September 30,
                                               --------------------------------------------------------------- -------------------
                                                           1997                            1996                        1997
                                               -------------------------------- ------------------------------ -------------------
                                                Average               Average    Average             Average   Average   Average
                                                Balance   Interest   Yield/Cost  Balance  Interest Yield/Cost  Balance  Yield/Cost
                                                -------   --------   ----------  -------  -------- ----------  -------  ----------
                                                                                    (Dollars in thousands)
Interest-earning assets:
  Loans receivable(1)...................        $32,065    $2,942         9.18%  $29,351   $2,654      9.04%   $33,326       9.13%
  Mortgage-backed securities............            140         8         5.71        --       --        --        542       5.14
  Investment securities(2)..............          3,617       226         6.25     3,732      216      5.79      3,309       5.94
  Other interest-earning assets.........            345        22         6.38       671       37      5.51        548       5.26
                                                 ------     -----                 ------    -----               ------
    Total interest-earning assets.......         36,167     3,198         8.84    33,754    2,907      8.61     37,825       8.74
Non-interest-earning assets.............          1,515        --                    897       --                1,367
                                                 ------    ------                 ------   ------               ------
    Total assets........................        $37,682    $3,198                $34,651   $2,907              $39,192
                                                 ======     =====                 ======    =====               ======

Interest-bearing liabilities:
  NOW Accounts..........................        $ 1,488    $   49         3.29   $ 1,452   $   47      3.24    $ 1,439       3.45
  Savings accounts......................          2,185        82         3.75     2,103       78      3.73      1,945       4.25
  Money market accounts.................             --        --           --        --       --        --         --
  Certificates of deposit...............         29,427     1,782         6.06    27,737    1,703      6.14     31,087       6.06
  Other liabilities.....................          1,175        65         5.53       304       15      4.93      1,300       6.55
                                                 ------     -----                 ------    -----               ------
    Total interest-bearing liabilities           34,275     1,978         5.77    31,596    1,843      5.83     35,771       5.87
Non-interest bearing liabilities........            519        --                    428       --                  463
                                                 ------    ------                 ------    -----               ------
    Total liabilities...................         34,794     1,978                 32,024   $1,843               36,234
                                                           ======                           =====
Retained earnings.......................          2,888                            2,627                         2,958
                                                 ------                           ------                        ------
    Total liabilities and retained earnings     $37,682                          $34,651                       $39,192
                                                 ======                           ======                        ======
Net interest income.....................                   $1,220                          $1,064
Interest rate spread(3).................                                  3.07%                         2.78%                2.87%
Net yield on interest-earning assets(4).                                  3.37%                         3.15%                3.18%
Ratio of average interest-earning assets
 to average interest-bearing liabilities                                105.52%                       106.83%              105.74%


(1) Average balances include non-accrual loans.
(2) Includes interest-bearing deposits in other financial institutions.
(3) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4) Net yield on interest-earning assets represents net interest income as a percentage of average interest-earning assets.
(5) Annualized (where appropriate) for purposes of comparability with year-end data.

30

The table below sets forth certain information regarding changes in interest income and interest expense of the Savings Bank for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (changes in average volume multiplied by old rate); (ii) changes in rates (changes in rate multiplied by old average volume); (iii) changes in rate-volume (changes in rate multiplied by the change in average volume).

                                                           Year Ended September 30,
                                    --------------------------------------------------------------------
                                            1997  vs.     1996                1996    vs.   1995
                                    ---------------------------------   --------------------------------
                                            Increase (Decrease)               Increase (Decrease)
                                                  Due to                            Due to
                                    ---------------------------------   --------------------------------
                                                      Rate/                              Rate/
                                    Volume    Rate    Volume    Net     Volume    Rate   Volume     Net
                                    ------   -----    ------   ------   ------   ------  -------   -----
                                                                 (Dollars in thousands)
Interest income:
  Loans receivable ..............   $ 250    $  35    $   3    $ 288    $ 278    $  (5)   $  (1)   $ 272
  Investment securities .........      (6)      17        7       18       (1)      (1)    --         (2)
  Other interest-earning assets .     (18)       6       (3)     (15)       9       (1)      (1)       7
                                    -----    -----    -----    -----    -----    -----    -----    -----
    Total interest-earning assets   $ 226    $  58    $   7    $ 291    $ 286    $  (7)   $  (2)   $ 277
                                    =====    =====    =====    =====    =====    =====    =====    =====

Interest expense:
  NOW Accounts ..................   $   1    $   1    $--      $   2    $   8    $--      $--      $   8
  Savings accounts ..............       3        1     --          4       13     --       --         13
  Money market accounts .........    --       --       --       --       --       --       --       --
  Certificate of deposit ........     139      (55)      (5)      79      191       86       12      289
  Other liabilities .............      43        2        5       50       (2)      (1)    --         (3)
                                    -----    -----    -----    -----    -----    -----    -----    -----
    Total interest-bearing
      liabilities ...............   $ 186    $ (51)   $--      $ 135    $ 210    $  85    $  12    $ 307
                                    =====    =====    =====    =====    =====    =====    =====    =====

Net change in interest income ...   $  40    $ 109    $   7    $ 156    $  76    $ (92)   $ (14)   $ (30)
                                    =====    =====    =====    =====    =====    =====    =====    =====

31

Results of Operations for the Years Ended September 30, 1997 and 1996

Net Income. Net income increased $159,513 or 154.4% from $103,286 for fiscal 1996 to $262,799 for fiscal 1997. The increase was primarily the result of an increase in interest on loans receivable due to an increase in the average balance of $2.7 million and a one-time SAIF assessment of $185,647 in fiscal 1996, partially offset by a $100,000 increase in the provision for loan losses.

Net Interest Income. Our net interest income increased $156,412 or 14.7% to $1,219,481 in fiscal 1997 compared to $1,063,069 in fiscal 1996. The increase was due primarily to the growth of average interest-earning assets from $33.8 million in fiscal 1996 to $36.2 million in fiscal 1997.

The increase in our average interest-earning assets of $2.4 million reflects an increase of $2.7 million in average loans. Our increase in average loans receivable is mainly due to increased demand for loans in our market area.

Our interest rate spread and net interest margin increased in fiscal 1997 compared to fiscal 1996. This was due to the increase in the yield on interest-earning assets from 8.61% in fiscal 1996 to 8.84% in fiscal 1997 and the decrease in the interest cost of average interest-bearing liabilities from 5.83% in fiscal 1996 to 5.77% in fiscal 1997.

The yield on our average interest-earning assets increased in fiscal 1997 primarily due to an increase in the yield on loans receivable and to a lesser degree an increase in the yield on investment securities. This increase in yield on our loans receivable primarily reflected an increase in the average balance of our loans and, to a lesser degree, increased levels of higher yielding construction loans, and the increase in the yield on our investment securities reflected the reinvestment at higher interest rates of those proceeds we received when our investment securities matured.

The increase in the cost of our average interest-bearing liabilities was due primarily to an increase in the average balance of our certificates of deposit from $27.7 million in fiscal 1996 to $29.4 million in fiscal 1997, offset partially by a decrease in the cost of certificates of deposit from 6.14% in fiscal 1996 to 6.06% in fiscal 1997. The lower cost of certificates of deposit reflects our reduction of rates to match declining market rates. The $1.7 million increase in the average balance of certificates of deposits was attributable primarily to our increased efforts to market our certificates of deposit by offering competitive rates to fund our loan demand.

As a result of the conversion, the interest we expect to earn on the proceeds we receive will likely increase our net interest income. Initially, the proceeds would likely be invested in shorter term investments that generally have lower yields than residential mortgage loans. To the extent we are able through time to find higher yielding uses for these funds, our net interest income may continue to increase.

Provision for Loan Losses. Our provision for loan losses increased $100,000 from $36,000 for fiscal 1996 to $136,000 for fiscal 1997. The increase in the provision for fiscal 1997 was the result of management's review of our loan portfolio, including the increasing importance in the portfolio of riskier construction and consumer loans and a $124,000 increase in classified assets in the loan portfolio.

Noninterest Income. Our non-interest income decreased approximately $4,000 in fiscal 1997 as compared to fiscal 1996. This was attributable to a decrease in other income.

32

Noninterest Expense. Our non-interest expense decreased by $175,484 or 19.0% from $922,358 for fiscal 1996 to $746,874 for fiscal 1997. The decrease was primarily attributable to a special SAIF assessment of 185,647 in fiscal 1996 which was partially offset by increases in compensation expense and other personnel expense.

As a result of the conversion, our expenses will increase because of the costs associated with our employee stock ownership plan, restricted stock plan, and the costs of being a public company. We also expect to offer checking accounts and may offer the use of an automated teller machine (an "ATM") to our customers during 1998. Our preparation costs for these products and the costs of soliciting checking account funds will also increase our expenses. We do not know if we will receive sufficient checking account funds or other income to offset these additional costs.

Although no definite plans have been made, we are exploring whether to purchase land and construct a branch. We would likely hire experts or spend money before we commit to purchasing land or constructing a new branch. If we decided not to build a new branch, the money that we had spent up to that time would be a noninterest expense and would negatively affect our income.

Income Tax Expense. Our income tax expense increased $68,590 from $50,621 in fiscal 1996 to $119,211 in fiscal 1997 due to the increase in income before taxes.

Liquidity and Capital Resources

We are required to maintain minimum levels of liquid assets as defined by OTS regulations. This requirement, which varies from time to time depending upon economic conditions and deposit flows, is based upon a percentage of our deposits and short-term borrowings. The required ratio currently is 5.0% and our liquidity ratio average was 12% at both September 30, 1997 and 1996. The proceeds we receive from the conversion will increase our liquidity and capital resources.

Our primary sources of funds are deposits, repayment of loans and mortgage-backed securities, maturities of investments and interest-bearing deposits, funds provided from operations and advances from the FHLB of Atlanta. While scheduled repayments of loans and mortgage-backed securities and maturities of investment securities are predicable sources of funds, deposit flows, and loan prepayments are greatly influenced by the general level of interest rates, economic conditions and competition. We use our liquidity resources principally to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets, to maintain liquidity, and to meet operating expenses. We expect that these liquidity needs will continue to exist in future years.

Net cash provided by our operating activities (the cash effects of transactions that enter into our determination of net income -- e.g., non-cash items, amortization and depreciation, provision for loan losses) for the year ended September 30, 1997 was $328,902 as compared to $298,754 for the year ended September 30, 1996.

Net cash used in our investing activities (i.e., cash receipts, primarily from our investment securities and mortgage-backed securities portfolios and our loan portfolio) for the year ended September 30, 1997 totalled $3.3 million, an increase of $377,542 from September 30, 1996. The increase was primarily attributable to our use of $1.7 million in cash to fund the purchase of available-for-sale

33

investment securities and ^ the use of ^ $1.5 million in cash to fund the net increase in investment and mortgage-backed securities and loan originations.

Net cash provided by our financing activities (i.e., cash receipts primarily from net increases in deposits and net FHLB advances) for fiscal 1997 totalled $2.8 million compared to $2.7 million for fiscal 1996. This is a result of a net increase in deposits of $2.7 million in fiscal 1997 as compared to an increase of $2.0 million in fiscal 1996 and proceeds of $100,000 in FHLB advances in fiscal 1997 compared to ^ $700,000 in fiscal 1996.

We have received a letter from our computer service vendor assuring us that the computer services of our vendor will properly function on January 1, 2000, the date that computer problems are expected to develop worldwide on computer systems that incorrectly identify the year 2000 as the year 1900 and incorrectly compute interest, payment or delinquency. However, our vendor, and other vendors, have not yet eliminated the year 2000 computer problem. Accurate data processing is essential to our operations and a lack of accurate processing by our vendor or by us could have a significant adverse impact on our financial condition and results of operation. We have also examined our computers to determine whether they will properly function on January 1, 2000 and do not believe that we will experience material costs to upgrade our computers to meet our requirements.

During the fiscal year ended September 30, 1998, approximately $11.4 million of certificates of deposit (approximately 1/3 of our total deposits) will mature. We expect that most of these certificates of deposit will be renewed. Even if many of these certificates of deposit are not renewed, we believe that we have sufficient liquidity and other sources of funds to successfully manage the outflow of funds.

Regardless of whether this offering is completed, we are exploring whether to purchase land and construct a branch. Although no definite plans have been made, if a new branch is built, the land and construction costs could total approximately $600,000. We have sufficient liquid assets to pay for these costs even if the offering is not completed. These costs could be partially offset if we sold our existing office. We also have sufficent capital resources to install an ATM machine, if we decide to offer that service in the future.

Recent Accounting Pronouncements

FASB Statement on Earnings Per Share. In March 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS) No. 128. The Statement establishes standards for computing and presenting earnings per share and applies to entities with publicly held common stock or potential common stock. This Statement simplifies the standards for computing earnings per share previously found in Accounting Principles Board ("APB") Opinion No. 15, Earnings per Share ("EPS"), and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and the denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS pursuant to APB Opinion No. 15. This statement supersedes Opinion 15

34

and AICPA Accounting Interpretation 1-102 of Opinion 15. This statement is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. SFAS No. 128 will be adopted by us in the initial period after December 15, 1997. We do not believe the impact of adopting SFAS No. 128 will be material to our financial statements.

FASB Statement on Disclosure of Information about Capital Structure. In February 1997, the FASB issued SFAS No. 129. The Statement incorporates the disclosure requirements of APB Opinion No. 15, Earnings per Share, and makes them applicable to all public and nonpublic entities that have issued securities addressed by the Statement. APB Opinion No. 15 requires disclosure of descriptive information about securities that is not necessarily related to the computation of earnings per share. This statement continues the previous requirements to disclose certain information about an entity's capital structure found in APB Opinions No. 10, Omnibus Opinion- 1966, and No. 15, Earnings per Share, and FASB Statement No. 47, Disclosure of Long-Term Obligations, for entities that were subject to the requirements of those standards. This Statement eliminates the exemption of nonpublic entities from certain disclosure requirements of Opinion 15 as provided by FASB Statement No. 21, Suspension of the Reporting of Earnings per Share and Segment Information by Nonpublic Enterprises. It supersedes specific disclosure requirements of Opinions 10 and 15 and Statement 47 and consolidates them in this Statement for ease of retrieval and for greater visibility to nonpublic entities. The Statement is effective for financial statements for periods ending after December 15, 1997. SFAS No. 129 will be adopted by us in the initial period after December 15, 1997. We do not believe the impact of adopting SFAS No. 129 will be material to our financial statements.

FASB Statement of on Accounting for Stock-Based Compensation. In October 1995, the FASB issued SFAS No. 123. SFAS No. 123 defines a "fair value based method" of accounting for an employee stock option whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period. FASB has encouraged all entities to adopt the fair value based method, however, it will allow entities to continue the use of the "intrinsic value based method" prescribed by APB Opinion No. 25. Under the intrinsic value based method, compensation cost is the excess of the market price of the stock at the grant date over the amount an employee must pay to acquire the stock. However, most stock option plans have no intrinsic value at the grant date and, as such, no compensation cost is recognized under APB Opinion No. 25. Entities electing to continue use of the accounting treatment of APB Opinion No. 25 must make certain pro forma disclosures as if the fair value based method had been applied. The accounting requirements of SFAS No. 123 are effective for transactions entered into in fiscal years beginning after December 15, 1995. Pro forma disclosures must include the effects of all awards granted in fiscal years beginning after December 15, 1994. We expect to use the "intrinsic value based method" as prescribed by APB Opinion No. 25. Accordingly, we do not believe the impact of adopting SFAS No. 123 will be material to our financial statements.

SOP 93-6 Employers' Accounting for Employee Stock Ownership Plan. In November 1993, the American Institute of Certified Public Accountants ("AICPA") issued SOP 93-6 Employers' Accounting for Employee Stock Ownership Plan. SOP 93-6 addresses accounting for shares of stock issued to employees by an employee stock ownership plan. SOP 93-6 requires that the employer record compensation expense in an amount equal to the fair value of shares committed to be released from the ESOP to employees. SOP 93-6 is effective for fiscal years beginning after December 15, 1993 and relates to shares purchased by an ESOP after December 31, 1992. If the common stock appreciates over time, SOP 93-6 will increase compensation expense relative to the ESOP, as compared with prior guidance that required recognition of compensation expense based on the cost of the shares acquired by the ESOP. The amount of any such increase, however, cannot be determined at this time because the expense will be

35

based on the fair value of the shares committed to be released to employees, which amount is not determinable. See "Pro Forma Data."

BUSINESS OF QUITMAN BANCORP, INC.

QBI is not an operating company and has not engaged in any significant business to date. It was formed in December 1997 as a Georgia-chartered corporation to be the holding company for Quitman Federal Savings Bank. The holding company structure and retention of proceeds will facilitate: (i) diversification into non-banking activities, (ii) acquisitions of other financial institutions, such as savings institutions, (iii) expansion within existing and into new market areas and (iv) stock repurchases without adverse tax consequences. There are no present plans regarding diversification, acquisitions, expansion, or repurchases, although QBI is considering engaging in the acquisition and development of real estate.

Since QBI will own only one savings association, it generally will not be restricted in the types of business activities in which it may engage, provided that we retain a specified amount of our assets in housing-related investments. QBI initially will not conduct any active business and does not intend to employ any persons other than officers but will utilize our support staff from time to time.

The office of the QBI is located at 100 West Screven Street, Quitman, Georgia. The telephone number is (912) 263-7538.

BUSINESS OF QUITMAN FEDERAL SAVINGS BANK

The principal sources of funds for our activities are deposits, payments on loans and borrowings from the FHLB of Atlanta. Our deposits totalled $34.5 million at September 30, 1997. Funds are used principally for the origination of fixed rate loans secured by first mortgages on one- to four-family residences which are located in our market area. Such loans totalled $23.5 million, or 67.05% of our total loans receivable portfolio at September 30, 1997. Our principal source of revenue is interest received on loans and investments and our principal expense is interest paid on deposits.

Market Area

We are located in Quitman, which is in the center of the southern part of Georgia, approximately 15 miles west of Valdosta and Interstate 75 and 10 miles north of the Florida border. Our market area is Brooks county (in which Quitman is located) as well as parts of Lowdnes county, both of which are in Georgia. Our market area is based primarily on agricultural goods such as cotton, peanuts, corn and tobacco and dairy products.

Our area has benefitted from its location of within 30 miles of Moody Air Force Base as well as from small garment factories, although employment from these sources is not expected to grow. Although the population in a five and ten mile radius of our office has been declining and is expected to decline somewhat in the future, the population in a 20 mile radius of our office has grown and is expected to grow more modestly in the future. The income of the population within a 10 mile radius of us is primarily low to moderate. The income within a 20 mile radius is somewhat higher.

Unemployment levels are higher within a five mile radius of our office than those within a 10 and 20 mile radius of our office but, for all three areas, are below the national average. In addition, housing values are lower within a five mile radius of our office than they are within a 10 or 20 mile

36

radius of our office. Approximately two-thirds of the homes within a five mile radius have a value of less than $50,000, with almost half of these homes having a value of less than $25,000. We expect that most of the future growth in our loan portfolio would come from within a 20 mile radius of our office rather than within a five mile radius. We believe our market share of deposits within a five mile radius of our office is approximately 30% while within a 20 mile radius it is approximately 3%.

Lending Activities

Most of our loans are mortgage loans which are secured by one- to four-family residences. We also make multi-family, commercial real estate and consumer loans. Most of the loans we originate have rates of interest which are fixed for a three or five year term of the loan ("fixed rate"). We do also originate some adjustable-rate mortgage ("ARM") loans.

The following table sets forth information concerning the types of loans held by us.

                                                                                At September 30,
                                                               ------------------------------------------------------------
                                                                         1997                              1996
                                                               ------------------------         ---------------------------
                                                                Amount         Percent           Amount            Percent
                                                                ------         -------           ------            -------
                                                                                 (Dollars in thousands)
Type of Loans:
Real estate loans:
  One-to-four family residential...................            $23,656           68.09%         $23,717              70.43%
  Multi-family (5 or more) dwelling................                699            2.01              607               1.80
  Non residential..................................              5,394           15.52            5,083              15.09
  Construction.....................................              3,655           10.52            3,142               9.33
  FHLMC pools......................................                  4             .01                6                .02
Share loans........................................                470            1.35              476               1.41
Consumer ..........................................                867            2.50              645               1.92
                                                                ------           -----           ------              -----
                                                                34,745          100.00%          33,676             100.00%
                                                                ------          ======           ------             ======
Less:
  Loans in process.................................              1,023                            2,609
  Allowance for loan losses........................                346                              210
  Deferred loan origination fees
   and costs.......................................                 50                               52
                                                               -------                           ------
Total loans, net...................................            $33,326                          $30,805
                                                                ======                           ======

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The following table sets forth the estimated maturity of our loan portfolio at September 30, 1997. The table does not include the effects of possible prepayments or scheduled principal repayments. All mortgage loans are shown as maturing based on the date of the last payment required by the loan agreement.

                                           Real Estate
                           -------------------------------------------
                             Residential
                             Real Estate       Non
                               Mortgage     Residential  Construction    Other        Total
                               --------     -----------  ------------    -----        -----
                                                         In thousands)
Amounts due:
Within 1 year..............     $ 2,042        $ 1,408       $3,655     $  736      $ 7,841
Over 1 to 5 years..........      13,271          2,562           --        398       16,231
Over 5 years...............       9,046          1,424           --        203       10,673
                                 ------         ------        -----      -----       ------
  Total amount due.........     $24,359        $ 5,394       $3,655     $1,337       34,745
                                 ======         ======        =====      =====      -------

Less:
Allowance for loan loss....                                                             346
Loans in process...........                                                           1,023
Deferred loan fees.........                                                              50
                                                                                     ------
  Loans receivable, net....                                                         $33,326
                                                                                     ======

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The following table sets forth the dollar amount of all loans due after September 30, 1998, which have pre-determined interest rates and which have floating or adjustable interest rates.

                                                                                Floating or
                                                      Fixed Rates             Adjustable Rates            Total
                                                      -----------             ----------------            -----
                                                                               (In thousands)
Real estate:
  Residential............................                $19,943                   $2,374               $22,317
  Non-residential........................                  3,926                       60                 3,986
                                                          ------                    -----                 -----
                                                          23,869                    2,434                26,303

Non real estate:
  Share loans............................                     78                       --                    78
  Consumer...............................                    523                       --                   523
                                                         -------                   ------               -------
                                                         $24,470                   $2,434               $26,904
                                                          ======                    =====                ======

The following information contains information concerning changes in the amount of loans held by us.

                                                                                   For the Years Ended
                                                                           ---------------------------------
                                                                                      September 30,
                                                                           ---------------------------------
                                                                               1997                  1996
                                                                           ----------            -----------


Total gross loans receivable at beginning of period...........              ^ $33,676              $29,102
                                                                               ------               ------
Loans originated:
  Residential real estate.....................................                 15,156               16,258
  Non-residential real estate.................................                  2,864                3,081
  Consumer....................................................                  1,218                1,080
                                                                               ------               ------
Total loans originated........................................                 19,238               20,419
                                                                               ------               ------
Loan principal repayments.....................................                 18,169               15,845
                                                                               ------               ------
Net loan activity.............................................                  1,069                4,574
                                                                               ------               ------
  Total gross loans receivable at
     end of period............................................                $34,745              $33,676
                                                                               ======               ======

One-to Four-Family Residential Loans. Our primary lending activity consists of the origination of one- to four-family residential mortgage loans secured by property located in our primary market area. We generally originate one- to four-family residential mortgage loans in amounts up to 85% of the appraised market value or purchase price. The maximum loan-to-value ratio on mortgage loans secured by non-owner occupied properties generally is limited to 80% . We primarily originate and retain fixed-rate balloon loans having terms of 3 or 5 years, with principal and interest payments calculated using up to a 25-year amortization period. Because of the amortization period, relatively short term and renewability of these loans, there are similarities between these loans and ARMs, particularly from our asset/liability management perspective. We occasionally originate 15 year fixed-rate loans.

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The interest rate on our ARM loans is based on an index plus a stated margin. We may offer discounted initial interest rates on ARM loans but we require that the borrower qualify for the ARM loan at the fully indexed rate (the index rate plus the margin). ARM loans provide for periodic interest rate adjustments upward or downward of up to 2% per year . The interest rate may not increase more than 6% over the life of the loan. ARM loans typically reprice every year and provide for terms of up to 25 years with most loans having terms of between 20 and 25 years. ARM loans are offered to all applicants; however, consumer preference in our market area for ARM loans has been weak.

ARM loans decrease the risk associated with changes in interest rates by periodically repricing, but involve other risks because as interest rates increase, the underlying payments by the borrower increase, thus increasing the potential for default by the borrower. At the same time, the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustment of the contractual interest rate is also limited by the maximum periodic and lifetime interest rate adjustment permitted by the loan documents, and, therefore is potentially limited in effectiveness during periods of rapidly rising interest rates. At September 30, 1997, less than 10% of our one- to four-family residential loans we held had adjustable rates of interest.

All of our loans are originated for our portfolio. We do not conform our loans to the standards that are used in the mortgage industry that would allow our loans to be readily sold into the secondary market since we do not expect to sell our loans. For example, our lending policy does not require our borrowers to obtain private mortgage insurance on the amount of a loan that exceeds the typical loan to value ratios used in the mortgage loan industry and we may lend money to individuals based on our review of personal circumstances that other lenders might not consider.

Mortgage loans originated and held by us generally include due-on-sale clauses. This gives us the right to deem the loan immediately due and payable in the event the borrower transfers ownership of the property securing the mortgage loan without our consent.

Residential Construction Loans. We make residential construction loans on one- to four-family residential property to the individuals who will be the owners and occupants upon completion of construction. No principal payments are required during construction. After that time, the payments are set at an amount that will repay the loan over the term of the loan. The maximum loan-to-value ratio is 85%. Because residential construction loans are not rewritten if permanent financing is obtained from us, these loans are made on terms similar to those of our single family residential loans and may be paid off over terms of 3 to 5 years with an amortization period of 25 years.

We also originate speculative loans to residential builders who have established business relationships with us. These speculative loans typically are made for a term of six months after which we allow one extension of six months. If after one year a unit remains unsold, we require that the builder make a 10% principal reduction payment and we either then allow the builder to make interest payments for 90 days before he is required to make another principal reduction payment, or the builder may choose that we treat the loan as a regular loan, pursuant to which he will make monthly payments for the full term of the loan. In underwriting such loans, we consider the number of units that the builder has on a speculative bid basis that remain unsold. Our experience has been that most speculative loans are repaid well within the twelve month period. Speculative loans are generally originated with a loan to value ratio that does not exceed 75%. At September 30, 1997 our largest speculative loan was $429,000, drawn on a line of credit, and was performing in accordance with its terms.

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Construction lending is generally considered to involve a higher degree of credit risk than long-term financing of residential properties. Our 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 and the estimated cost of construction. If the estimate of construction cost and the marketability of the property upon completion of the project prove to be inaccurate, we may be compelled to advance additional funds to complete the construction. Furthermore, if the final value of the completed property is less than the estimated amount, the value of the property might not be sufficient to assure the repayment of the loan. For speculative loans we originate to builders, the ability of the builder to sell completed dwelling units will depend, among other things, on demand, pricing and availability of comparable properties, and general economic conditions.

We do not expect the dollar amount of construction loans to significantly increase in the future.

Non-Residential Real Estate Loans. Our non-residential real estate loans consist of commercial business loans and farm real estate loans. Commercial real estate loans are secured by churches, office buildings, and other commercial properties. Farm loans are secured by the farm land. These loans generally have not exceeded $500,000 or had terms greater than 25 years.

Commercial and farm real estate lending entails significant additional risks compared to residential property lending. These loans typically involve large loan balances to single borrowers or groups of related borrowers. The repayment of these loans typically is dependent on the successful operation of the real estate project securing the loan. For commercial real estate these risks can be significantly affected by supply and demand conditions in the market for office retail space and may also be subject to adverse conditions in the economy. For loans secured by farm real estate, repayment may be affected by weather conditions, government policies, and subsidies concerning farming. To minimize these risks, we generally limit this type of lending to our market area and to borrowers who are otherwise well known to us and generally limit the loan to value ratio to 80%.

Consumer Loans. We offer consumer loans in order to provide a wider range of financial services to our customers and because these loans provide higher interest rates and shorter terms than many of our other loans. Consumer loans totalled $867,000 or 2.5% of our total loans at September 30, 1997. Our consumer loans consist of home equity, automobile, and mobile home loans and are generally in smaller dollar amounts than our other loans.

Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. Repossessed collateral for a defaulted consumer loan may not be sufficient for repayment of the outstanding loan, and the remaining deficiency may not be collectible.

Loan Approval Authority and Underwriting. Our loan committee, which is comprised of all 5 directors on the board, approves all loans. Mr. Plair, our President, has loan authority to approve consumer loans of up to $5,000.

Upon receipt of a completed loan application from a prospective borrower, a credit report is ordered. Income and certain other information is verified. If necessary, additional financial information may be requested. An appraisal or other estimate of value of the real estate intended to be used as security for the proposed loan is obtained. Appraisals are processed by independent fee appraisers.

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Construction/permanent loans are made on individual properties. Funds advanced during the construction phase are held in a loans-in-process account and disbursed at various stages of completion, following physical inspection of the construction by a loan officer or appraiser.

Either title insurance or a title opinion is generally required on all real estate loans. Borrowers also must obtain fire and casualty insurance. Flood insurance is also required on loans secured by property which is located in a flood zone.

Loan Commitments. Verbal commitments are given to prospective borrowers on all approved real estate loans. Written commitments are given where requested. Generally, the commitment requires acceptance within 30 days of the date of issuance. At September 30, 1997, commitments to cover originations of mortgage loans totalled $3.2 million. We believe that virtually all of our commitments will be funded.

Loans to One Borrower. The maximum amount of loans which we may make to any one borrower may not exceed the greater of $500,000 or 15% of our unimpaired capital and unimpaired surplus. We may lend an additional 10% of our unimpaired capital and unimpaired surplus if the loan is fully secured by readily marketable collateral. Our maximum loan to one borrower limit has been $500,000. At September 30, 1997, the aggregate loans outstanding of our five largest borrowers have outstanding balances of between $220,000 and $434,000. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Results of Operations for the Years Ended September 30, 1997 and 1996."

Nonperforming and Problem Assets

Loan Delinquencies. When a mortgage loan becomes 5 days past due, a notice of nonpayment is sent to the borrower. After the loan becomes 30 days past due, another notice of nonpayment, accompanied by a personal letter, is sent to the borrower. If the loan continues in a delinquent status for 90 days past due and no repayment plan is in effect, foreclosure proceedings will be initiated. The customer will be notified when foreclosure is commenced.

Loans are reviewed on a monthly basis and are placed on a non-accrual status when, in our opinion, the collection of additional interest is doubtful. Interest accrued and unpaid at the time a loan is placed on nonaccrual status is charged against interest income. Subsequent interest payments, if any, are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment of the ultimate collectibility of the loan.

Nonperforming Assets. The following table sets forth information regarding nonaccrual loans and real estate owned, as of the dates indicated. We have no loans categorized as troubled debt restructurings within the meaning of SFAS 15. ^ For the year ended September 30, 1997, there was $11,000 in interest income that would have been recorded on loans accounted for on a nonaccrual basis under the original terms of such loans ^; however, interest income on these loans, which is recorded only when received, was $5,000.

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                                                                           At September 30,
                                                                     -----------------------------
                                                                       1997                1996
                                                                     -------            ----------
                                                                            (In thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
  Construction loans...................................               $  --                $  --
  One- to four-family residential......................                  73                   --
  All other mortgage loans.............................                  51                   --
Non-mortgage loans:
  Commercial...........................................                  --                   --
  Consumer.............................................                  --                   --
                                                                       ----                 ----
Total..................................................               $ 124                $  --
                                                                       ====                 ====

Accruing loans which are contractually past due 90 days or more:
Mortgage loans:
  Construction loans...................................               $  58                $  18
  One- to four-family residential......................                 249                  820
  All other mortgage loans.............................                  25                   18
Non-mortgage loans:
  Commercial...........................................                  --                   --
  Consumer.............................................                  21                   15
                                                                        ---                 ----
Total..................................................               $ 353                $ 871
                                                                       ====                 ====
Total non-accrual and accrual loans....................               $ 477                $ 871
                                                                       ====                 ====
Real estate owned......................................               $  64                $  --
                                                                       ====                 ====
Other non-performing assets............................               $  --                $  --
                                                                       ====                 ====
Total non-performing assets............................               $ 541                $ 871
                                                                       ====                 ====
Total non-performing loans to total loans, net.........                1.43%                2.83%
                                                                       ====                 ====
Total non-performing loans to total assets.............                1.22%                2.41%
                                                                       ====                 ====
Total non-performing assets to total assets............                1.38%                2.41%
                                                                       ====                 ====

Classified Assets. OTS regulations provide for a classification system for problem assets of savings associations which covers all problem assets. Under this classification system, problem assets of savings institutions such as ours are classified as "substandard," "doubtful," or "loss." An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard assets include those characterized by the "distinct possibility" that the savings institution will sustain "some loss" if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses present make "collection or liquidation in full," on the basis of currently existing facts, conditions, and values, "highly questionable and improbable." Assets classified as loss are those considered "uncollectible" and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets may be designated "special mention" because of potential weakness that do not currently warrant classification in one of the aforementioned categories.

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When a savings association classifies problem assets as either substandard or doubtful, it may establish general allowances for loan losses in an amount deemed prudent by management. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When a savings association classifies problem assets as loss, it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge off such amount. A savings association's determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the OTS, which may order the establishment of additional general or specific loss allowances. A portion of general loss allowances established to cover possible losses related to assets classified as substandard or doubtful may be included in determining a savings association's regulatory capital. Specific valuation allowances for loan losses generally do not qualify as regulatory capital.

At September 30, 1997, we had loans classified as special mention, substandard, doubtful and loss as follows:

                                                                At
                                                           September 30,
                                                               1997
                                                          --------------
                                                          (In thousands)

Special mention.............................                    $313
Substandard.................................                     444
Doubtful assets.............................                      --
Loss assets.................................                      --
                                                                ----

     Total..................................                    $757
                                                                ====

Allowances for Loan Losses. A provision for loan losses is charged to operations based on management's evaluation of the losses that may be incurred in our loan portfolio. The evaluation, including a review of all loans on which full collectibility of interest and principal may not be reasonably assured, considers: (i) our past loan loss experience, (ii) known and inherent risks in our portfolio, (iii) adverse situations that may affect the borrower's ability to repay, (iv) the estimated value of any underlying collateral, and (v) current economic conditions.

We monitor our allowance for loan losses and make additions to the allowance as economic conditions dictate. Although we maintain our allowance for loan losses at a level that we consider adequate for the inherent risk of loss in our loan portfolio, future losses could exceed estimated amounts and additional provisions for loan losses could be required. In addition, our determination as to the amount of allowance for loan losses is subject to review by the OTS, as part of its examination process. After a review of the information available, the OTS might require the establishment of an additional allowance.

44

The following table illustrates the allocation of the allowance for loan losses for each category of loans. The allocation of the allowance to each category is not necessarily indicative of future loss in any particular category and does not restrict our use of the allowance to absorb losses in other loan categories.

                                                                                      At September 30
                                                      ------------------------------------------------------------------------------
                                                                   1997                                        1996
                                                      -----------------------------------           --------------------------------
                                                                              Percent of                              Percent of
                                                                               Loans in                                Loans in
                                                                                Each                                    Each
                                                                               Category                                Category
                                                                               to Total                                to Total
                                                       Amount                   Loans                Amount             Loans
                                                       ------                  ----------            ------            ----------
                                                                                   (Dollars in thousands)
At end of period allocated to:
  One- to four-family......................             $ 231                     68.1%              $ 144                70.4%
  Multi-family.............................                 7                      2.0                   4                 1.8
  Other real estate........................                90                     26.1                  53                24.5
  Consumer.................................                18                      3.8                   9                 3.3
                                                        -----                    -----                ----               -----
     Total allowance.......................             $ 346                    100.0%              $ 210               100.0%
                                                        =====                    =====                ====               =====

The following table sets forth information with respect to our allowance for loan losses at the dates and for the periods indicated:

                                                                           At September 30,
                                                                      ---------------------------
                                                                        1997               1996
                                                                      --------            -------
                                                                         (Dollars in thousands)

Total loans, net........................................              $33,326             $30,805
                                                                       ======              ======
Average loans outstanding...............................              $32,065             $29,351
                                                                       ======              ======

 Allowance balances (at beginning of period)............              $   210             $   174
 Provision:
  Residential...........................................                   94                  25
  Non-residential.......................................                   35                   9
  Consumer..............................................                    7                   2
Net charge-offs (recoveries):
  Residential...........................................                   --                  --
  Non-residential.......................................                   --                  --
  Consumer..............................................                   --                  --
                                                                      -------              ------
 Allowance balance (at end of period)...................              $   346             $   210
                                                                      =======              ======
 Allowance for loan losses as a percent
  of total loans outstanding............................                 1.03%                .68%
Net loans charged off as a percent of
  average loans outstanding.............................                   --                  --

45

Investment Activities

Investment Securities. We are required under federal regulations to maintain a minimum amount of liquid assets which may be invested in specified short-term securities and certain other investments. See "Regulation -- Savings Institution Regulation -- Federal Home Loan Bank System" and "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." The level of liquid assets varies depending upon several factors, including: (i) the yields on investment alternatives, (ii) our judgment as to the attractiveness of the yields then available in relation to other opportunities, (iii) expectation of future yield levels, (iv) asset/liability management, and (v) our projections as to the short-term demand for funds to be used in loan origination and other activities. We classify our investment securities as "available-for-sale" or "held-to-maturity" in accordance with SFAS No. 115. At September 30, 1997, our investment portfolio policy allowed investments in instruments such as: (i) U.S. Treasury obligations, (ii) U.S. federal agency or federally sponsored agency obligations,
(iii) local municipal obligations, (iv) mortgage-backed securities, (v) banker's acceptances, (vi) certificates of deposit, (vii) federal funds, including FHLB overnight and term deposits (up to six months), and (viii) investment grade corporate bonds, commercial paper and mortgage derivative products. See "-- -Mortgage-backed Securities." The board of directors may authorize additional investments.

Our investment securities "available-for-sale" and "held-to-maturity" portfolios at September 30, 1997, did not contain securities of any issuer with an aggregate book value in excess of 10% of our equity, excluding those issued by the United States Government or its agencies.

Mortgage-backed Securities. To supplement lending activities, we have invested in residential mortgage-backed securities. Mortgage-backed securities can serve as collateral for borrowings and, through repayments, as a source of liquidity. Mortgage-backed securities represent a participation interest in a pool of single-family or other type of mortgages. Principal and interest payments are passed from the mortgage originators, through intermediaries (generally quasi-governmental agencies) that pool and repackage the participation interests in the form of securities, to investors such as us. The quasi-governmental agencies guarantee the payment of principal and interest to investors and include the Federal Home Loan Mortgage Corporation ("FHLMC"), the Government National Mortgage Association ("GNMA"), and Federal National Mortgage Association ("FNMA").

At September 30, 1997, our mortgaged-backed securities portfolio was classified as "available-for- sale" and totalled $542,000. Each security was issued by GNMA, FHLMC or FNMA. Expected maturities will differ from contractual maturities due to scheduled repayments and because borrowers may have the right to call or prepay obligations with or without prepayment penalties.

Mortgage-backed securities typically are issued with stated principal amounts. The securities are backed by pools of mortgages that have loans with interest rates that are within a set range and have varying maturities. The underlying pool of mortgages can be composed of either fixed rate or adjustable rate mortgage loans. Mortgage-backed securities are generally referred to as mortgage participation certificates or pass-through certificates. The interest rate risk characteristics of the underlying pool of mortgages (i.e., fixed rate or adjustable rate) and the prepayment risk, are passed on to the certificate holder. The life of a mortgage-backed pass-through security is equal to the life of the underlying mortgages. Mortgage-backed securities issued by FHLMC and GNMA make up a majority of the pass-through certificates market.

46

Securities Portfolio. The following table sets forth the carrying (i.e., amortized cost) value of our investment securities held-to-maturity, at the dates indicated. Our securities portfolio classified as available-for-sale is carried at market value. At September 30, 1997, the market value of our investment securities, held-to-maturity, was $801,000 million. At September 30, 1997, our securities portfolio available-for-sale contained net unrealized ^ gains, net of tax, of $6,000. See Notes 1 and 3 to our financial statements elsewhere in this document.

Investment Portfolio

The following table sets forth the carrying value of the Savings Bank's investment securities portfolio, short-term investments, FHLB stock, and mortgage-backed securities at the dates indicated. At September 30, 1997, the market value of the Savings Bank's investment securities portfolio held-to- maturity was $801,000.

                                                                At September 30,
                                                          -----------------------------
                                                            1997                 1996
                                                          --------             --------
                                                                 (In thousands)

Investment securities:
 U.S. Government securities available-for-sale......       $  904               $   --
 U.S. Agency securities held-to-maturity............          100                   --
 U.S. Agency securities available-for-sale..........        1,600                1,781
 U.S. Agency securities held-to-maturity............          705                1,663
   Total investment securities......................        3,309                3,444
Interest-bearing deposits...........................          548                  679
FHLB stock..........................................          228                  219
Mortgage-backed securities available-for-sale.......          542                   --
Mortgage-backed securities held-to-maturity.........           --                   --
                                                            -----                -----
   Total investments................................       $4,627               $4,342
                                                            =====                =====

47

The following table sets forth certain information regarding scheduled maturities, carrying values, approximate fair values, and weighted average yields for our investment securities portfolio at September 30, 1997 by contractual maturity. The following table does not take into consideration the effects of scheduled repayments or the effects of possible prepayments.

                                                                                            More than                  Total
                                  One Year or Less  One to Five Years  Five to Ten Years    Ten Years         Investment Securities
                                 ------------------ ------------------ ----------------- ---------------- --------------------------
                                 Carrying   Average Carrying   Average Carrying  Average Carrying Average Carrying    Average Market
                                   Value     Yield   Value      Yield   Value     Yield   Value    Yield    Value     Yield    Value
                                 -------    ------- -------    ------- --------  ------- ------- --------  -------   -------  ------
                                                                     (Dollars in thousands)
Investment securities:
  U.S. Government securities ..   $  100      4.68% $  904      6.27%    $   --     --%   $ --     --%      $1,004      6.42% $1,004
  U. S. Agency securities .....       --        --   2,305      6.25         --     --      --     --        2,305      6.25   2,301
  Corporate notes and bonds ...       --
  Other securities(1) .........       --        --      --        --         --     --      --     --           --        --      --
                                  ------            ------                -----           ----              ------            ------
    Total investment securities      100      4.68   3,209      6.26         --     --      --     --        3,309      6.30   3,305
Interest-bearing deposits .....      548      5.69      --        --         --     --      --     --          548      5.69     548
Federal Funds sold ............       --        --      --        --         --     --      --     --           --        --      --
FHLB stock ....................      228      7.25      --        --         --     --      --     --          228      7.25     228
Mortgage-backed securities ....       --        --      --        --         --     --     542   5.13          542      5.13     542
                                  ------            ------                -----           ----              ------            ------
    Total investments .........   $  876      5.98  $3,209      6.26     $   --     --    $542   5.13       $4,627      6.07  $4,623
                                  ======            ======                =====           ====              ======            ======

48

Sources of Funds

Deposits are our major external source of funds for lending and other investment purposes. Funds are also derived from the receipt of payments on loans and prepayment of loans and maturities of investment securities and mortgage-backed securities and, to a much lesser extent, borrowings and operations. Scheduled loan principal repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are significantly influenced by general interest rates and market conditions.

Deposits. Consumer and commercial deposits are attracted principally from within our primary market area through the offering of a selection of deposit instruments including regular savings accounts, money market accounts, and term certificate accounts. IRA accounts are also offered. Deposit account terms vary according to the minimum balance required, the time period the funds must remain on deposit, and the interest rate.

The interest rates paid by us on deposits are set weekly at the direction of our senior management. Interest rates are determined based on our liquidity requirements, interest rates paid by our competitors, and our growth goals and applicable regulatory restrictions and requirements.

Regular savings and NOW accounts constituted $3.4 million, or ^ 9.82%, of our deposit portfolio at September 30, 1997. Certificates of deposit constituted $31.1 million or 90.17% of the deposit portfolio of which $6.3 million or 18.38% of the deposit portfolio were certificates of deposit with balances of $100,000 or more. Such deposits are offered at negotiated rates. As of September 30, 1997, we had no brokered deposits.

We hope to offer checking accounts to our customers during 1998. These accounts will provide us with an additional source of funds.

49

At September 30, 1997, our deposits were represented by the various types of savings programs described below.

                                                          Interest           Minimum             Balance as of        Percentage of
Category                         Term                     Rate(1)        Balance Amount       September 30, 1997      Total Deposits
--------                         ----                     -------        --------------       ------------------      --------------
                                                                         (In thousands)
Now Accounts                     None                           3.50%        $1,000                  $ 1,439                4.18%
Regular Savings                  None                           4.25%            25                    1,945                5.65%
                                                                                                      ------

Certificates of Deposit:
                                                                                                       3,384                9.83
                                                                                                      ------               -----
Fixed Term, Fixed Rate           1-3 Months              4.25 - 4.50%           100                        1                 .01%
Fixed Term, Fixed Rate           4-6 Months              5.10 - 5.75%           100                    1,406                4.08%
Fixed Term, Fixed Rate           7-12 Months             5.75 - 6.25%           100                    9,978               28.90%
Fixed Term, Fixed Rate           13-24 Months            5.70 - 6.40%           100                    9,628               27.93%
Fixed Term, Fixed Rate           25-36 Months            5.70 - 7.10%           100                    2,176                6.32%
Fixed Term, Fixed Rate           36-48 Months            5.30 - 7.35%           100                    1,221                3.55%
Fixed Term, Fixed Rate           49-120 Months           5.65 - 6.75%           100                      344                1.00%
Fixed Term, Variable Rate        12-18 Months            5.15 - 6.90%
Jumbo Certificates                                                           98,000                    6,333               18.38%
                                                                                                      ------               -----
                                                                                                      31,087               90.17
                                                                                                      ------               -----
                                 Total                                                               $34,471              100.00%
                                                                                                      ======              ======


(1) Current interest rate offerings as of September 30, 1997:

 6 mos            5.10%
12 mos            5.75%
15 mos            5.90%
24 mos            6.25%
36 mos            6.25%
48 mos            6.25%

The following table sets forth our time deposits classified by interest rate at the dates indicated.

                                                  As of September 30,
                                           ------------------------------------
                                               1997                    1996
                                              ------                  ------

                                                      (In thousands)
2.00% or less...............                 $    --                 $    --
2.01-4.00%..................                      --                       1
4.01-6.00%..................                  14,976                  18,329
6.01-8.00%..................                  16,111                   9,437
                                              ------                  ------

Total.......................                 $31,087                 $27,767
                                              ======                  ======

50

The following table sets forth the time deposits in the Savings Bank classified by interest rate as of the dates indicated.

                                                  Amount Due
                  ---------------------------------------------------------------------------
                                                                     After
                  September 30,  September 30,   September 30,   September 30,
                      1998           1999            2000             2001           Total
                      ----           ----            ----             ----           -----
                                                (In thousands)
2.00% or less....   $    --         $    --         $    --         $    --         $    --
2.01-4.00% ......        --              --              --              --              --
4.01-6.00% ......    14,478             448              50              --          14,976
6.01-8.00% ......     7,232           7,107             949             823          16,111
8.01% or more....        --              --              --              --              --
                    -------         -------         -------         -------         -------

Total .......       $21,710         $ 7,555         $   999         $   823         $31,087
                    =======         =======         =======         =======         =======

The following table sets forth our savings activity for the periods indicated:

                                                       Year Ended September 30,
                                                      --------------------------
                                                        1997              1996
                                                       ------            ------
                                                   (In thousands)

Net increase (decrease) before interest credited...   $   829           $   293
Interest credited..................................     1,913             1,673
                                                        -----             -----
Net increase (decrease) in savings deposits........   $ 2,742           $ 1,966
                                                        =====             =====

The following table indicates the amount of our certificates of deposits of $100,000 or more by time remaining until maturity as of September 30, 1997.

                                                  Certificates
Maturity Period                                   of Deposits
---------------                                   -----------
                                                 (In thousands)
Within three months...............                   $    403
Three through six months..........                      2,180
Six through twelve months.........                      2,404
 Over twelve months...............                      1,346
                                                        -----
                                                       $6,333
                                                       ======

51

Borrowings. Advances (borrowing) may be obtained from the FHLB of Atlanta to supplement our supply of lendable funds. Advances from the FHLB of Atlanta are typically secured by a pledge of our stock in the FHLB of Atlanta, a portion of our first mortgage loans and other assets. Each FHLB credit program has its own interest rate (which may be fixed or adjustable) and range of maturities. We may borrow up to $3 million from the FHLB of Atlanta. If the need arises, we may also access the Federal Reserve Bank discount window to supplement our supply of lendable funds and to meet deposit withdrawal requirements. At September 30, 1997, borrowings from the FHLB of Atlanta totaled $1.3 million (all of which were variable rate short-term borrowings maturing on July 16, 1998). We had no other borrowings outstanding. At September 30, 1996, FHLB advances were $1.2 million.

The following table sets forth the terms of our short-term FHLB advances ^.

                                             At or for the period ended
                                       -----------------------------------------
                                       September 30, 1997     September 30, 1996
                                       ------------------     ------------------
                                               (Dollars in thousands)
Balance at year end..................   $   1,300                $   1,200
 Average balance outstanding ^
  during the period..................       1,175                      319
Maximum amount outstanding
  at any month-end ^ during
  the period.........................     ^ 1,300                    1,200
Weighted average interest rate
  during the period..................         5.4%                     4.9%

Competition

Competition for deposits comes from other insured financial institutions such as commercial banks, thrift institutions, credit unions, finance companies, and multi-state regional banks in our market areas. Competition for funds also includes a number of insurance products sold by local agents and investment products such as mutual funds and other securities sold by local and regional brokers. Loan competition varies depending upon market conditions and comes from commercial banks, thrift institutions, credit unions and mortgage bankers, most of whom have far greater resources than we have.

Properties

We operate from our main office which we own. The net book value of this real property at September 30, 1997, was $180,000. Our total investment in office equipment had a net book value of $142,000 at September 30, 1997.

Personnel

At September 30, 1997 we had 8 full-time employees and 1 part-time employee. None of our employees are represented by a collective bargaining group. We believe that our relationship with our employees is good.

52

Legal Proceedings

We are, from time to time, a party to legal proceedings arising in the ordinary course of our business, including legal proceedings to enforce our rights against borrowers. We are not a party to any legal proceedings which are expected to have a material adverse effect on our financial statements.

REGULATION

Set forth below is a brief description of certain laws which relate to us. The description is not complete and is qualified in its entirety by references to applicable laws and regulation.

Holding Company Regulation

General. QBI will be required to register and file reports with the OTS and will be subject to regulation and examination by the OTS. In addition, the OTS will have enforcement authority over QBI and any non-savings institution subsidiaries. This will permit the OTS to restrict or prohibit activities that it determines to be a serious risk to us. This regulation is intended primarily for the protection of our depositors and not for the benefit of you, as stockholders of QBI.

QTL Test. Since QBI will only own one savings institution, it will be able to diversify its operations into activities not related to banking, but only so long as we satisfy the QTL test. If QBI controls more than one savings institution, it would lose the ability to diversify its operations into non-banking related activities, unless such other savings institutions each also qualify as a QTL or were acquired in a supervised acquisition. See "-- Savings Institution Regulation -- Qualified Thrift Lender Test. "

Restrictions on Acquisitions. QBI must obtain approval from the OTS before acquiring control of any other SAIF-insured savings institution. No person may acquire control of a federally insured savings institution without providing at least 60 days written notice to the OTS and giving the OTS an opportunity to disapprove the proposed acquisition.

Savings Institution Regulation

General. As a federally chartered, SAIF-insured savings institution, we are subject to extensive regulation by the OTS and the FDIC. Our lending activities and other investments must comply with various federal and state statutory and regulatory requirements. We are also subject to certain reserve requirements promulgated by the Board of Governors of the Federal Reserve System ("Federal Reserve").

The OTS, in conjunction with the FDIC, regularly examines us and prepares reports for the consideration of our board of directors on any deficiencies that the OTS finds in our operations. Our relationship with our depositors and borrowers is also regulated to a great extent by federal and state law, especially in such matters as the ownership of savings accounts and the form and content of our mortgage documents.

We must file reports with the OTS and the FDIC concerning our activities and financial condition, in addition to obtaining regulatory approvals prior to entering into certain transactions such as mergers with or acquisitions of other financial institutions. This regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for

53

the protection of the SAIF and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in regulations, whether by the OTS, the FDIC or any other government agency, could have a material adverse impact on our operations.

Insurance of Deposit Accounts. The FDIC is authorized to establish separate annual assessment rates for deposit insurance for members of the BIF and the SAIF. The FDIC may increase assessment rates for either fund if necessary to restore the fund's ratio of reserves to insured deposits to its target level within a reasonable time and may decrease such assessment rates if such target level has been met. The FDIC has established a risk-based assessment system for both SAIF and BIF members. Under this system, assessments are set within a range, based on the risk the institution poses to its deposit insurance fund. This risk level is determined based on the institution's capital level and the FDIC's level of supervisory concern about the institution.

Because a significant portion of the assessments paid into the SAIF by savings institutions were used to pay the cost of prior savings institution failures, the reserves of the SAIF were below the level required by law. The BIF had, however, met its required reserve level during the third calendar quarter of 1995. As a result, deposit insurance premiums for deposits insured by the BIF were substantially less than premiums for deposits such as ours which are insured by the SAIF. Legislation to capitalize the SAIF and to eliminate the significant premium disparity between the BIF and the SAIF became effective September 30, 1996. The recapitalization plan provided for a special assessment equal to $.657 per $100 of SAIF deposits held at March 31, 1995, in order to increase SAIF reserves to the level required by law. Certain BIF institutions holding SAIF-insured deposits were required to pay a lower special assessment. Based on our deposits at March 31, 1995, we paid a pre-tax special assessment of $186,000.

The recapitalization plan also provides that the cost of prior failures which were funded through the issuance of Fico Bonds (bonds issued to fund the cost of savings institution failures in prior years) will be shared by members of both the SAIF and the BIF. This will increase BIF assessments for healthy banks to approximately $.013 per $100 of deposits in 1997. SAIF assessments for healthy savings institutions in 1997 will be approximately $.064 per $100 in deposits and may be reduced, but not below the level set for healthy BIF institutions.

The FDIC has lowered the rates on assessments paid to the SAIF and widened the spread of those rates. The FDIC's action established a base assessment schedule for the SAIF with rates ranging from 4 to 31 basis points, and an adjusted assessment schedule that reduces these rates by 4 basis points. As a result, the effective SAIF rates range from 0 to 27 to basis points as of October 1, 1996. In addition, the FDIC's final rule prescribed a special interim schedule of rates ranging from 18 to 27 basis points for SAIF-member savings institutions for the last quarter of calendar 1996, to reflect the assessments paid to the Financing Corp. (Fico Bonds). Finally, the FDIC's action established a procedure for making limited adjustments to the base assessment rates by rulemaking without notice and comment, for both the SAIF and the BIF.

The recapitalization plan also provides for the merger of the SAIF and BIF effective January 1, 1999, assuming there are no savings institutions under federal law. Under separate proposed legislation, Congress is considering the elimination of the federal thrift charter and elimination of the separate federal regulation of thrifts. As a result, we might have to convert to a different financial institution charter and be regulated under federal law as a bank, including being subject to the more restrictive activity

54

limitations imposed on national banks. We cannot predict the impact of our conversion to, or regulation as, a bank until the legislation requiring such change is enacted.

Regulatory Capital Requirements. OTS capital regulations require savings institutions to meet three capital standards: (1) tangible capital equal to 1.5% of total adjusted assets, (2) core capital equal to at least 3% of total adjusted assets, and (3) risk-based capital equal to 8% of total risk-weighted assets. Our capital ratios are set forth under "Historical and Pro Forma Capital Compliance."

Tangible capital is defined as core capital less all intangible assets (including supervisory goodwill), less certain mortgage servicing rights and less certain investments. Core capital is defined as common stockholders' equity (including retained earnings), noncumulative perpetual preferred stock and minority interests in the equity accounts of consolidated subsidiaries, certain nonwithdrawable accounts and pledged deposits of mutual savings associations and qualifying supervisory goodwill, less nonqualifying intangible assets, certain mortgage servicing rights and certain investments.

The risk-based capital standard for savings institutions requires the maintenance of total risk-based capital (which is defined as core capital plus supplementary capital) of 8% of risk-weighted assets. The components of supplementary capital include, among other items, cumulative perpetual preferred stock, perpetual subordinated debt, mandatory convertible subordinated debt, intermediate-term preferred stock, and the portion of the allowance for loan losses not designated for specific loan losses. The portion of the allowance for loan and lease losses includable in supplementary capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, supplementary capital is limited to 100% of core capital. A savings association must calculate its risk-weighted assets by multiplying each asset and off-balance sheet item by various risk factors as determined by the OTS, which range from 0% for cash to 100% for delinquent loans, property acquired through foreclosure, commercial loans, and other assets.

The risk-based capital standards of the OTS generally require savings institutions with more than a "normal" level of interest rate risk to maintain additional total capital. An institution's interest rate risk will be measured in terms of the sensitivity of its "net portfolio value" to changes in interest rates. Net portfolio value is defined, generally, as the present value of expected cash inflows from existing assets and off-balance sheet contracts less the present value of expected cash outflows from existing liabilities. A savings institution will be considered to have a "normal" level of interest rate risk exposure if the decline in its net portfolio value after an immediate 200 basis point increase or decrease in market interest rates (whichever results in the greater decline) is less than two percent of the current estimated economic value of its assets. An institution with a greater than normal interest rate risk will be required to deduct from total capital, for purposes of calculating its risk-based capital requirement, an amount (the "interest rate risk component") equal to one-half the difference between the institution's measured interest rate risk and the normal level of interest rate risk, multiplied by the economic value of its total assets.

The OTS calculates the sensitivity of an institution's net portfolio value with data submitted by the institution and the interest rate risk measurement model adopted by the OTS. The amount of the interest rate risk component, if any, to be deducted from an institution's total capital will be based on the institution's Thrift Financial Report filed two quarters earlier. Savings institutions with less than $300 million in assets and a risk-based capital ratio above 12% are generally exempt from filing the interest rate risk schedule with their Thrift Financial Reports. However, the OTS may require any exempt institution that it determines may have a high level of interest rate risk exposure to file such schedule on a quarterly basis and may be subject to an additional capital requirement based upon its level of interest

55

rate risk as compared to its peers. Although the rule is not yet in effect, due to our net size and risk-based capital level, we are exempt from the interest rate risk component.

Dividend and Other Capital Distribution Limitations. OTS regulations require us to give the OTS 30 days advance notice of any proposed declaration of dividends to QBI, and the OTS has the authority under its supervisory powers to prohibit the payment of dividends by us to QBI. In addition, we may not declare or pay a cash dividend on our capital stock if the effect would be to reduce our regulatory capital below the amount required for the liquidation account to be established at the time of the conversion. See "The Conversion -- Effects of Conversion to Stock Form on Depositors and Borrowers of Quitman Federal Savings Bank -- Liquidation Account."

OTS regulations impose limitations upon all capital distributions by savings institutions, such as cash dividends, payments to repurchase or otherwise acquire its shares, payments to stockholders of another institution in a cash-out merger, and other distributions charged against capital. The rule establishes three tiers of institutions based primarily on an institution's capital level. An institution that exceeds all fully phased-in capital requirements before and after a proposed capital distribution ("Tier 1 institution") and has not been advised by the OTS that it is in need of more than the normal supervision can, after prior notice but without the approval of the OTS, make capital distributions during a calendar year equal to the greater of (i) 100% of its net income to date during the calendar year plus the amount that would reduce by one-half its "surplus capital ratio" (the excess capital over its fully phased-in capital requirements) at the beginning of the calendar year, or (ii) 75% of its net income over the most recent four quarter period. Any additional capital distributions require prior regulatory notice. As of September 30, 1997, we qualified as a Tier 1 institution.

In the event our capital falls below our fully phased-in requirement or the OTS notifies us that we are in need of more than normal supervision, we would become a Tier 2 or Tier 3 institution and as a result, our ability to make capital distributions could be restricted. Tier 2 institutions, which are institutions that before and after the proposed distribution meet their current minimum capital requirements, may only make capital distributions of up to 75 % of net income over the most recent four quarter period. Tier 3 institutions, which are institutions that do not meet current minimum capital requirements and propose to make any capital distribution, and Tier 2 institutions that propose to make a capital distribution in excess of the noted safe harbor level, must obtain OTS approval prior to making such distribution. In addition, the OTS could prohibit a proposed capital distribution by any institution, which would otherwise be permitted by the regulation, if the OTS determines that such distribution would constitute an unsafe or unsound practice. The OTS has proposed rules relaxing certain approval and notice requirements for well-capitalized institutions.

A savings institution is prohibited from making a capital distribution if, after making the distribution, the savings institution would be undercapitalized (i.e., not meet any one of its minimum regulatory capital requirements). Further, a savings institution cannot distribute regulatory capital that is needed for its liquidation account.

Qualified Thrift Lender Test. Savings institutions must meet a qualified thrift lender ("QTL") test. If we maintain an appropriate level of qualified thrift investments ("QTIs") (primarily residential mortgages and related investments, including certain mortgage-related securities) and otherwise qualify as a QTL, we will continue to enjoy full borrowing privileges from the FHLB of Atlanta. The required percentage of QTIs is 65% of portfolio assets (defined as all assets minus intangible assets, property used by the institution in conducting its business and liquid assets equal to 10% of total assets). Certain assets

56

are subject to a percentage limitation of 20% of portfolio assets. In addition, savings institutions may include shares of stock of the FHLBs, FNMA, and FHLMC as QTIs. Compliance with the QTL test is determined on a monthly basis in nine out of every 12 months. As of September 30, 1997, we were in compliance with our QTL requirement with approximately 85% of our assets invested in QTIs.

Transactions With Affiliates. Generally, restrictions on transactions with affiliates require that transactions between a savings institution or its subsidiaries and its affiliates be on terms as favorable to the savings institution as comparable transactions with non-affiliates. In addition, certain of these transactions are restricted to an aggregate percentage of the savings institution's capital. Collateral in specified amounts must usually be provided by affiliates in order to receive loans from the savings institution. Within certain limits, affiliates are permitted to receive more favorable loan terms than non-affiliates. Our affiliates include QBI and any company which would be under common control with us. In addition, a savings institution may not extend credit to any affiliate engaged in activities not permissible for a bank holding company or acquire the securities of any affiliate that is not a subsidiary. The OTS has the discretion to treat subsidiaries of savings institution as affiliates on a case-by-case basis.

Liquidity Requirements. All savings institutions are required to maintain an average daily balance of liquid assets equal to a certain percentage of the sum of its average daily balance of net withdrawable deposit accounts and borrowings payable in one year or less. The liquidity requirement may vary from time to time (between 4% and 10%) depending upon economic conditions and savings flows of all savings institutions. At September 30, 1997, our required liquid asset ratio was 5% and our actual ratio was 13%. In November 1997, the required ratio was reduced to 4%. Monetary penalties may be imposed upon institutions for violations of liquidity requirements.

Federal Home Loan Savings Bank System. We are a member of the FHLB of Atlanta, which is one of 12 regional FHLBs. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from funds deposited by savings institutions and proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the board of directors of the FHLB.

As a member, we are required to purchase and maintain stock in the FHLB of Atlanta in an amount equal to at least 1% of our aggregate unpaid residential mortgage loans, home purchase contracts or similar obligations at the beginning of each year. At September 30, 1997, we had $228,000 in FHLB stock, at cost, which was in compliance with this requirement. The FHLB imposes various limitations on advances such as limiting the amount of certain types of real estate related collateral to 30% of a member's capital and limiting total advances to a member.

The FHLBs are required to provide funds for the resolution of troubled savings institutions and to contribute to affordable housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects. These contributions have adversely affected the level of FHLB dividends paid and could continue to do so in the future.

Federal Reserve. The Federal Reserve requires all depository institutions to maintain noninterest bearing reserves at specified levels against their transaction accounts (primarily checking, NOW and Super NOW checking accounts) and non-personal time deposits. The balances maintained to meet the reserve requirements imposed by the Federal Reserve may be used to satisfy the liquidity requirements that are imposed by the OTS. At September 30, 1997, our reserve met the minimum level required by the Federal Reserve.

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Savings institutions have authority to borrow from the Federal Reserve System "discount window," but Federal Reserve System policy generally requires savings institutions to exhaust all other sources before borrowing from the Federal Reserve System. We had no borrowings from the Federal Reserve System at September 30, 1997.

TAXATION

Federal Taxation

We are subject to the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), in the same general manner as other corporations. In August 1996, the Code was revised to equalize the taxation of thrifts and banks. Thrifts, such as us, no longer have a choice between the percentage of taxable income method and the experience method in determining additions to bad debt reserves. Thrifts with $500 million of assets or less may still use the experience method, which is generally available to small banks. Larger thrifts must use the specific charge off method regarding bad debts. Any reserve amounts added to our bad debt reserve after 1987 will be recaptured into our taxable income over a six year period beginning in 1996. A thrift may delay recapturing into income its post-1987 bad debt reserves for an additional two years if it meets a residential lending test. This recapture will not have a material impact on us.

Under the experience method, the bad debt deduction may be based on (i) a six-year moving average of actual losses on qualifying and non-qualifying loans, or (ii) a fill-up to the institution's base year reserve amount, which is the tax bad debt reserve determined as of December 31, 1987.

The percentage of specially computed taxable income that was used to compute a savings institution's bad debt reserve deduction under the percentage of taxable income method (the "percentage bad debt deduction") was 8%. The percentage of taxable income bad debt deduction thus computed was reduced by the amount permitted as a deduction for non-qualifying loans under the experience method. In the past the availability of the percentage of taxable income method permitted qualifying savings institutions to be taxed at a lower effective federal income tax rate than that applicable to corporations generally (approximately 31.3% assuming the maximum percentage bad debt deduction).

If a savings institution's qualifying assets (generally, loans secured by residential real estate or deposits, educational loans, cash and certain government obligations) constitute less than 60% of its total assets, the institution may not deduct any addition to a bad debt reserve and generally must include existing reserves in income over a four year period, which is immediately accruable for financial reporting purposes. As of September 30, 1997, at least 60% of our assets were qualifying assets as defined in the Code. No assurance can be given that we will meet the 60% test for subsequent taxable years.

Earnings appropriated to our bad debt reserve and claimed as a tax deduction including our supplemental reserves for losses will not be available for the payment of cash dividends or for distribution to you, our stockholders (including distributions made on dissolution or liquidation), unless we include the amount in income. Distributable amounts may be reduced by any amount deemed necessary to pay the resulting federal income tax. As of September 30, 1997, we had $6,000 of accumulated earnings, representing our base year tax reserve, for which federal income taxes have not been provided. If such amount is used for any purpose other than bad debt losses, including a dividend distribution or a distribution in liquidation, it will be subject to federal income tax at the then current rate.

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Generally, for taxable years beginning after 1986, the Code also requires most corporations, including savings institutions, to utilize the accrual method of accounting for tax purposes. Further, for taxable years ending after 1986, the Code disallows 100% of a savings institution's interest expense deemed allocated to certain tax-exempt obligations acquired after August 7, 1986. Interest expense allocable to (i) tax-exempt obligations acquired after August 7, 1986 which are not subject to this rule, and (ii) tax-exempt obligations issued after 1982 but before August 8, 1986, are subject to the rule which applied prior to the Code disallowing the deductibility of 20% of the interest expense.

The Code imposes an alternative minimum tax ("AMT") on a corporation's alternative minimum taxable income ("AMTI") at a rate of 20%. AMTI is increased by certain preference items, including the excess of the tax bad debt reserve deduction using the percentage of taxable income method over the deduction that would have been allowable under the experience method. Only 90% of AMTI can be offset by net operating loss carryovers of which we currently have none. AMTI is also adjusted by determining the tax treatment of certain items in a manner that negates the deferral of income resulting from the regular tax treatment of those items. Thus, our AMTI is increased by an amount equal to 75 % of the amount by which our adjusted current earnings exceeds our AMTI (determined without regard to this adjustment and prior to reduction for net operating losses). In addition, for taxable years beginning after December 31, 1986 and before January 1, 1996, an environmental tax of 0.12% of the excess of AMTI (with certain modifications) over $2 million is imposed on corporations, including us, whether or not an AMT is paid. For tax years beginning in 1998 a corporation that has had average annual gross receipts of $5 million or less over its 1995, 1996 and 1997 tax years will be a "small corporation". Once the corporation is recognized as a small corporation it will be exempt from the AMT for so long as its average annual gross receipts for the prior 3 year period does not exceed $7,500,000.

QBI may exclude from its income 100% of dividends received from us as a member of the same affiliated group of corporations. A 70% dividends received deduction generally applies with respect to dividends received from corporations that are not members of such affiliated group, except that an 80% dividends received deduction applies if QBI owns more than 20% of the stock of a corporation paying a dividend. The above exclusion amounts, with the exception of the affiliated group figure, were reduced in years in which we availed ourself of the percentage of taxable income bad debt deduction method.

Our federal income tax returns have not been audited by the IRS during the past ten years.

State Taxation

The Association files Georgia income tax returns. For Georgia income tax purposes, savings institutions are presently taxed at a rate equal to 6% of net income, which is calculated based on federal taxable income, subject to certain adjustments. The State of Georgia also imposes franchise and privilege taxes on savings institutions which, in the case of Quitman, do not constitute significant tax items.

Our state tax returns have not been audited by the State of Georgia during the past ten years.

MANAGEMENT OF QUITMAN BANCORP, INC.

Our board of directors consists of the same individuals who serve as directors of our subsidiary, Quitman Federal Savings Bank. Our articles of incorporation and bylaws require that directors be divided into three classes, as nearly equal in number as possible. Each class of directors serves for a three-year period, with approximately one-third of the directors elected each year. Our officers will be elected

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annually by the board and serve at the board's discretion. See "Management of Quitman Federal Savings Bank."

MANAGEMENT OF QUITMAN FEDERAL SAVINGS BANK

Directors and Executive Officers

Our board of directors is composed of six members each of whom serves for a term of three years, with approximately one-third of the directors elected each year. Our current charter and bylaws and our proposed stock charter and bylaws require that directors be divided into three classes, as nearly equal in number as possible. Our officers are elected annually by our board and serve at the board's discretion.

The following table sets forth information with respect to our directors and executive officers, all of whom will continue to serve in the same capacities after the conversion.

                                            Age at                                                          Current
                                         September 30,                                    Director             Term
Name                                         1997           Position                        Since           Expires(1)
----                                         ----           --------                      --------          -------

Claude R. Butler                              59            Chairman                        1980               1999

Robert L. Cunningham, III                     41            Vice Chairman                   1985               1998

Walter B. Holwell                             41            Director                        1988               1999


 Daniel M. Mitchell, Jr.                      47            Director                        1986             ^ 2000

John W. Romine                                50             Director                       1987             ^ 2000


Melvin E. Plair                               60            Director, President             1997               1998
                                                            and CEO

Peggy L. Forgione                             46            Vice President and               N/A
                                                            Controller


(1) The terms for directors of QBI are the same as those of Quitman Federal Savings Bank. A director whose term expires during the year would serve until the next annual meeting that would typically occur in January of the following year.

The business experience for the past five years of each of the directors and executive officers is as follows:

Claude R. Butler is a pork producer in Brooks County. He was elected to the Board of Directors in 1980, and has served as Chairman since 1987. Mr. Butler is also a Brooks County Commissioner, and was Chairman of the Brooks County Commission in 1996.

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Robert L. Cunningham, III is the corporate secretary and treasurer of R.L. Cunningham & Sons, Inc., a peanut warehouse and peanut seed business. Mr. Cunningham has served as a director of the Savings Bank since 1985, and as Vice Chairman since 1987.

Walter B. Holwell is the sole proprietor of Holwell & Holwell, Inc., an insurance enterprise. Mr. Holwell has served on the board of directors since 1988. Active in the community, Mr. Holwell was President of the Brooks County Chamber of Commerce from 1992 to 1993. He was President of Brooks Co. Athletic Boosters. Mr. Holwell is Secretary of Brooks Co. Industrial Authority.

Daniel M. Mitchell, Jr. is an attorney with a practice in Quitman. He has served as a director of the Savings Bank since 1986. Mr. Mitchell is a Deacon of the First Baptist Church of Quitman and is Trustee of Westbrook School in Dixie, Georgia.

John W. Romine is President and 100% stockholder of Romine Furniture Co., Inc., a retail furniture store. Mr. Romine has been a Director of the Savings Bank since 1987.

Melvin E. Plair is the President and Chief Executive Officer ("CEO") of the Savings Bank. He has served in this capacity since 1993. Prior to that, Mr. Plair was a loan officer for the Savings Bank. Mr. Plair became a director of the Savings Bank and QBI in December 1997. Mr. Plair has been a director of both the Brooks County and the South Georgia Chambers of Commerce for the past three years, and has also been a director of the South Georgia Area Bankers Association for three years.

Peggy L. Forgione has been the Vice President since January 1993 and Controller of the Savings Bank since January 1987. She has served the Savings Bank since 1982, and also holds the position of Officer in Charge of Operations. Ms. Forgione was also a director of the Brooks County Chamber of Commerce until 1994.

Meetings and Committees of the Board of Directors

The board of directors conducts its business through meetings of the board and through activities of its committees. During the year ended September 30, 1997, the board of directors held 14 regular meetings and 4 special meetings. Additionally, the full board, functioning as the Executive Committee meets weekly to review loan applications and to consider related business. No director attended fewer than 75 % of the total meetings of the board of directors and committees on which such director served during this time period.

Director Compensation

Each director is paid monthly. Total aggregate fees paid to the directors for the year ended September 30, 1997 were $39,750. Since October 1, 1997, each director has been paid a monthly fee of $750 and the Chairman of the Board has been paid a monthly fee of $875.

Director Fee Continuation Program ("DFCP"). We expect to implement a DFCP to provide retirement benefits to our directors based upon the number of years of service to our board. If a director agrees to become a consulting director to our board upon retirement, he would receive a monthly payment for a period of time or until death. Benefits under our DFCP would begin upon a director's retirement. In the event there is a change in control, all directors would be entitled to receive a lump sum payment based upon future benefits. We have not determined the specific benefit to be provided to any director

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and have not yet determined the full cost to us of this program because the specific benefits have yet to be determined.

Executive Compensation

Summary Compensation Table. The following table sets forth the cash and non-cash compensation awarded to or earned by our chief executive officer at September 30, 1997. No employee earned in excess of $100,000 for the year ended September 30, 1997.

                                                  Annual Compensation
                                          --------------------------------------
                                                                    Other Annual
Name and Principal Position                Salary         Bonus     Compensation
---------------------------                ------         -----     ------------

Melvin E. Plair, Director, President       $54,000        $8,400          N/A
and CEO

Supplemental Executive Retirement Plan. We are considering whether to implement a supplemental executive retirement plan ("SERP") for the benefit of our President, Mr. Plair. The SERP could provide Mr. Plair with a supplemental retirement benefit in addition to benefits under the Profit Sharing Plan and the proposed ESOP. Payments under the SERP would be accrued for financial reporting purposes during the period of employment. The SERP would be unfunded. All benefits payable under the SERP would be paid from our current assets. There are no tax consequences to either participant or us related to the SERP prior to payment of benefits. Upon receipt of payment of benefits, the participant will recognize taxable ordinary income in the amount of such payments received and we will be entitled to recognize a tax-deductible compensation expense at that time. We have not determined whether to implement a SERP or whether the cost would be material to us.

Employee Stock Ownership Plan. We have established an employee stock ownership plan, the ESOP, for the exclusive benefit of participating employees of ours, to be implemented upon the completion of the conversion. Participating employees are employees who have completed one year of service with us or our subsidiary and have attained the age of 21. An application for a letter of determination as to the tax-qualified status of the ESOP will be submitted to the IRS. Although no assurances can be given, we expect that the ESOP will receive a favorable letter of determination from the IRS.

The ESOP is to be funded by contributions made by us in cash or common stock. Benefits may be paid either in shares of the common stock or in cash. In accordance with the Plan, the ESOP may borrow funds with which to acquire up to 8 % of the common stock to be issued in the conversion. The ESOP intends to borrow funds from QBI. The loan is expected to be for a term of ten years at an annual interest rate equal to the prime rate as published in The Wall Street Journal. Presently it is anticipated that the ESOP will purchase up to 8% of the common stock to be issued in the offering (i.e., $400,000, based on the midpoint of the EVR). The loan will be secured by the shares purchased and earnings of ESOP assets. Shares purchased with such loan proceeds will be held in a suspense account for allocation among participants as the loan is repaid. We anticipate contributing approximately $40,000 annually (based on a $400,000 purchase) to the ESOP to meet principal obligations under the ESOP loan, as

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proposed. It is anticipated that all such contributions will be tax-deductible. This loan is expected to be fully repaid in approximately 10 years.

Shares sold above the maximum of the EVR (i.e., more than 575,000 shares) may be sold to the ESOP before satisfying remaining unfilled orders of Eligible Account Holders to fill the ESOP's subscription or the ESOP may purchase some or all of the shares covered by its subscription after the conversion in the open market.

Contributions to the ESOP and shares released from the suspense account will be allocated among participants on the basis of total compensation. All participants must be employed at least 1,000 hours in a plan year, or have terminated employment following death, disability or retirement, in order to receive an allocation. Participant benefits become vested in plan allocations following five years of service. Employment prior to the adoption of the ESOP shall be credited for the purposes of vesting. Vesting will be accelerated upon retirement, death, disability, change in control of QBI, or termination of the ESOP. Forfeitures will be reallocated to participants on the same basis as other contributions in the plan year. Benefits may be payable in the form of a lump sum upon retirement, death, disability or separation from service. Our contributions to the ESOP are discretionary and may cause a reduction in other forms of compensation. Therefore, benefits payable under the ESOP cannot be estimated.

The board of directors has appointed non-employee directors to the ESOP Committee to administer the ESOP and to serve as the initial ESOP Trustees. The board of directors or the ESOP Committee may instruct the ESOP Trustees regarding investments of funds contributed to the ESOP. The ESOP Trustees must vote all allocated shares held in the ESOP in accordance with the instructions of the participating employees. Unallocated shares and allocated shares for which no timely direction is received will be voted by the ESOP Trustees as directed by the board of directors or the ESOP Committee, subject to the Trustees' fiduciary duties.

Profit Sharing Plan. We sponsor a tax-qualified defined contribution savings plan ("401(k) Plan") for the benefit of our employees. Employees become eligible to participate under the 401(k) Plan after reaching age 20 1/2 and completing 6 months of service. Under the 401(k) Plan, employees may voluntarily elect to defer compensation, not to exceed applicable limits under the Code (i.e., $9,500 in calendar year 1997). In recent years the Bank has contributed $10,000 to the 401(k) Plan that is allocated to each participant's account in proportion to the ratio which each participant's total compensation for the calendar year bears to the total compensation of all participants for the calendar year. Contributions from the Bank to employees vest over immediate as of the contribution date.^

Benefits are payable upon termination of employment, retirement, death, disability, or plan termination. Normal retirement age under the 401(k) Plan is age 65. It is intended that the 401(k) Plan operate in compliance with the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the requirements of Section 401(a) of the Code.

Costs associated with the 401(k) Plan were $10,000 for the year ended September 30, 1997. Contributions to the 401(k) Plan by the Savings Bank for employees may be reduced in the future or eliminated as a result of contributions made to the Employee Stock Ownership Plan. See "- Employee Stock Ownership Plan."

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Proposed Future Stock Benefit Plans

Stock Option Plan. The boards of directors intend to adopt a stock option plan (the Option Plan) following the conversion, subject to approval by QBI's stockholders, at a stockholders' meeting to be held no sooner than six months after the conversion. The Option Plan would be in compliance with the OTS regulations in effect. See "-- Restrictions on Stock Benefit Plans." If the Option Plan is implemented within one year after the conversion, in accordance with OTS regulations, a number of shares equal to 10% of the aggregate shares of common stock to be issued in the offering (i.e., 50,000 shares based upon the sale of 500,000 shares at the midpoint of the EVR) would be reserved for issuance by QBI upon exercise of stock options to be granted to our officers, directors and employees from time to time under the Option Plan. The purpose of the Option Plan would be to provide additional performance and retention incentives to certain officers, directors and employees by facilitating their purchase of a stock interest in QBI. Under the OTS regulations, the Option Plan, would provide for a term of 10 years, after which no awards could be made, unless earlier terminated by the board of directors pursuant to the Option Plan and the options would vest over a five year period (i.e., 20% per year), beginning one year after the date of grant of the option. Options would be granted based upon several factors, including seniority, job duties and responsibilities, job performance, our financial performance and a comparison of awards given by other savings institutions converting from mutual to stock form.

QBI would receive no monetary consideration for the granting of stock options under the Option Plan. It would receive the option price for each share issued to optionees upon the exercise of such options. Shares issued as a result of the exercise of options will be either authorized but unissued shares or shares purchased in the open market by QBI. However, no purchases in the open market will be made that would violate applicable regulations restricting purchases by QBI. The exercise of options and payment for the shares received would contribute to the equity of QBI.

If the Option Plan is implemented more than one year after the conversion, the Option Plan will comply with OTS regulations and policies that are applicable at such time.

Restricted Stock Plan. The board of directors intends to adopt the RSP following the conversion, the objective of which is to enable us to retain personnel and directors of experience and ability in key positions of responsibility. QBI expects to hold a stockholders' meeting no sooner than six months after the conversion in order for stockholders to vote to approve the RSP. If the RSP is implemented within one year after the conversion, in accordance with applicable OTS regulations, the shares granted under the RSP will be in the form of restricted stock vesting over a five year period (i.e., 20% per year) beginning one year after the date of grant of the award. Compensation expense in the amount of the fair market value of the common stock granted will be recognized pro rata over the years during which the shares are payable. Until they have vested, such shares may not be sold, pledged or otherwise disposed of and are required to be held in escrow. Any shares not so allocated would be voted by the RSP Trustees. The RSP will be implemented in accordance with applicable OTS regulations. See "--Restrictions on Stock Benefit Plans." Awards would be granted based upon a number of factors, including seniority, job duties and responsibilities, job performance, our performance and a comparison of awards given by other institutions converting from mutual to stock form. The RSP would be managed by a committee of non-employee directors (the "RSP Trustees"). The RSP Trustees would have the responsibility to invest all funds contributed by us to the trust created for the RSP (the "RSP Trust").

We expect to contribute sufficient to the RSP so that the RSP Trust can purchase, in the aggregate, up to 4% of the amount of common stock that is sold in the conversion. The shares purchased

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by the RSP would be authorized but unissued shares or would be purchased in the open market. In the event the market price of the common stock is greater than $10 per share, our contribution of funds will be increased. Likewise, in the event the market price is lower than $10 per share, our contribution will be decreased. In recognition of their prior and expected services to us and QBI, as the case may be, the officers, other employees and directors responsible for implementation of the policies adopted by the board of directors and our profitable operation will, without cost to them, be awarded stock under the RSP. Based upon the sale of 500,000 shares of common stock in the offering at the midpoint of the EVR, the RSP Trust is expected to purchase up to 20,000 shares of common stock.

If the RSP is implemented more than one year after the conversion, the RSP will comply with such OTS regulations and policies that are applicable at such time.

Restrictions on Stock Benefit Plans. OTS regulations provide that in the event stock option or management and/or employee stock benefit plans are implemented within one year from the date of conversion, such plans must comply with the following restrictions: (1) the plans must be fully disclosed in the prospectus, (2) for stock option plans, the total number of shares for which options may be granted may not exceed 10% of the shares issued in the conversion, (3) for restricted stock plans, the shares may not exceed 3% of the shares issued in the conversion (4% for institutions with 10% or greater tangible capital), (4) the aggregate amount of stock purchased by the ESOP in the conversion may not exceed 10% (8% for well-capitalized institutions utilizing a 4% restricted stock plan), (5) no individual employee may receive more than 25 % of the available awards under the option plan or the restricted stock plans, (6) directors who are not employees may not receive more than 5 % individually or 30% in the aggregate of the awards under any plan, (7) all plans must be approved by a majority of the total votes eligible to be cast at any duly called meeting of QBI's stockholders held no earlier than six months following the conversion, (8) for stock option plans, the exercise price must be at least equal to the market price of the stock at the time of grant, (9) for restricted stock plans, no stock issued in a conversion may be used to fund the plan, (10) neither stock option awards nor restricted stock awards may vest earlier than 20% as of one year after the date of stockholder approval and 20% per year thereafter, and vesting may be accelerated only in the case of disability or death (or if not inconsistent with applicable OTS regulations in effect at such time, in the event of a change in control), (11) the proxy material must clearly state that the OTS in no way endorses or approves of the plans, and (12) prior to implementing the plans, all plans must be submitted to the Regional Director of the OTS within five days after stockholder approval with a certification that the plans approved by the stockholders are the same plans that were filed with and disclosed in the proxy materials relating to the meeting at which stockholder approval was received.

Certain Related Transactions. We grant loans to our officers, directors and employees. These loans are made in the ordinary course of business and upon the same terms, including collateral, as those prevailing at the time for comparable transactions and do not involve more than the normal risk of collectibility or present any other unfavorable features, except that we charge an interest rate that is two percent above our cost of funds and we may waive loan fees. That interest rate and the waiver of loan fees are not available to our other borrowers. Loans to officers and directors and their affiliates amounted to $675,000 or 23% of our total equity at September 30, 1997. Assuming the conversion had occurred at September 30, 1997 with the issuance of 500,000 shares, these loans would have totalled approximately 10% of pro forma consolidated stockholders' equity.

Set forth below is information about these loans to our executive officers and directors and members of their immediate family where the aggregate balance of loans or lines of credit exceeded $60,000 at any time during the fiscal years ended September 30, 1997 or 1996.

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                                                                                             Highest Balance
                                                            Date          Original             During 1997            Interest
Name of Officer or Director(1)          Loan Type        Originated      Loan Amount           Fiscal Year           Rate Paid
---------------------------             ---------        ----------      -----------           -----------           ---------


Melvin E. Plair (President)..........   real estate       3/28/97        $86,006                 $86,006                 7.30%
                                        vehicle           1/31/97          8,200                   8,200               ^ 7.80
                                        real estate       8/16/94          8,852                   8,467               ^ 7.95
                                        consumer          6/30/97          4,800                   4,800               ^ 8.09
Claude R. Butler (Chairman)..........   real estate       3/4/97        ^ 80,000                  80,000                 7.31
W. B. Holwell (Director).............   real estate       5/14/93       ^ 13,550                ^ 11,412               ^ 8.81
                                        real estate       8/19/97        220,516                 220,516               ^ 8.45
                                        consumer          6/27/97          4,506                   4,006               ^ 9.00


(1) Includes all loans for these individuals, even if only one loan had preferential terms.

RESTRICTIONS ON ACQUISITION OF QUITMAN BANCORP, INC.

While the board of directors is not aware of any effort that might be made to obtain control of QBI after conversion, the board of directors believes that it is appropriate to include certain provisions as part of QBI's articles of incorporation to protect the interests of QBI and its stockholders from hostile takeovers ("anti-takeover" provisions) which the board of directors might conclude are not in the best interests of us or our stockholders. These provisions may have the effect of discouraging a future takeover attempt which is not approved by the board of directors but which individual stockholders may deem to be in their best interests or in which stockholders may receive a substantial premium for their shares over the current market prices. As a result, stockholders who might desire to participate in such a transaction may not have an opportunity to do so. Such provisions will also render the removal of the current board of directors or management of QBI more difficult.

The following discussion is a general summary of the material provisions of the articles of incorporation, bylaws, and certain other regulatory provisions of QBI, which may be deemed to have such an anti-takeover effect. The description of these provisions is necessarily general and reference should be made in each case to the articles of incorporation and bylaws of QBI which are filed as exhibits to the registration statement of which this prospectus is a part. See "Where You Can Find Additional Information" as to how to obtain a copy of these documents.

Provisions of QBI Articles of Incorporation and Bylaws

Limitations on Voting Rights. The articles of incorporation of QBI provide that for a period of five years from completion of the conversion, in no event shall any record owner of any outstanding equity security which is beneficially owned, directly or indirectly, by a person who beneficially owns in excess of 10% of any class of equity security outstanding (the "Limit") be entitled or permitted to any vote in respect of the shares held in excess of the Limit. In addition, for a period of five years from the completion of our conversion, no person may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of QBI without the approval of the Board of Directors.

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The impact of these provisions on the submission of a proxy on behalf of a beneficial holder of more than 10% of the common stock is (1) to disregard for voting purposes and require divestiture of the amount of stock held in excess of 10% (if within five years of the conversion more than 10% of the common stock is beneficially owned by a person) and (2) limit the vote on common stock held by the beneficial owner to 10% or possibly reduce the amount that may be voted below the 10% level (if more than 10% of the common stock is beneficially owned by a person more than five years after the conversion). Unless the grantor of a revocable proxy is an affiliate or an associate of such a 10% holder or there is an arrangement, agreement or understanding with such a 10% holder, these provisions would not restrict the ability of such a 10% holder of revocable proxies to exercise revocable proxies for which the 10% holder is neither a beneficial nor record owner. A person is a beneficial owner of a security if he has the power to vote or direct the voting of all or part of the voting rights of the security, or has the power to dispose of or direct the disposition of the security. The articles of incorporation of QBI further provide that this provision limiting voting rights may only be amended upon the vote of 80% of the outstanding shares of voting stock.

Election of Directors. Certain provisions of QBI's articles of incorporation and bylaws will impede changes in majority control of the board of directors. QBI's articles of incorporation provide that the board of directors of QBI will be divided into three staggered classes, with directors in each class elected for three-year terms. Thus, it would take two annual elections to replace a majority of QBI's board. QBI's articles of incorporation provide that the size of the board of directors may be increased or decreased only if ^ approved by majority vote of the whole board of the directors. The articles of incorporation also provide that any vacancy occurring in the board of directors, including a vacancy created by an increase in the number of directors, may be filled only by the board of directors, acting by a majority vote of the directors then in office and any directors so chosen shall hold office until the next ^ succeeding annual election of directors. Finally, the articles of incorporation and the bylaws impose certain notice and information requirements in connection with the nomination by stockholders of candidates for election to the board of directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders.

The articles of incorporation provide that a director may only be removed for cause by the affirmative vote of at least 80% of the shares of QBI entitled to vote generally in an election of directors cast at a meeting of stockholders called for that purpose.

Restrictions on Call of Special Meetings. The articles of incorporation of QBI provide that a special meeting of stockholders may be called only pursuant to a resolution adopted by a majority of the board of directors, the chairman, the president or 80% of all shareholder votes that may be cast at a meeting. If QBI has 100 or fewer stockholders, then 25% of all shareholder votes that may be cast at a meeting is sufficient to call a special meeting.

Absence of Cumulative Voting. QBI's articles of incorporation provide that stockholders may not cumulate their votes in the election of directors.

Authorized Shares. The articles of incorporation authorize the issuance of 4,000,000 shares of common stock and 1,000,000 shares of preferred stock. The shares of common stock and preferred stock were authorized in an amount greater than that to be issued in the conversion to provide QBI's board of directors with as much flexibility as possible to effect, among other transactions, financings, acquisitions, stock dividends, stock splits and the exercise of stock options. However, these additional authorized shares may also be used by the board of directors consistent with its fiduciary duty to deter future

67

attempts to gain control of QBI. The board of directors also has sole authority to determine the terms of any one or more series of preferred stock, including voting rights, conversion rates, and liquidation preferences. As a result of the ability to fix voting rights for a series of preferred stock, the board has the power, to the extent consistent with its fiduciary duty, to issue a series of preferred stock to persons friendly to management in order to attempt to block a post-tender offer merger or other transaction by which a third party seeks control, and thereby assist management to retain its position.

Procedures for Certain Business Combinations. The articles of incorporation require that unless certain fair price provisions set forth in Georgia law are met, business combinations must be (1) unanimously approved by directors who are not affiliated with an "interested shareholder" (as defined below) or (2) recommended by two-thirds of directors not affiliated with an interested shareholder and approved by a majority of the votes entitled to be cast that are not owned by an interested shareholder. An interested shareholder is a person other than QBI or the Savings Bank that beneficially owns 10% or more of the outstanding voting shares of QBI within the two years prior to the time a business transaction is proposed. Exceptions to this requirement may occur if the board of directors has previously approved the business transaction or if the interested shareholder becomes the owner of 90% or more of the outstanding shares of QBI. Any amendment to this provision requires the affirmative vote of at least 80% of the shares of QBI entitled to vote generally in an election of directors.

Amendment to Articles of Incorporation and Bylaws. Amendments to QBI's articles of incorporation must be approved by QBI's board of directors and also by a majority of the outstanding shares of QBI's voting stock, provided, however, that approval by at least 80% of the outstanding voting stock is generally required for certain provisions (i.e., provisions relating to restrictions on the acquisition and voting of greater than 10% of the common stock; number, classification, election and removal of directors; amendment of bylaws; call of special stockholder meetings; director liability; certain business combinations; power of indemnification; and amendments to provisions relating to the foregoing in the articles of incorporation).

The bylaws may be amended by a majority vote of the board of directors or the affirmative vote of the holders of at least 80 % of the outstanding shares of QBI entitled to vote in the election of directors cast at a meeting called for that purpose.

Benefit Plans. In addition to the provisions of QBI's articles of incorporation and bylaws described above, certain benefit plans of ours adopted in connection with the conversion contain provisions which also may discourage hostile takeover attempts which the boards of directors might conclude are not in the best interests of us or our stockholders. For a description of the benefit plans and the provisions of such plans relating to changes in control, see "Management of Quitman Federal Savings Bank -- Proposed Future Stock Benefit Plans."

Regulatory Restrictions. A federal regulation prohibits any person prior to the completion of a conversion from transferring, or entering into any agreement or understanding to transfer, the legal or beneficial ownership of the subscription rights issued under a plan of conversion or the stock to be issued upon their exercise. This regulation also prohibits any person prior to the completion of a conversion from offering, or making an announcement of an offer or intent to make an offer, to purchase such subscription rights or stock. For three years following conversion, OTS regulations prohibit any person, without the prior approval of the OTS, from acquiring or making an offer to acquire more than 10% of the stock of any converted savings institution if such person is, or after consummation of such acquisition would be, the beneficial owner of more than 10% of such stock. In the event that any person, directly

68

or indirectly, violates this regulation, the securities beneficially owned by such person in excess of 10% shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection with any matter submitted to a vote of stockholders.

Federal regulations require that, prior to obtaining control of an insured institution, a person, other than a company, must give 60 days notice to the OTS and have received no OTS objection to such acquisition of control, and a company must apply for and receive OTS approval of the acquisition. Control, involves a 25% voting stock test, control in any manner of the election of a majority of the institution's directors, or a determination by the OTS that the acquiror has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution. Acquisition of more than 10% of an institution's voting stock, if the acquiror also is subject to any one of either "control factors," constitutes a rebuttable determination of control under the regulations. The determination of control may be rebutted by submission to the OTS, prior to the acquisition of stock or the occurrence of any other circumstances giving rise to such determination, of a statement setting forth facts and circumstances which would support a finding that no control relationship will exist and containing certain undertakings. The regulations provide that persons or companies which acquire beneficial ownership exceeding 10% or more of any class of a savings association's stock after the effective date of the regulations must file with the OTS a certification that the holder is not in control of such institution, is not subject to a rebuttable determination of control and will take no action which would result in a determination or rebuttable determination of control without prior notice to or approval of the OTS, as applicable.

DESCRIPTION OF CAPITAL STOCK

QBI is authorized to issue 4,000,000 shares of the common stock, $0.10 par value per share, and 1,000,000 shares of serial preferred stock, no par value per share. QBI currently expects to issue up to 575,000 shares of common stock in the conversion. QBI does not intend to issue any shares of serial preferred stock in the conversion, nor are there any present plans to issue such preferred stock following the conversion. The aggregate par value of the issued shares will constitute the capital account of QBI. The balance of the purchase price will be recorded for accounting purposes as additional paid-in capital. See "Capitalization". The capital stock of QBI will represent nonwithdrawable capital and will not be insured by us, the FDIC, or any other governmental agency.

Common Stock

Voting Rights. Each share of the common stock will have the same relative rights and will be identical in all respects with every other share of the common stock. The holders of the common stock will possess exclusive voting rights in QBI, except to the extent that shares of serial preferred stock issued in the future may have voting rights, if any. Each holder of the common stock will be entitled to only one vote for each share held of record on all matters submitted to a vote of holders of the common stock and will not be permitted to cumulate their votes in the election of QBI's directors.

Liquidation. In the unlikely event of the complete liquidation or dissolution of QBI, the holders of the common stock will be entitled to receive all assets of QBI available for distribution in cash or in kind, after payment or provision for payment of (i) all debts and liabilities of QBI; (ii) any accrued dividend claims; and (iii) liquidation preferences of any serial preferred stock which may be issued in the future.

69

Restrictions on Acquisition of the Common Stock. See "Restrictions on Acquisition of Quitman Bancorp, Inc." for a discussion of the limitations on acquisition of shares of the common stock.

Other Characteristics. Holders of the common stock will not have preemptive rights with respect to any additional shares of the common stock which may be issued. Therefore, the board of directors may sell shares of capital stock of QBI without first offering such shares to existing stockholders of QBI. The common stock is not subject to call for redemption, and the outstanding shares of common stock when issued and upon receipt by QBI of the full purchase price therefor will be fully paid and non-assessable.

Issuance of Additional Shares. Except in the offering and possibly pursuant to the RSP or Option Plan, the QBI has no present plans, proposals, arrangements or understandings to issue additional authorized shares of the common stock. In the future, the authorized but unissued and unreserved shares of the common stock will be available for general corporate purposes, including, but not limited to, possible issuance: (i) as stock dividends; (ii) in connection with mergers or acquisitions; (iii) under a cash dividend reinvestment or stock purchase plan; (iv) in a public or private offering; or
(v) under employee benefit plans. See "Risk Factors -- Possible Dilutive Effect of RSP and Stock Options" and "Pro Forma Data." Normally no stockholder approval would be required for the issuance of these shares, except as described herein or as otherwise required to approve a transaction in which additional authorized shares of the common stock are to be issued.

For additional information, see "Dividends," "Regulation" and "Taxation" with respect to restrictions on the payment of cash dividends; "The Conversion -- Restrictions on Sales and Purchases of Shares by Directors and Officers relating to certain restrictions on the transferability of shares purchased by directors and officers; and "Restrictions on Acquisitions of Quitman Bancorp, Inc." for information regarding restrictions on acquiring common stock of QBI.

Serial Preferred Stock

None of the 1,000,000 authorized shares of serial preferred stock of QBI will be issued in the conversion. After the conversion is completed, the board of directors of QBI will be authorized to issue serial preferred stock and to fix and state voting powers, designations, preferences or other special rights of such shares and the qualifications, limitations and restrictions thereof, subject to regulatory approval but without stockholder approval. If and when issued, the serial preferred stock is likely to rank prior to the common stock as to dividend rights, liquidation preferences, or both, and may have full or limited voting rights. The board of directors, without stockholder approval, can issue serial preferred stock with voting and conversion rights which could adversely affect the voting power of the holders of the common stock. The board of directors has no present intention to issue any of the serial preferred stock.

LEGAL AND TAX MATTERS

The legality of the common stock has been passed upon for us by Malizia, Spidi, Sloane & Fisch, P.C., Washington, D.C. Certain legal matters for Trident Securities, Inc. may be passed upon by Housley Kantarian & Bronstein, P.C., Washington, DC. The federal income tax consequences of the conversion have been passed upon for us by Malizia, Spidi, Sloane & Fisch, P.C., Washington, D.C. The Georgia income tax consequences of the Conversion have been passed upon for us by Daniel M. Mitchell, Jr., Esq., Quitman, Georgia.

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EXPERTS

The financial statements of Quitman Federal Savings Bank as of and for the years ended September 30, 1997 and 1996, appearing in this document have been audited by Stewart, Fowler & Stalvey, P.C., independent certified public accountants, as set forth in their report which appears elsewhere in this document, and is included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.

FinPro has consented to the publication herein of a summary of its letters to Quitman Federal Savings Bank setting forth its opinion as to the estimated pro forma market value of us in the converted form and its opinion setting forth the value of subscription rights and to the use of its name and statements with respect to it appearing in this document.

CHANGE IN AUDITOR

On September 30, 1997, the audit proposal of Stewart, Fowler & Stalvey, P.C. for the 1997 audit year was accepted at a meeting of the Board of Directors of the Savings Bank. Stewart, Fowler & Stalvey, P.C. subsequently stated that it would also audit the 1996 and 1998 audit years. Simmons & Simmons, P.C., the independent auditor for the Savings Bank, orally advised the Savings Bank on August 27, 1997 that it did not wish to continue as independent auditor following the conversion and that it was resigning to allow Stewart, Fowler & Stalvey, P.C. to audit the fiscal year ending September 30, 1997 in connection with the conversion. The report of Simmons & Simmons, P.C. for the fiscal year ended September 30, 1996 contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal year ended September 30, 1996 and during the period from September 30, 1996 to September 30, 1997, there were no disagreements between the Savings Bank and Simmons & Simmons, P.C. concerning accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

REGISTRATION REQUIREMENTS

The common stock of QBI is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). QBI will be subject to the information, proxy solicitation, insider trading restrictions, tender offer rules, periodic reporting and other requirements of the SEC under the Exchange Act. QBI may not deregister the common stock under the Exchange Act for a period of at least three years following the conversion.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

QBI is subject to the informational requirements of the Exchange Act and must file reports and other information with the SEC.

QBI has filed with the SEC a registration statement on Form SB-2 under the Securities Act of 1933, as amended, with respect to the common stock offered in this document. As permitted by the rules and regulations of the SEC, this document does not contain all the information set forth in the registration statement. Such information can be examined without charge at the public reference facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such material can be obtained from the SEC at prescribed rates. The SEC also maintains an internet address ("Web site") that contains reports, proxy and information statements and other information regarding registrants, including the

71

Company, that file electronically with the SEC. The address for this Web site is "http://www.sec.gov." The statements contained in this document as to the contents of any contract or other document filed as an exhibit to the Form SB-2 are, of necessity, brief descriptions and are not necessarily complete; each such statement is qualified by reference to such contract or document.

Quitman Federal Savings Bank has filed an Application for conversion with the OTS with respect to the conversion. Pursuant to the rules and regulations of the OTS, this document omits certain information contained in that Application. The Application may be examined at the principal office of the OTS, 1700 G Street, N.W., Washington, D.C. 20552 and at the Southeast Regional Office of the OTS, 1475 Peachtree Street, N.E., Atlanta, Georgia 30309, without charge.

A copy of the Articles of Incorporation and the Bylaws of QBI are available without charge from Quitman Federal Savings Bank.

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QUITMAN FEDERAL SAVINGS BANK

Index to Financial Statements

                                                                            Page
                                                                            ----

Independent Auditors' Report............................................    F-1

Balance Sheets..........................................................    F-2

Statements of Income....................................................     26

Statements of Changes in Retained Earnings..............................    F-3

Statements of Cash Flows................................................    F-4

Notes to Financial Statements...........................................    F-5

All schedules are omitted because the required information is either not applicable or is included in the consolidated financial statements or related notes.

Separate financial statements for QBI have not been included since it will not engage in material transactions until after the conversion. QBI, which has been inactive to date, has no significant assets, liabilities, revenues, expenses or contingent liabilities.

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INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Quitman Federal Savings and Loan Association Quitman, Georgia

We have audited the accompanying statements of financial condition of Quitman Federal Savings and Loan Association as of September 30, 1997 and 1996, and the related statements of income, retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these 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 financial statements referred to above present fairly, in all material respects, the financial position of Quitman Federal Savings and Loan Association as of September 30, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

/s/Stewart Fowler and Stalvey, P.C.

Valdosta, Georgia
October 30, 1997

F-1

QUITMAN FEDERAL SAVINGS AND LOAN ASSOCIATION

STATEMENTS OF FINANCIAL CONDITION

ASSETS

                                                                                     SEPTEMBER 30,
                                                                               -------------------------
                                                                                   1997          1996
                                                                               -----------   -----------
Cash and Cash Equivalents, Notes 1 and 2:
   Cash and amounts due from depository
      institutions                                                             $   108,650        86,461
   Interest-bearing deposits in other banks                                        548,158       678,789
                                                                               -----------   -----------
         Total Cash and Cash Equivalents                                           656,808       765,250
Investment securities:
   Available-for-sale (fair value $3,046,109 in 1997
      and $1,780,875 in 1996), Notes 1 and 3                                     3,046,109     1,780,875
   Held-to-maturity (fair value $801,061 in 1997 and
      $1,642,828 in 1996), Notes 1 and 3                                           804,706     1,663,271
Loans receivable, Notes 1 and 4                                                 33,325,719    30,805,187
Office properties and equipment, at cost, net of
   accumulated depreciation, Notes 1 and 5                                         322,527       310,921
Real estate and other property acquired in
   settlement of loans, Note 1                                                      63,915           -0-
Accrued interest receivable, Note 6                                                381,218       370,047
Investment required by law-stock in Federal
   Home Loan Bank, at cost, Note 14                                                227,700       219,100
Cash value of life insurance, Note 11                                              218,106       109,419
Other assets, Notes 1 and 9                                                        145,356       148,978
                                                                               -----------   -----------

         Total Assets                                                          $39,192,164    36,173,048
                                                                               ===========   ===========

                                           LIABILITIES AND RETAINED EARNINGS


Liabilities:
   Deposits, Note 7                                                            $34,470,803    31,728,963
   Advances from Federal Home Loan Bank, Note 14                                 1,300,000     1,200,000
   Accrued interest payable                                                        272,346       253,272
   Income taxes payable, Note 9                                                    114,766        60,015
   Other liabilities, Note 13                                                       75,696       263,958
                                                                               -----------   -----------

      Total Liabilities                                                         36,233,611    33,506,208
                                                                               -----------   -----------

Equity:
   Retained Earnings, Notes 8 and 9                                              2,952,560     2,689,761
   Unrealized gains (losses) on available-
      for-sale securities                                                            5,993       (22,921)
                                                                               -----------   -----------

      Total Equity                                                               2,958,553     2,666,840
                                                                               -----------   -----------

         Total Liabilities and Retained Earnings                               $39,192,164    36,173,048
                                                                               ===========   ===========

Note:The accompanying notes to financial statements are an integral part of this statement.

F-2

QUITMAN FEDERAL SAVINGS AND LOAN ASSOCIATION

STATEMENTS OF RETAINED EARNINGS

YEAR ENDED SEPTEMBER 30,

                                                     1997         1996
                                                  ----------   ----------

Balance, October 1                                $2,689,761    2,586,475

Net Income                                           262,799      103,286
                                                  ----------   ----------

Balance, September 30                             $2,952,560    2,689,761
                                                  ==========   ==========

Note:The accompanying notes to financial statements are an integral part of this statement.

F-3

QUITMAN FEDERAL SAVINGS AND LOAN ASSOCIATION

STATEMENTS OF CASH FLOWS

                                                             YEAR ENDED SEPTEMBER 30,
                                                             ------------------------
                                                                 1997           1996
                                                             -----------    -----------
Cash Flows From Operating Activities:
-------------------------------------
   Net income                                                $   262,799        103,286
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                                41,067         42,601
      Provision for loan losses                                  136,000         36,000
      Increase (Decrease) in deferred income tax benefit         (51,972)        (1,185)
      Amortization (Accretion) of securities and loans            11,022          9,856

   Change in Assets and Liabilities:
      (Increase) Decrease in accrued interest receivable         (11,171)       (39,840)
      Increase (Decrease) in accrued interest payable             19,074        (16,116)
      Increase (Decrease) in other liabilities                  (188,262)       208,601
      Increase (Decrease) in income taxes payable                 60,483          2,934
      (Increase) Decrease in other assets                         49,862        (47,383)
                                                             -----------    -----------

         Net cash provided by operating activities               328,902        298,754
                                                             -----------    -----------

Cash Flows From Investing Activities:
-------------------------------------
   Capital expenditures                                          (52,673)       (22,478)
   Purchase of available-for-sale securities                  (1,740,910)    (1,408,307)
   Purchase of held-to-maturity securities                           -0-       (864,994)
   Proceeds from sale of foreclosed property                         -0-         86,733
   Proceeds from maturity of held-to-maturity securities         300,000      1,050,000
   Net (increase) decrease in loans                           (2,720,447)    (2,961,051)
   Purchase of stock in Federal Home Loan Bank                    (8,600)           -0-
   Principal collected on mortgage-backed securities               2,289            -0-
   Proceeds from sale of available-for-sale securities           400,063            -0-
   Proceeds from call of held-to-maturity securities             549,781        777,874
   Proceeds from maturity of available-for-sale securities       100,000        550,000
   Increase in cash value of life insurance                     (108,687)      (109,419)
                                                             -----------    -----------

         Net cash provided (used) by investing activities     (3,279,184)    (2,901,642)
                                                             -----------    -----------

Cash Flows From Financing Activities:
-------------------------------------
   Net increase (decrease) in deposits                         2,741,840      1,965,769
   Proceeds from Federal Home Loan Bank advances                 100,000        700,000
                                                             -----------    -----------

         Net cash provided (used) by financing activities      2,841,840      2,665,769
                                                             -----------    -----------

Net Increase (Decrease) in cash and cash equivalents            (108,442)        62,881

Cash and Cash Equivalents at Beginning of Period                 765,250        702,369
                                                             -----------    -----------

Cash and Cash Equivalents at End of Period                   $   656,808        765,250
                                                             ===========    ===========

Supplemental Disclosures of Cash Flow Information
-------------------------------------------------

   Cash paid during the year for:
      Income taxes net of refunds                            $    60,000         27,806
                                                             ===========    ===========
      Interest                                               $ 1,959,389      1,859,786
                                                             ===========    ===========

Note:The accompanying notes to financial statements are an integral part of this statement.

F-4

QUITMAN FEDERAL SAVINGS AND LOAN ASSOCIATION

NOTES TO FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies

Business Activities: Quitman Federal Savings and Loan Association is a federally chartered mutual savings and loan association chartered in 1936. The Association engages in traditional savings and loan association activities through its office in Quitman, Georgia. Business activities are predominately with customers in the Brooks and Lowndes County, Georgia area.

Investment Securities: Investment securities for which the Association has the ability and management has the intent to hold to maturity are classified as held-to- maturity and carried at amortized cost using methods approximating the interest method. Other securities are classified as available-for-sale and are carried at fair value. Unrealized gains and losses on securities available-for-sale are recognized as direct increases or decreases in stockholders' equity. Cost of any securities sold is recognized by the specific identification method.

Loans Receivable: Loans receivable are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan-origination fees and discounts. Uncollectible interest on loans that are contractually past due for 90 days or more is charged off or an allowance is established unless the loans are well collateralized and management deems them to be fully collectible. The allowance is established by a charge to interest income equal to all interest previously accrued and income is subsequently recognized only to the extent that cash payments are received until, principal and interest payments are current, full collectibility of principal and interest is reasonably assured and a consistent record of performance has been demonstrated, in which case the loan is returned to accrual status.

Office properties and equipment and related depreciation and amortization:
Office properties and equipment, consisting of land, buildings, furniture and fixtures and automobile are carried at cost, less accumulated depreciation and are being depreciated on the straight-line method.

Loan origination fees: Commencing with loans originated during the year ended September 30, 1988, mortgage loan origination fees and related direct loan origination costs are deferred and the net amount so deferred is amortized over the life of the loan by a method that approximates the level yield method and reflected as an adjustment of interest income. Fees for originating consumer loans which do not materially exceed the direct loan origination cost, are recorded as income when received and the direct loan origination costs are expensed as incurred. Management does not deem the consumer loan origination fees in excess of direct loan cost to be material in amount.

Real estate and other property acquired in settlement of loans: At the time of foreclosure, real estate and other property acquired in settlement of loans is recorded at fair value, less estimated costs to sell. Any write-downs based on the asset's fair value at date of acquisition are charged to the allowance for loan losses. Subsequent to acquisition, such assets are carried at the lower of cost or market value less estimated costs to sell. Cost incurred in maintaining such assets and any subsequent write-downs to reflect declines in the fair value of the property are included in income (loss) on foreclosed assets.

F-5

Note 1 - Summary of Significant Accounting Policies (Continued)

Allowance for losses: An allowance for possible loan losses is charged to operations based upon management's evaluation of the potential losses in its loan portfolio. This evaluation includes a review of all loans on which full collectibility may not be reasonably assured, considers the estimated value of the underlying collateral and such other factors as, in management's judgement, deserve recognition under existing economic conditions.

Income taxes: Income taxes have been computed under Statement of Financial Accounting Standards No. 109. Implementation of Statement No. 109 with regard to income taxes did not have a material effect on the tax provisions of the Association. Deferral of income taxes results primarily from differences in the provision for loan losses for tax purposes and financial reporting purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. The financial statements reflect a net deferred asset of $49,530 and liability of $2,442 at September 30, 1997 and 1996, respectively.

Cash and cash equivalents: For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents and includes cash on hand and amounts due from banks (excluding certificates of deposit).

Off balance sheet financial instruments: In the ordinary course of business, the Association has entered into off balance sheet financial instruments consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable.

Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain significant estimates: Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for losses on loans and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of allowances for losses on loans and the valuation of foreclosed real estate, management obtains independent appraisals for significant properties.

While management uses available information to recognize losses on loans and foreclosed real estate, future additions to the allowances may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Association's allowances for losses on loans and foreclosed real estate. Such agencies may require the Association to recognize additions to the allowances based on their judgements about information available to them at the time of their examination. It is at least reasonably possible that the allowances for losses on loans and foreclosed real estate may change in the near term.

F-6

Note 1 - Summary of Significant Accounting Policies (Continued)

Advertising costs: The Association expenses advertising costs as they are incurred. Advertising costs charged to expenses were $31,279 and $37,931 for the years ended September 30, 1997 and 1996, respectively.

Fair values of financial instruments: Statement of Financial Accounting Standards No. 107, Disclosure about Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial condition. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation 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 instruments. Statement No. 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Association.

The following methods and assumptions were used by the Association in estimating its fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amounts reported in the statement of financial condition for cash and cash equivalents approximate those assets' fair values.

Time deposits: Fair values for time deposits are estimated using a discounted cash flow analysis that applies interest rates currently being offered on certificates to a schedule of aggregated contractual maturities on such time deposits.

Investment securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying amounts. The fair values for other loans (for example, fixed rate commercial real estate, mortgage loans and commercial and industrial loans) are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgements regarding future expected loss experience and risk characteristics. The carrying amount of accrued interest receivable approximates its fair value.

Deposits: The fair values disclosed for demand deposits (for example, checking accounts, interest-bearing checking accounts and savings accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated contractual maturities on such time deposits. The carrying amount of accrued interest payable approximates fair value.

F-7

Note 1 - Summary of Significant Accounting Policies (Continued)

Advances from Federal Home Loan Bank: The carrying amounts of advances from the Federal Home Loan Bank approximate their fair value.

Other liabilities: Commitments to extend credit were evaluated and fair value was estimated using the terms for similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.

Note 2 - Cash

As of September 30, 1997, the Association had cash on deposit with certain commercial banks in excess of federal depository insurance as follows:

                                                  FEDERAL
                BOOK             BANK           DEPOSITORY
               BALANCE          BALANCE          INSURANCE
               -------          -------          ---------
Total       $  635,611          762,746            187,453
            ==========         ========         ==========

As of September 30, 1996, the Association had cash on deposit with certain commercial banks in excess of federal depository insurance as follows:

                                                  FEDERAL
                BOOK             BANK           DEPOSITORY
               BALANCE          BALANCE          INSURANCE
               -------          -------          ---------
Total          $  753,095       766,500            175,101
               ==========      ========         ==========

Note 3 - Investment Securities

Investment securities are carried in the accompanying balance sheets as follows:

SEPTEMBER 30,

                                                    1997              1996
                                                  ----------       ----------

Available-for-sale                                $3,046,109       1,780,875
Held-to-maturity                                     804,706        1,663,271
                                                  ----------       ----------

                                                  $3,850,815        3,444,146
                                                  ==========        =========

Securities available-for-sale consist of the following:

As of September 30, 1997:

                                                      GROSS             GROSS
                                  AMORTIZED        UNREALIZED        UNREALIZED          MARKET
                                    COST              GAINS             LOSSES            VALUE
                                  -----------      ---------       -----------       -----------
U.S. Treasury Obligations         $   897,299          6,763               -0-           904,062
Obligations of other U.S.
   Government agencies              1,601,903          3,120             5,108         1,599,915
Mortgage-backed securities            540,914          2,168               950           542,132
                                  -----------      ---------       -----------       -----------

                                  $ 3,040,116         12,051             6,058         3,046,109
                                  ===========      =========       ===========       ===========

F-8

Note 3 - Investment Securities (Continued)

As of September 30, 1996:

                                                      GROSS             GROSS
                                  AMORTIZED        UNREALIZED        UNREALIZED          MARKET
                                    COST              GAINS             LOSSES            VALUE
                                  -----------      ----------        ----------     -----------
Obligations of other U.S.
   Government agencies            $ 1,803,795             -0-            22,920       1,780,875
                                  ===========      ==========        ==========     ===========

Securities held-to-maturity consist of the following:

As of September 30, 1997:

                                                                        GROSS             GROSS
                                  AMORTIZED        UNREALIZED        UNREALIZED          MARKET
                                    COST              GAINS             LOSSES            VALUE
                                  ---------        -----------       -----------       -----------
U.S. Treasury Obligations         $ 100,077                -0-                31           100,046
Obligations of other U.S.
   Government agencies              704,629                -0-             3,614           701,015
                                  ---------        -----------       -----------       -----------

                                  $ 804,706                -0-             3,645           801,061
                                  =========        ===========       ===========       ===========

As of September 30, 1996:

                                                      GROSS             GROSS
                                  AMORTIZED        UNREALIZED        UNREALIZED          MARKET
                                    COST              GAINS             LOSSES            VALUE
                                 -----------       ----------        ----------       ---------
Obligations of other U.S.
   Government agencies           $ 1,663,271              -0-           20,443        1,642,828
                                 ===========       ==========        =========        =========

The amortized cost and estimated market value of debt securities at September 30, 1997, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

                                           SECURITIES                            SECURITIES
                                       AVAILABLE-FOR-SALE                     HELD-TO-MATURITY
                                  -------------------------------        ------------------------------
                                   AMORTIZED            MARKET            AMORTIZED            MARKET
                                     COST               VALUE               COST               VALUE
                                  -----------         -----------        -----------        -----------
Due in one year or less           $   551,684             552,054            604,706            603,249
Due after one year through
   five years                       1,947,518           1,951,923            200,000            197,812
Due after five years through
   ten years                          540,914             542,132                -0-                -0-
                                  -----------         -----------        -----------        -----------

                                  $ 3,040,116           3,046,109            804,706            801,061
                                  ===========         ===========        ===========        ===========

Proceeds from sales of available-for-sale securities during the year ended September 30, 1997 were $400,063 with gross losses of $2 being realized. Proceeds from call of held-to-maturity securities during the year ended September 30, 1997 were $549,781 with gross losses of $131 being realized. Proceeds from maturities of available-for-sale and held-to-maturity securities during the year ended September 30, 1997 were $100,000 and $300,000, respectively.

F-9

Note 3 - Investment Securities (Continued)

Securities with a book value of $1,104,767 (market value $1,104,249) and $1,105,752 (market value $1,092,395) at September 30, 1997 and 1996, respectively, were pledged to secure public monies as required by law.

Note 4 - Loans Receivable

A summary of loans receivable is presented below:

                                                                                 SEPTEMBER 30,
                                                                           ----------------------------
                                                                                1997            1996
                                                                           ------------    ------------
First mortgage loans                                                       $ 29,748,471      29,406,603
Construction loans                                                            3,654,458       3,142,000
FHLMC pool                                                                        4,203           5,611
Share loans                                                                     470,366         476,148
Consumer loans                                                                  867,450         645,510
                                                                           ------------    ------------

                                                                             34,744,948      33,675,872

Loans in process                                                             (1,022,930)     (2,608,790)
Allowance for loan losses                                                      (346,000)       (210,000)
Deferred loan origination fees                                                  (50,299)        (51,895)
                                                                           ------------    ------------

                                                                           $ 33,325,719      30,805,187
                                                                           ============    ============

An analysis of changes in the allowance for loan losses is as follows:

                                                                     YEAR ENDED SEPTEMBER 30,
                                                                   ----------------------------
                                                                        1997            1996
                                                                   ------------    ------------
Balance at beginning of period                                     $    210,000         174,000
Provision charged to income                                             136,000          36,000
Recoveries                                                                  -0-             -0-
Losses charged to allowance                                                 -0-             -0-
                                                                   ------------    ------------

Balance at end of period                                           $    346,000         210,000
                                                                   ============    ============

First mortgage loans on residential (one-to-four units) real estate are pledged to secure advances from the Federal Home Loan Bank (See Note 14). The advances must be fully secured after discounting the qualifying loans at 75% of the principal balances outstanding.

F-10

Note 4 - Loans Receivable (Continued)

The Association predominately grants mortgage and consumer loans to customers in the immediate Quitman and South Georgia area. The Association has a diversified loan portfolio consisting predominately of mortgage loans collateralized by residential properties. The following schedule provides an additional summary of the Association's loans:

SEPTEMBER 30,

                                                    1997            1996
                                               ------------    ------------
First Mortgage Loans:
      Secured by 1 to 4 family
         residences                            $ 23,655,471      23,716,603
      Secured by over 4 family
         residences                                 699,000         607,000
      Other real estate                           5,394,000       5,083,000
Construction loans                                3,654,458       3,142,000
FHLMC pools                                           4,203           5,611
Share loans                                         470,366         476,148
Consumer loans                                      867,450         645,510
                                               ------------    ------------

                                                 34,744,948      33,675,872

Loans in Process                                 (1,022,930)     (2,608,790)
Allowance for loan losses                          (346,000)       (210,000)
Deferred loan origination fees                      (50,299)        (51,895)
                                               ------------    ------------

         Total                                 $ 33,325,719      30,805,187
                                               ============    ============

Loans on which the accrual of interest has been discontinued amounted to $124,002 and $-0- at September 30, 1997 and 1996, respectively. If interest on those loans had been accrued, such income would have approximated $11,072 and $-0- for the years ended September 30, 1997 and 1996, respectively. Interest income on those loans, which is recorded only when received, amounted to $5,156 and $-0- for the years ended September 30, 1997 and 1996, respectively. No contractual modifications have been made to these loans that would affect the interest ultimately due.

Loans receivable includes loans to officers and directors of the Association totalling approximately $674,614 and $681,037 at September 30, 1997 and 1996, respectively. Since November 1996, loans to officers and directors are made at an interest rate equal to two percentage points (2.00%) above the Associations cost of funds rate. All related party loans were made in the ordinary course of business and did not involve more than the normal risk of collectibility or present other unfavorable features.

As of September 30, 1997 and 1996 the Association had no loans which were considered to be impaired loans.

F-11

Note 5 - Office Properties and Equipment

Office properties and equipment, at cost, are summarized as follows:

                                          SEPTEMBER 30,
                                       -------------------    ESTIMATED
                                         1997      1996      USEFUL LIVES
                                       --------   --------   ------------
Land                                   $ 39,561     39,561
Buildings                               234,087    234,087   20-31 years
Furniture and fixtures                  293,912    241,239    5-10 years
Automobile                               15,513     15,513       5 years
                                       --------   --------
                                        583,073    530,400
Less accumulated depreciation           260,546    219,479
                                       --------   --------

                                       $322,527    310,921
                                       ========   ========

Depreciation expense for the years ended September 30, 1997 and 1996 was $41,067 and $42,601, respectively.

Note 6 - Accrued Interest Receivable

Accrued interest receivable is summarized as follows:

SEPTEMBER 30,

                                    1997           1996
                                 ----------     ---------

Investment securities             $  54,267        56,702
Loans receivable                    326,951       313,345
                                 ----------     ---------

                                  $ 381,218       370,047
                                  =========     =========

Note 7 - Deposit Account Analysis

An analysis of deposit accounts and the weighted average interest rates as of the dates indicated is presented below:

                                                         SEPTEMBER 30,
                                       -----------------------------------------------
                                                  1997                     1996
                                       ---------------------     ---------------------

                                         BOOK VALUE      %        BOOK VALUE       %
                                       ------------   ------     -----------    ------

Type of Account:
   N.O.W. Accounts - 3.39%
      (1996 - 3.42%)                   $  1,439,374     4.18       1,536,858      4.84
   Passbook - 4.11%
      (1996 - 4.18%)                      1,944,865     5.64       2,425,321      7.64
   Certificates - 6.00%
      (1996 - 6.19%)                     31,086,564    90.18      27,766,784     87.52
                                       ------------   ------     -----------    ------

                                       $ 34,470,803   100.00%     31,728,963    100.00%
                                       ============   ======     ===========    ======

The aggregate amount of certificates of deposit in denominations of $100,000 or more was $6,333,000 and $4,072,000 at September 30, 1997 and 1996, respectively.

F-12

Note 7 - Deposit Account Analysis (Continued)

At September 30, 1997, scheduled maturities of certificates of deposit were as follows:

YEAR ENDING
SEPTEMBER 30,

1998                             $21,709,114
1999                               7,555,518
2000                                 998,573
2001                                 823,359
                                 -----------

                                 $31,086,564
                                 ===========

The Association held deposits of $556,252 and $529,552 for related parties at September 30, 1997 and 1996, respectively.

Interest expense on deposits is summarized as follows:

YEAR ENDED SEPTEMBER 30,

                                        1997                 1996
                                       ----------           ----------

Passbook savings                       $   88,675               81,345
NOW                                        50,072               52,791
Certificates of deposit                 1,774,298            1,694,634
                                       ----------           ----------

                                        $1,913,045           1,828,770
                                        ==========          ==========

Note 8 - Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of
1989

FIRREA was signed into law on August 9, 1989. Regulations for savings institution's minimum capital requirements went into effect on December 7, 1989. In addition to the capital requirements, FIRREA includes provisions for changes in the Federal regulatory structure for financial institutions, including a new deposit insurance system, increased deposit insurance premiums and restricted investment activities with respect to non-investment grade corporate debt and certain other investments. FIRREA also increases the required ratio of housing-related assets needed to qualify as a savings institution. The regulations currently require institutions to have minimum regulatory tangible capital equal to 1.5% of total assets, 3% core capital ratio and 8.0% risk-based capital ratio.

As of June 30, 1997, the most recent notification from the OTS categorized the Association as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized" the Association must maintain minimum total tangible, core and risk-based ratios as set forth in the following tables. There are no conditions or events since that notification that management believes have changed the institution's category.

F-13

Note 8 - Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of
1989 (Continued)

The following tables reconcile capital under generally accepted accounting principles (GAAP) to regulatory capital (in thousands).

                                           TANGIBLE                CORE             RISK-BASED
                                            CAPITAL               CAPITAL             CAPITAL
                                           ----------           ----------          ----------
At September 30, 1997:
    Total equity                           $    2,959               2,959                2,959
    Unrealized gains on securities                 (6)                 (6)                  (6)
    General valuation allowance                   -0-                 -0-                  346
                                           ----------           ----------          ----------

    Regulatory Capital                     $    2,953               2,953                3,299
                                           ==========           ==========          ==========

At September 30, 1996:
    Total equity                           $    2,667               2,667                2,667
    Unrealized losses on securities                23                  23                   23
    General valuation allowance                   -0-                 -0-                  210
                                           ----------           ---------           ----------

    Regulatory Capital                     $    2,690               2,690                2,900
                                           ==========           =========           ==========

The Association's actual capital amounts and ratios are presented (in thousands) as follows:

                                                                                                                TO BE WELL
                                                                                                             CAPITALIZED UNDER
                                                                                    FOR CAPITAL              PROMPT CORRECTIVE
                                                     ACTUAL                       ADEQUACY PURPOSES:         ACTION PROVISIONS:
                                              ----------------------         ------------------------      -----------------------
                                              AMOUNT           RATIO         AMOUNT            RATIO        AMOUNT         RATIO
                                              ------           -----         ------            -----        ------         -----
As of September 30, 1997:
   Tangible Capital
      (to adjusted total assets)              $2,953             7.5%           588               1.5%       1,959          5.0%
   Core Capital
      (to adjusted total assets)               2,953             7.5%         1,176               3.0%       1,959          5.0%
   Risk-Based Capital
      (to risk-weighted assets)                3,299            14.3%         1,852               8.0%       2,316         10.0%

As of September 30, 1996:
   Tangible Capital
      (to adjusted total assets)              $2,690             7.4%           542               1.5%       1,808          5.0%
   Core Capital
      (to adjusted total assets)               2,690             7.4%         1,085               3.0%       1,808          5.0%
   Risk-Based Capital
      (to risk-weighted assets)                2,900            13.42%        1,729               8.0%       2,161         10.0%

Note 9 - Provision For Income Taxes

The income tax provision is as follows:

                                                YEAR ENDED SEPTEMBER 30,
                                              ----------------------------
                                                 1997              1996
                                              ----------        ----------
Taxes payable currently                       $  171,183            51,806
Deferred taxes (benefit)                         (51,972)           (1,185)
                                              ----------        ----------
Total tax provision                           $  119,211            50,621
                                              ==========        ==========

F-14

Note 9 - Provision For Income Taxes (Continued)

The provision for income taxes represents the portion of estimated income taxes relating to the years ended September 30, 1997 and 1996.

Through 1995, the Association qualified under provisions of the Internal Revenue Code which permitted annual bad debt deductions based on a percentage of taxable income before such deductions. The maximum annual bad debt deduction was 8% under the Tax Reform Act of 1986. New tax legislation effective for 1996 eliminates the percentage of taxable income method for computing the provision for bad debts of thrift institutions and requires the recapture of the provision for bad debts since 1987 to the extent that the provision computed under the percentage of taxable income method exceeds that which would have been computed under the experience method. Such recapture totals $142,587 for the Association and results in an additional income tax liability of $48,480. This additional tax may be repaid over a six year period beginning in 1996 or, if certain conditions are met, over a six year period beginning in 1998. The full amount of the recapture has been accrued as of September 30, 1996.

Retained earnings at September 30, 1997 include accumulated bad debt deductions prior to 1988 amounting to approximately $6,000 for which no provision for income taxes has been made. If, in the future, these amounts are used for any purpose other than to absorb losses on bad debts, federal income taxes will be imposed at the then applicable rates. The amount of unrecognized deferred tax liability is approximately $2,040.

Deferred taxes on income result from timing differences in the recognition of revenue and expense for tax and financial statement purposes. Deferred tax assets have been recorded. No valuation allowance was required. The amount and sources of these assets were as follows:

SEPTEMBER 30,

                                                       1997             1996
                                                    ----------       ----------
Deferred Tax Assets:
   Allowance for loan losses                        $  107,440           61,200
                                                    ----------       ----------
         Total                                         107,440           61,200
                                                    ----------       ----------

Deferred Tax Liabilities:
   Bad debt deduction recapture                         48,480           48,480
   Depreciation                                          9,430           15,162
                                                    ----------       ----------
      Total                                             57,910           63,642
                                                    ----------       ----------

   Net Deferred Tax Assets (Liabilities)            $   49,530           (2,442)
                                                    ==========       ==========

F-15

Note 9 - Provision For Income Taxes (Continued)

The following is a summary of the differences between the income tax expense as shown in the accompanying financial statements and the income tax expense which would result from applying the Federal statutory tax rate of 34% to earnings before taxes on income:

YEAR ENDED SEPTEMBER 30,

                                                  1997           1996
                                              ----------      ----------
Expected income tax                           $  129,883          52,328
Increase (decrease) in tax resulting from:
   State and local taxes                          (2,440)         (1,846)
   Other, net                                     (8,232)            139
                                              ----------      ----------
Actual income tax expense                     $  119,211          50,621
                                              ==========      ==========

Note 10 - Commitments and Contingencies

The Association had outstanding mortgage loan commitments at September 30, 1997 and 1996 of $1,022,930 and $2,608,790, respectively. These commitments represent financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of the Association's customers. These commitments involve elements of credit and interest-rate risk in excess of the amount recognized in the statement of financial condition. Outstanding loan commitments are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates. 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 Association evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained varies but includes primarily real estate.

Note 11 - Retirement Plans

401(k) Plan - The Association has a 401(k) plan, covering all full-time employees who meet the plan's eligibility requirements. The plan is a defined contribution plan. The Association made contributions to the plan in the amount of $10,000 and $10,000 for the years ended September 30, 1997 and 1996, respectively.

Deferred Compensation Plan - Effective December 15, 1996, the Association adopted a deferred compensation plan for the benefit of its officers and directors. Although the plan is to be funded from the general assets of the Association, life insurance policies were acquired for the purpose of serving as the primary funding source. As of September 30, 1996 and 1995 the cash values of those policies were $218,106 and $109,419 and the liability accrued for benefits payable under the plan was $-0- and $-0-, respectively.

F-16

Note 12 - Reconciliation of Regulatory Reports

Net income and net worth reported in these audited financial statements differs from amounts in reports filed with the Office of Thrift Supervision (OTS) as follows:

Net Income:

YEAR ENDED SEPTEMBER 30,

                                                   1997                1996
                                                -----------        ---------

Net Income reported to OTS                      $   193,000          116,000

Reconciling Items                                    69,799          (12,714)
                                                -----------        ---------

Net Income for the twelve months ended
   September 30 per audited financial statement $   262,799          103,286
                                                ===========        =========

Net Worth:

SEPTEMBER 30,

                                                    1997                1996
                                                -----------          ---------

Net Worth reported to OTS                       $ 2,910,000          2,688,000

Reconciling Items                                    48,553            (21,160)
                                                -----------          ---------

Total Net Worth on September 30, per audited
   financial statement                          $ 2,958,553          2,666,840
                                                ===========          =========

Note 13 - Special SAIF Assessment

On September 30, 1996, legislation was signed into law which resulted in a special assessment, the objective of which is to recapitalize the insurance fund. The assessment which affects only Savings Associations and Thrifts, results in a fee based on 65.7 cents per $100 in domestic deposits held as of March 31, 1995. Other liabilities at September 30, 1996 includes an accrual of this assessment in the amount of $185,647. No liability accrual was necessary in 1997.

Note 14 - Advances From Federal Home Loan Bank

Advances consist of the following:

SEPTEMBER 30,

                                                           1997        1996
                                                        -----------   ---------

Advances  payable - Federal  Home Loan Bank of
  Atlanta,  bearing  interest  at
  variable rate, due July 16, 1998,
  collateralized  by all stock in the Federal
  Home Loan Bank and qualifying first mortgage loans.   $ 1,300,000   1,200,000
                                                        ===========   =========

F-17

Note 15 - Fair Values of Financial Instruments

The estimated fair values of the Association's financial instruments are as follows:

                                         SEPTEMBER 30, 1997         SEPTEMBER 30, 1996
                                     -----------------------     -------------------------
                                        CARRYING       FAIR        CARRYING        FAIR
                                         AMOUNT        VALUE        AMOUNT         VALUE
                                         ------        -----        ------         -----
Financial assets:
   Cash and cash equivalents         $   656,808       656,808       765,250       765,250
   Investment securities               3,850,815     3,847,170     3,444,146     3,423,703
   Loans, net of allowance
      for loan losses                 33,325,719    33,322,000    30,805,187    30,717,651
   Accrued interest receivable           381,218       381,218       370,047       370,047
   Investment in Federal Home
      Loan Bank stock                    227,700       227,700       219,100       219,100

Financial liabilities:
   Deposits                           34,470,803    34,598,000    31,728,963    31,814,631
   Advances from Federal Home
      Loan Bank                        1,300,000     1,300,000     1,200,000     1,200,000
   Accrued interest payable              272,346       272,346       253,272       253,272

The carrying amounts in the preceding table are included in the statement of financial condition under the applicable captions.

                                 SEPTEMBER 30, 1997                    SEPTEMBER 30, 1996
                          -----------------------------          ----------------------------

                            NOTIONAL             FAIR             NOTIONAL             FAIR
                             AMOUNT              VALUE             AMOUNT              VALUE
                          -----------         ---------          ---------          ---------
Other:
   Loan commitments       $ 1,022,930         1,022,930          2,608,790          2,608,790

Note 16 - Related Party Transactions

Related parties to the Association are identified as its officers and directors. During the years ended September 30, 1997 and 1996, the Association had the following related party transactions:

                                                                   SEPTEMBER 30,
                                                           -----------------------------
                                                                1997            1996
                                                           -----------       -----------

Loans to officers and directors (balance at
   September 30), Note 6                                   $   674,614           681,037
Deposits held for officers and directors (balance
   at September 30),Note 7                                     556,252           529,552
Insurance premiums paid - director                              22,314            38,532
Legal fees paid - director                                       3,000             4,016
Supplies purchased - officers and directors                      8,218             7,141

F-18

Note 17 - Plan of Conversion

On October 14, 1997, the Association's Board of Directors formally approved a plan ("Plan") to convert from a federally-chartered mutual savings bank to a federally-chartered stock savings bank subject to approval by the Association's members as of a still-to-be-determined future voting record date. The Plan, which includes formation of a holding company, is subject to approval by the Office of Thrift Supervision (OTS) and includes the filing of a registration statement with the Securities and Exchange Commission. As of September 30, 1997, the Association had incurred conversion costs of approximately $10,000. If the conversion is ultimately successful, actual conversion costs will be accounted for as a reduction in gross proceeds. If the conversion is unsuccessful, the conversion costs will be expensed.

The Plan calls for the common stock of the Bank to be purchased by the holding company and for the common stock of the holding company to be offered to various parities in a subscription offering at a price based on an independent appraisal. It is anticipated that any shares not purchased in the subscription offering will be offered in a direct community offering, and then any remaining shares offered to the general public in a solicited offering.

The stockholders of the holding company will be asked to approve a proposed stock option plan and a proposed restricted stock plan at a meeting of the stockholders after the conversion. Shares issued to the directors and employees under these plans may be from authorized but unissued shares of common stock or they may be purchased in the open market. In the event that options or shares are issued under these plans, such issuances will be included in the earnings per share calculation; thus, the interests of existing stockholders would be diluted.

The Bank may not declare or pay a cash dividend if the effect thereof would cause its net worth to be reduced below either the amounts required for the liquidation account discussed below or the regulatory capital requirements imposed by federal regulations.

At the time of conversion, the Bank will establish a liquidation account, which will be a memorandum account that does not appear on the balance sheet, in an amount equal to its retained income as reflected in the latest consolidated balance sheet used in the final conversion prospectus. The liquidation account will be maintained for the benefit of eligible account holders who continue to maintain their deposit accounts in the Bank after conversion. In the event of a complete liquidation of the Bank (and only in such an event), eligible depositors who continue to maintain accounts shall be entitled to receive a distribution from the liquidation account before any liquidation may be made with respect to common stock.

F-19

You should rely only on the information contained in this document or that to which we have referred you. We have not authorized anyone to provide you with information that is different.This document does not constitute an offer to sell, or the solicitation of an offer to buy, any of the securities offered hereby to any person in any jurisdiction in which such offer or solicitation would be unlawful. The affairs of Quitman Federal Savings Bank or Quitman Bancorp, Inc. may change after the date of this prospectus. Delivery of this document and the sales of shares made hereunder does not mean otherwise.

QUITMAN BANCORP, INC.

Up to 575,000 Shares
(Anticipated Maximum)

Common Stock


PROSPECTUS


TRIDENT SECURITIES, INC.

Dated ____ __, 1998

THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS AND ARE
AND ARE NOT FEDERALLY INSURED OR GUARANTEED.

Until the later of _______ __, 1998, or 90 days after commencement of the offering of common stock, all dealers that buy, sell or trade these securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.


PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 27. Exhibits:

The exhibits filed as part of this Registration Statement are as follows:

1.1 Form of Sales Agency Agreement with Trident Securities, Inc.*
2 Plan of Conversion, as amended
3(i) Articles of Incorporation of Quitman Bancorp, Inc.* 3(ii) Bylaws of Quitman Bancorp, Inc.*
4 Specimen Stock Certificate of Quitman Bancorp, Inc.*
5.1 Opinion of Malizia, Spidi, Sloane & Fisch, P.C. regarding legality of securities registered*
8.1 Federal Tax Opinion of Malizia, Spidi, Sloane & Fisch, P.C.*
8.2 State Tax Opinion of Daniel M. Mitchell, Jr., Esq.*
8.3 Opinion of FinPro, Inc. as to the value of subscription rights*
10.1 Director Indexed Salary Continuation Plan
10.2 Executive Indexed Salary Continuation Plan
16 Letter of Simmons & Simmons, P.C.
23.1 Consent of Malizia, Spidi, Sloane & Fisch, P.C. (contained in its opinions filed as Exhibits 5.1 and 8.1)*
23.2 Consent of Stewart, Fowler & Stalvey, P.C.
23.3 Consent of FinPro, Inc.*
23.4 Consent of Daniel M. Mitchell, Jr., Esq. (contained in his opinion filed as Exhibit 8.2)*
24 Power of Attorney (reference is made to the signature page)*
27 Financial Data Schedule*
99.2 Appraisal Report of FinPro, Inc.
99.3 Marketing Materials


* Previously filed

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in Quitman, Georgia, on January 27, 1998.

QUITMAN BANCORP, INC.

By: /s/ Melvin E. Plair
    -------------------------------------
    Melvin E. Plair
    President and Chief Executive Officer
   (Duly Authorized Representative)

In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities indicated as of January 27, 1998.

/s/ Claude R. Butler*                           /s/ Melvin E. Plair
--------------------------------------          -----------------------------------------------
    Claude R. Butler                                Melvin E. Plair
    Chairman of the Board and Director              President and Chief Executive Officer
                                                    (Principal Executive and Financial Officer)

/s/ Robert L. Cunningham, III*                  /s/ Peggy L. Forgione
--------------------------------------          -----------------------------------------------
    Robert L. Cunningham, III                       Peggy L. Forgione
    Vice Chairman and Director                      Vice President and Controller
                                                    (Principal Accounting Officer)

/s/ Walter B. Holwell*
--------------------------------------
    Walter B. Holwell
    Director


/s/ John W. Romine*
--------------------------------------
    John W. Romine
    Director


/s/ Daniel M. Mitchell, Jr.*
--------------------------------------
    Daniel M. Mitchell, Jr.
    Director


*Signed pursuant to a Power of Attorney

As filed with the Securities and Exchange Commission on January 27, 1998

Registration No. 333-43063

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

EXHIBITS TO
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

Quitman Bancorp, Inc.

(Exact Name of Small Business Issuer as Specified in Charter)

               Georgia                    6035                 58-2365866
---------------------------------    -----------------      -------------------
   (State or Other Jurisdiction      (Primary SIC No.)      (I.R.S. Employer
of Incorporation or Organization)                           Identification No.)

100 West Screven Street, Quitman, Georgia 31643 (912) 263-7538

(Address and Telephone Number of Principal Executive Offices and Principal Place of Business)

Mr. Melvin E. Plair President and Chief Executive Officer Quitman Bancorp, Inc. 100 West Screven Street, Quitman, Georgia 31643 (912) 263-7538

(Name, Address and Telephone Number of Agent for Service)

Please send copies of all communications to:


Charles E. Sloane, Esq.
Gregory J. Rubis, Esq.
Jean A. Milner, Esq.
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
1301 K Street, N.W., Suite 700 East
Washington, D.C. 20005

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after this registration statement becomes effective.


INDEX TO EXHIBITS TO FORM SB-2

Exhibit

The exhibits filed as part of this Registration Statement are as follows:

1.1 Form of Sales Agency Agreement with Trident Securities, Inc.*
2 Plan of Conversion, as amended
3(i) Articles of Incorporation of Quitman Bancorp, Inc.*
3(ii) Bylaws of Quitman Bancorp, Inc.*
4 Specimen Stock Certificate of Quitman Bancorp, Inc.*
5.1 Opinion of Malizia, Spidi, Sloane & Fisch, P.C. regarding legality of securities registered*
8.1 Federal Tax Opinion of Malizia, Spidi, Sloane & Fisch, P.C.*
8.2 State Tax Opinion of Daniel M. Mitchell, Jr., Esq.*
8.3 Opinion of FinPro, Inc. as to the value of subscription rights*
10.1 Director Indexed Salary Continuation Plan
10.2 Executive Indexed Salary Continuation Plan
16 Letter of Simmons & Simmons, P.C.
23.1 Consent of Malizia, Spidi, Sloane & Fisch, P.C. (contained in its opinions filed as Exhibits 5.1 and 8.1)*
23.2 Consent of Stewart, Fowler & Stalvey, P.C.
23.3 Consent of FinPro, Inc.*
23.4 Consent of Daniel M. Mitchell, Jr., Esq. (contained in his opinion filed as Exhibit 8.2)*
24 Power of Attorney (reference is made to the signature page)*
27 Financial Data Schedule*
99.2 Appraisal Report of FinPro, Inc.
99.3 Marketing Materials


* Previously filed

PLAN OF CONVERSION
AS AMENDED

Adopted on

October 14, 1997

and

Amended on

January 27, 1998

By the Board of Directors of

QUITMAN FEDERAL SAVINGS ^ BANK

Quitman, Georgia


TABLE OF CONTENTS

Page

1.       Introduction..................................................... 1
2.       Definitions...................................................... 2
3.       Procedure for Conversion......................................... 5
4.       Holding Company Applications and Approvals....................... 5
5.       Sale of Conversion Stock......................................... 6
6.       Number of Shares and Purchase Price of
                Conversion Stock.......................................... 6
7.       Purchase by the Holding Company of the Stock
                of the Institution........................................ 7
8.       Subscription Rights of Eligible Account
                Holders (First Priority).................................. 7
9.       Subscription Rights of Employee Plans (Second Priority).......... 8
10.      Subscription Rights of Supplemental Eligible
                Account Holders (Third Priority).......................... 8
11.      Subscription Rights of Other Members
                (Fourth Priority)......................................... 9
12.      Community Offering............................................... 10

13.      ^ Syndicated ^ Community Offering................................ 11

14.      Limitation on Purchases.......................................... 12
15.      Payment for Conversion Stock..................................... 13
16.      Manner of Exercising Subscription Rights
                Through Order Forms....................................... 14
17.      Undelivered, Defective or Late Order Forms or
                Insufficient Payment...................................... 15
18.      Restrictions on Resale or Subsequent Disposition................. 16
19.      Voting Rights of Stockholders.................................... 16
20.      Establishment of Liquidation Account............................. 16
21.      Transfer of Savings Accounts..................................... 17
22.      Restrictions on Acquisition of the Institution
                and Holding Company....................................... 18
23.      Payment of Dividends and Repurchases of Stock.................... 19
24.      Amendment of Plan................................................ 19
25.      Charter and Bylaws............................................... 19
26.      Consummation of Conversion....................................... 19
27.      Registration and Marketing....................................... 19
28.      Residents of Foreign Countries and Certain States................ 20
29.      Expenses of Conversion........................................... 20
30.      Conditions to Conversion......................................... 20
31.      Interpretation................................................... 20


PLAN OF CONVERSION

FOR

QUITMAN FEDERAL SAVINGS ^ BANK

QUITMAN, GEORGIA

1. INTRODUCTION

This Plan of Conversion ("Plan") provides for the conversion of Quitman Federal Savings Bank ("INSTITUTION"), formerly known as Quitman Federal Savings and Loan Association^, into a federal capital stock savings institution, to be known as "Quitman Federal Savings Bank." The Board of Directors of the INSTITUTION currently contemplates that all of the stock of the INSTITUTION shall be held by another corporation (the "Holding Company"). The purpose of this conversion is to enable the INSTITUTION to be in the stock form of organization, like commercial banks and most other corporations. The conversion will result in an increase in the INSTITUTION's capital available to support growth and for expansion of its facilities, possible diversification into other related financial services activities and further enhance the INSTITUTION's ability to render services to the public and compete with other financial institutions. The use of the Holding Company would also provide greater organizational flexibility. Shares of capital stock of the INSTITUTION will be sold to the Holding Company and the Holding Company will offer the Conversion Stock upon the terms and conditions set forth herein to Eligible Account Holders, the tax-qualified employee stock benefit plans (the "Employee Plans") established by the INSTITUTION or the Holding Company, which may be funded by the Holding Company, Supplemental Eligible Account Holders, and Other Members in the respective priorities set forth in this Plan. Any shares of Conversion Stock not subscribed for by the foregoing classes of persons may be offered for sale to certain members of the public either directly by the INSTITUTION and the Holding Company through a Community Offering or through a ^ Syndicated ^ Community Offering. In the event that the INSTITUTION decides not to utilize the Holding Company in the conversion, Conversion Stock of the INSTITUTION, in lieu of the Holding Company, will be sold as set forth above and in the respective priorities set forth in this Plan. In addition to the foregoing, the INSTITUTION and the Holding Company intend to implement stock option plans and other stock benefit plans at the time of or subsequent to the conversion and may provide employment or severance agreements to certain management employees and certain other benefits to the directors, officers and employees of the INSTITUTION as described in the prospectus for the Conversion Stock.

This Plan, which has been unanimously approved by the Board of Directors of the INSTITUTION, must also be approved by the affirmative vote of a majority of the total number of votes entitled to be cast by Voting Members of the INSTITUTION at a special meeting to be called for that purpose. Prior to the submission of this Plan to the Voting Members for consideration, the Plan must be approved by the Office of Thrift Supervision (the "OTS").

Upon conversion, each Account Holder having a Savings Account at the INSTITUTION prior to conversion will continue to have a Savings Account, without payment therefor, in the same amount and subject to the same terms and conditions (except for voting and liquidation rights) as in effect prior to the conversion. After conversion, the INSTITUTION will succeed to all the rights, interests, duties and obligations of the INSTITUTION before conversion, including but not limited to all rights and

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interests of the INSTITUTION in and to its assets and properties, whether real, personal or mixed. The INSTITUTION will continue to be a member of the Federal Home Loan Bank System and all its insured savings deposits will continue to be insured by the Federal Deposit Insurance Corporation (the "FDIC") to the extent provided by applicable law.

2. DEFINITIONS

For the purposes of this Plan, the following terms have the following meanings:

Account Holder - The term Account Holder means any Person holding a Savings Account in the INSTITUTION.

Acting in Concert - The Term "Acting in Concert" means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise; or
(iii) a person or company which acts in concert with another person or company ("other party") shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated.

Associate - The term Associate when used to indicate a relationship with any person, means (i) any corporation or organization (other than the INSTITUTION or a majority-owned subsidiary of the INSTITUTION) of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities, (ii) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity except that for the purposes of Sections 8 and 14 hereof, the term "Associate" does not include any Tax-Qualified Employee Stock Benefit Plan or any Tax-Qualified Employee Stock Benefit Plan in which a person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity, and except that, for purposes of aggregating total shares that may be held by Officers and Directors the term "Associate" does not include any Tax-Qualified Employee Stock Benefit Plan, and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person or who is a Director or Officer of the INSTITUTION or the Holding Company, or any of its parents or subsidiaries.

Community Offering - The term Community Offering means the offering for sale to certain members of the general public directly by the Holding Company, of shares not subscribed for in the Subscription Offering.

Conversion Stock - The term Conversion Stock means the $.10 par value common stock offered and issued by the Holding Company upon conversion.

Director - The term Director means a member of the Board of Directors of the INSTITUTION and, where applicable, a member of the Board of Directors of the Holding Company.

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Eligible Account Holder - The term Eligible Account Holder means any person holding a Qualifying Deposit at the INSTITUTION on the Eligibility Record Date. Only the name(s) of the Person(s) listed on the account as of the Eligibility Record Date (or a successor entity or estate) is an Eligible Account Holder. Any Person(s) added to a Qualifying Deposit after the Eligibility Record Date is not an Eligible Account Holder.

Eligibility Record Date - The term Eligibility Record Date means the date for determining Eligible Account Holders in the INSTITUTION and is the close of business on December 31, 1995.

Employees - The term Employees means all Persons who are employed by
the INSTITUTION.

Employee Plans - The term Employee Plans means the Tax-Qualified Employee Stock Benefit Plans, including the Employee Stock Ownership Plan, approved by the Board of Directors of the INSTITUTION.

Estimated Valuation Range. The term Estimated Valuation Range means the range of the estimated pro forma market value of the Conversion Stock as determined by the Independent Appraiser prior to the Subscription Offering and as it may be amended from time to time thereafter.

FDIC - The term FDIC means the Federal Deposit Insurance Corporation.

Holding Company - The term Holding Company means the corporation formed for the purpose of acquiring all of the shares of capital stock of the INSTITUTION to be issued upon its conversion to stock form unless the Holding Company form of organization is not utilized. Shares of common stock of the Holding Company will be issued in the Conversion to Participants and others in a Subscription, Community, Public or Syndicated Public Offering, or through a combination thereof.

Independent Appraiser - The term Independent Appraiser means an appraiser retained by the INSTITUTION to prepare an appraisal of the pro forma market value of the Conversion Stock.

Institution - The term INSTITUTION means Quitman Federal Savings ^ Bank, Quitman, Georgia.

Local Community - The term local community means the county of Brooks in the State of Georgia.

Member - The term Member means any Person or entity who qualifies as a member of the INSTITUTION pursuant to its charter and bylaws.

OTS - The term OTS means Office of Thrift Supervision of the Department of the Treasury.

Officer - The term Officer means an executive officer of the INSTITUTION and may include the Chairman of the Board, President, Vice Presidents in charge of principal business functions, Secretary and Treasurer and any individual performing functions similar to those performed by the foregoing persons.

Order Form - The term Order Form means any form together with attached cover letter, sent by the INSTITUTION to any Person containing among other things a description of the alternatives available

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to such Person under the Plan and by which any such Person may make elections regarding subscriptions for Conversion Stock in the Subscription and Community Offerings.

Other Member - The term Other Member means any person, who is a Member of the INSTITUTION (other than Eligible Account Holders or Supplemental Eligible Account Holders) at the close of business on the voting record date.

Participants - The term Participants means the Eligible Account Holders, Employee Plans, Supplemental Eligible Account Holders and Other Members.

Person - The term Person means an individual, a corporation, a partnership, an association, a joint-stock company, a trust (including Individual Retirement Accounts and KEOGH Accounts), any unincorporated organization, a government or political subdivision thereof or any other entity.

Plan - The term Plan means this Plan of Conversion of the INSTITUTION as it exists on the date hereof and as it may hereafter be amended in accordance with its terms.

^ Purchase Order - The term Purchase Order means any form together with attached cover letter, sent by the Underwriter to any Person containing among other things a description of the alternatives available to such Person under the Plan and by which any such Person may make elections regarding subscriptions for Conversion Stock in the Public Offering.

Purchase Price - The term Purchase Price means the per share price at which the Conversion Stock will be sold in accordance with the terms hereof.

Qualifying Deposit - The term Qualifying Deposit means the balance of each Savings Account of $50 or more in the INSTITUTION at the close of business on the Eligibility Record Date or Supplemental Eligibility Record Date. Savings Accounts with total deposit balances of less than $50 shall not constitute a Qualifying Deposit. Pursuant to the authority contained in 12 C.F.R. ss.563b.3(e)(1), the term Qualifying Deposit also includes demand accounts as defined in 12 C.F.R. ss.561.16(a) of $50 or more in the INSTITUTION at the close of business on the Eligibility Record Date or Supplemental Eligibility Record Date.

SEC - The term SEC refers to the Securities and Exchange Commission.

Savings Account - The term Savings Account includes savings accounts as defined in Section 561.42 of the Rules and Regulations of the OTS and includes certificates of deposit.

Special Meeting of Members - The term Special Meeting of Members means the special meeting and any adjournments thereof held to consider and vote upon this Plan.

Subscription Offering - The term Subscription Offering means the offering of Conversion Stock for purchase through Order Forms to Participants.

Supplemental Eligibility Record Date - The term Supplemental Eligibility Record Date means the close of business on the last day of the calendar quarter preceding the approval of the Plan by the OTS.

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Supplemental Eligible Account Holder - The term Supplemental Eligible Account Holder means a holder of a Qualifying Deposit in the INSTITUTION (other than an officer or trustee or their Associates) at the close of business on the Supplemental Eligibility Record Date.

Syndicated Community Offering - The term Syndicated Community Offering means the offering of Conversion Stock following the Subscription and Community Offerings through a syndicate of broker-dealers.

Tax-Qualified Employee Stock Benefit Plan - The term Tax-Qualified Employee Stock Benefit Plan means any defined benefit plan or defined contribution plan, such as an employee stock ownership plan, stock bonus plan, profit-sharing plan or other plan, which, with its related trust, meets the requirements to be "qualified" under Section 401 of the Internal Revenue Code.

^ Voting Members - The term Voting Members means those Persons qualifying as voting members of the INSTITUTION pursuant to its charter and bylaws.

Voting Record Date - The term Voting Record Date means the date fixed by the Directors in accordance with OTS regulations for determining eligibility to vote at the Special Meeting of Members.

3. PROCEDURE FOR CONVERSION

After approval of the Plan by the Board of Directors of the INSTITUTION, the Plan shall be submitted together with all other requisite material to the OTS for its approval. Notice of the adoption of the Plan by the Board of Directors of the INSTITUTION will be published in a newspaper having general circulation in each community in which an office of the INSTITUTION is located and copies of the Plan will be made available at each office of the INSTITUTION for inspection by the Members. Upon filing the application with the OTS, the INSTITUTION also will cause to be published a notice of the filing with the OTS of an application to convert in accordance with the provisions of the Plan. Following approval by the OTS, the Plan will be submitted to a vote of the Voting Members at a Special Meeting of Members called for that purpose. Upon approval of the Plan by a majority of the total votes eligible to be cast by the Voting Members, the INSTITUTION will take all other necessary steps pursuant to applicable laws and regulations to convert the INSTITUTION to stock form. The conversion must be completed within 24 months of the approval of the Plan by the Voting Members, unless a longer time period is permitted by governing laws and regulations.

The Board of Directors of the INSTITUTION intends to take all necessary steps to form the Holding Company including the filing of an Application on Form H-(e)1 or H-(e)1-S, if available to the Holding Company, with the OTS. Upon conversion, the INSTITUTION will issue its capital stock to the Holding Company and the Holding Company will issue and sell the Conversion Stock in accordance with this Plan.

The Board of Directors of the INSTITUTION may determine for any reason at any time prior to the issuance of the Conversion Stock not to utilize a holding company form of organization in the Conversion, in which case, the Holding Company's registration statement on Form S-1 or Form SB-2 will be withdrawn from the SEC, the INSTITUTION will take all steps necessary to complete the conversion from the mutual to the stock form of organization, including filing any necessary documents with the OTS and will issue and sell the Conversion Stock in accordance with this Plan. In such event, any subscriptions or orders received for Conversion Stock of the Holding Company shall be deemed to

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be subscriptions or orders for Conversion Stock of the INSTITUTION without any further action by the INSTITUTION or the subscribers for the Conversion Stock. Any references to the Holding Company in this Plan shall mean the INSTITUTION in the event the Holding Company is eliminated in the Conversion.

The Conversion Stock will not be insured by the FDIC. The INSTITUTION will not knowingly lend funds or otherwise extend credit to any Person to purchase shares of the Conversion Stock.

4. HOLDING COMPANY APPLICATIONS AND APPROVALS

The Holding Company shall make timely applications for any requisite regulatory approvals, including an Application on Form H-(e)1 or an H-(e)1-S, if available to the Holding Company, to be filed with the OTS and a Registration Statement on Form S-1 or Form SB-2 to be filed with the SEC. The INSTITUTION shall be a wholly owned subsidiary of the Holding Company.

5. SALE OF CONVERSION STOCK

The Conversion Stock will be offered simultaneously in the Subscription Offering to the Eligible Account Holders, Employee Plans, Supplemental Eligible Account Holders and Other Members in the respective priorities set forth in Sections 8 through 11 of this Plan. The Subscription Offering may be commenced as early as the mailing of the Proxy Statement for the Special Meeting of Members and must be commenced in time to complete the conversion within the time period specified in Section 3.

Any shares of Conversion Stock not subscribed for in the Subscription Offering may be offered for sale in the Community Offering, if any, as provided in Section 12 of this Plan or offered in a ^ Syndicated ^ Community Offering, as provided in Section 13, if necessary and feasible. The Subscription Offering may be commenced prior to the Special Meeting of Members and, in that event, the Community Offering or ^ Syndicated Community Offering may also be commenced prior to the Special Meeting of Members. The offer and sale of Conversion Stock, prior to the Special Meeting of Members shall, however, be conditioned upon approval of the Plan by the Voting Members.

Shares of Conversion Stock may be sold in a Syndicated ^ Community Offering, as provided in Section 13 of this Plan in a manner that will achieve the widest distribution of the Conversion Stock as determined by the INSTITUTION. In the event of a Syndicated ^ Community Offering ^ the of all Conversion Stock subscribed for in the Subscription ^ and Community Offerings will be consummated simultaneously on the date the sale of Conversion Stock in the Syndicated ^ Community Offering is consummated and only if all unsubscribed for Conversion Stock is sold.

The INSTITUTION may elect to pay fees on either a fixed fee or commission basis or combination thereof to an investment banking firm which assists it in the sale of the Conversion Stock in the offerings.

The INSTITUTION may also elect to offer to pay fees on a per share basis to brokers who assist Persons in determining to purchase shares in the ^ Subscription and Community Offerings and whose broker's name appears on the Order Form of the Person.

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6. NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK

The total number of shares (or a range thereof) of Conversion Stock to be issued and offered for sale will be determined by the Boards of Directors of the INSTITUTION and the Holding Company, immediately prior to the commencement of the Offerings, subject to adjustment thereafter if necessitated by a change in the appraisal due to changes in market or financial conditions, with the approval of the OTS, if necessary.

All shares sold in the Conversion will be sold at a uniform price per share referred to in this Plan as the Purchase Price. The aggregate Purchase Price for all shares of Conversion Stock will not be inconsistent with the estimated consolidated pro forma market value of the INSTITUTION. The estimated consolidated pro forma market value of the INSTITUTION will be determined for such purpose by the Independent Appraiser. Prior to the commencement of the Subscription and Community Offerings, an Estimated Valuation Range will be established, which range will vary within 15% above to 15% below the midpoint of such range. The number of shares of Conversion Stock to be issued and/or the Purchase Price may be increased or decreased by the INSTITUTION. In the event that the aggregate Purchase Price of the Conversion Stock is below the minimum of the Estimated Valuation Range, or materially above the maximum of the Estimated Valuation Range, resolicitation of purchasers may be required, provided that up to a 15% increase above the maximum of the Estimated Valuation Range will not be deemed material so as to require a resolicitation. Any such resolicitation shall be effected in such manner and within such time as the INSTITUTION shall establish, with the approval of the OTS, if required. Up to a 15% increase in the number of shares to be issued which is supported by an appropriate change in the estimated pro forma market value of the INSTITUTION or in order to fill the order by the Employee Plans will not be deemed to be material so as to require a resolicitation of subscriptions.

Based upon the independent valuation, as updated prior to the consummation of the Subscription, Community and/or ^ Syndicated Community Offerings, the Boards of Directors of the INSTITUTION and the Holding Company will fix the Purchase Price.

Notwithstanding the foregoing, no sale of Conversion Stock may be consummated unless, prior to such consummation, the Independent Appraiser confirms to the INSTITUTION and Holding Company and to the OTS that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the aggregate value of the Conversion Stock sold at the Purchase Price is incompatible with its estimate of the aggregate consolidated pro forma market value of the INSTITUTION. If such confirmation is not received, the INSTITUTION may cancel the Subscription Offering, Community Offering and/or the ^ Syndicated ^ Community Offering, reopen or hold new Offerings to take such other action as the OTS may permit.

The Conversion Stock to be issued in the Conversion shall be fully paid and nonassessable.

7. PURCHASE BY THE HOLDING COMPANY OF THE STOCK OF THE INSTITUTION

Upon the consummation of the sale of all of the Conversion Stock, the Holding Company will purchase from the INSTITUTION all of the capital stock of the INSTITUTION to be issued by the INSTITUTION in the conversion in exchange for the Conversion proceeds that are not permitted to be retained by the Holding Company.

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The Holding Company will apply to the OTS to retain up to 50% of the proceeds of the Conversion. Assuming the Holding Company is not eliminated, a lesser percentage may be acceptable.

8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)

A. Each Eligible Account Holder shall receive, without payment, nontransferable subscription rights to subscribe for shares of Conversion Stock equal to the greater of: (i) the maximum established for the Community Offering;
(ii) one-tenth of one percent of the Conversion Stock offered; or (iii) 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Conversion Stock offered by a fraction of which the numerator is the amount of the Qualifying Deposit of such Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders but in no event greater than the maximum purchase limitation specified in Section 14 hereof. All such purchases are subject to the maximum and minimum purchase limitations specified in Section 14 and are exclusive of an increase in the total number of shares issued due to an increase in the maximum of the Estimated Valuation Range of up to 15%. Only a Person(s) with a Qualifying Deposit as of the Eligibility Record Date (or a successor entity or estate) shall receive subscription rights. Any Person(s) added to a Qualifying Deposit after the Eligibility Record Date is not an Eligible Account Holder.

B. In the event that Eligible Account Holders exercise Subscription Rights for a number of shares of Conversion Stock in excess of the total number of such shares eligible for subscription, the shares of Conversion Stock shall be allocated among the subscribing Eligible Account Holders so as to permit each subscribing Eligible Account Holder, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation of Conversion Stock equal to the lesser of 100 shares or the number of shares subscribed for by the Eligible Account Holder. Any shares remaining after that allocation will be allocated among the subscribing Eligible Account Holders whose subscriptions remain unsatisfied in the proportion that the amount of the Qualifying Deposit of each Eligible Account Holder whose subscription remains unsatisfied bears to the total amount of the Qualifying Deposits of all Eligible Account Holders whose subscriptions remain unsatisfied. If the amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Eligible Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated or all subscriptions satisfied.

C. Subscription rights as Eligible Account Holders received by Directors and Officers and their Associates which are based on deposits made by such persons during the twelve (12) months preceding the Eligibility Record Date shall be subordinated to the Subscription Rights of all other Eligible Account Holders.

9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)

Subject to the availability of sufficient shares after filling subscription orders of Eligible Account Holders under Section 8, the Employee Plans shall receive without payment nontransferable subscription rights to purchase in the Subscription Offering the number of shares of Conversion Stock requested by such Plans, subject to the purchase limitations set forth in
Section 14.

The Employee Plans shall not be deemed to be associates or affiliates of or Persons Acting in Concert with any Director or Officer of the Holding Company or the INSTITUTION.

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10. SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)

A. In the event that the Eligibility Record Date is more than 15 months prior to the date of the latest amendment to the Application filed prior to OTS approval, then, and only in that event, each Supplemental Eligible Account Holder shall receive, without payment, nontransferable subscription rights entitling such Supplemental Eligible Account Holder to purchase that number of shares of Conversion Stock which is equal to the greater of: (i) the maximum purchase limitation established for the Community Offering; (ii) one-tenth of 1% of the Conversion Stock Offered; and (iii) or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Conversion Stock to be issued by a fraction of which the numerator is the amount of the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of the Qualifying Deposits of all Supplemental Eligible Account Holders. All such purchases are subject to the maximum and minimum purchase limitations in Section 14 and are exclusive of an increase in the total number of shares issued due to an increase in the maximum of the Estimated Valuation Range of up to 15%.

B. Subscription rights received pursuant to this Category shall be subordinated to the subscription rights received by Eligible Account Holders and by the Employee Plans.

C. Any subscription rights to purchase shares of Conversion Stock received by an Eligible Account Holder in accordance with Section 8 shall reduce to the extent thereof the subscription rights to be distributed pursuant to this Section.

D. In the event of an oversubscription for shares of Conversion Stock pursuant to this Section, shares of Conversion Stock shall be allocated among the subscribing Supplemental Eligible Account Holders as follows:

(1) Shares of Conversion Stock shall be allocated so as to permit each such Supplemental Eligible Account Holder, to the extent possible, to purchase a number of shares of Conversion Stock sufficient to make his total allocation (including the number of shares of Conversion Stock, if any, allocated in accordance with Section 8) equal to 100 shares of Conversion Stock or the total amount of his subscription, whichever is less.

(2) Any shares of Conversion Stock not allocated in accordance with subparagraph (1) above shall be allocated among the subscribing Supplemental Eligible Account Holders on an equitable basis, related to the amounts of their respective Qualifying Deposits as compared to the total Qualifying Deposits of all subscribing Supplemental Eligible Account Holders.

11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)

A. Each Other Member shall receive, without payment, nontransferable subscription rights to subscribe for shares of Conversion Stock in an amount equal to the greater of the maximum purchase limitation established for the Community Offering or one-tenth of one percent of the Conversion Stock offered, subject to the maximum and minimum purchase limitations specified in Section 14 and exclusive of an increase in the total number of shares issued due to an increase in the maximum of the Estimated Valuation Range of up to 15%, which will be allocated only after first allocating to Eligible Account

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Holders, the Employee Plans and Supplemental Eligible Account Holders all shares of Conversion Stock subscribed for pursuant to Sections 8, 9 and 10 above.

B. In the event that such Other Members subscribe for a number of shares of Conversion Stock which, when added to the shares of Conversion Stock subscribed for by the Eligible Account Holders, the Employee Plans and the Supplemental Eligible Account Holders is in excess of the total number of shares of Conversion Stock being issued, the subscriptions of such Other Members will be allocated among the subscribing Other Members so as to permit each subscribing Other Member, to the extent possible, to purchase a number of shares sufficient to make his total allocation of Conversion Stock equal to the lesser of 100 shares or the number of shares subscribed for by the Other Member. Any shares remaining will be allocated among the subscribing Other Members whose subscriptions remain unsatisfied on a 100 shares (or whatever lesser amount is available) per order basis until all orders have been filled or the remaining shares have been allocated.

12. COMMUNITY OFFERING

If less than the total number of shares of Conversion Stock to be subscribed for in the Conversion are sold in the Subscription Offering, shares remaining unsubscribed may be made available for purchase in the Community Offering to certain members of the general public. The maximum number of shares of Conversion Stock, which may be subscribed for in the Community Offering by any Person shall not exceed such number of shares of Conversion Stock as shall equal $60,000 divided by the Purchase Price, subject to the maximum and minimum purchase limitations specified in Section 14. The shares may be made available in the Community Offering through a direct community marketing program which may provide for utilization of a broker, dealer, consultant or investment banking firm, experienced and expert in the sale of savings institution securities. In the Community Offering, if any, shares will be available for purchase by the general public with preference given to natural persons residing in the Local Community. Subject to these preferences, the INSTITUTION shall make distribution of the Conversion Stock to be sold in the Community Offering in such a manner as to promote the widest distribution of Conversion Stock.

If the Community Purchasers in the Community Offering, whose orders would otherwise be accepted, subscribe for more shares than are available for purchase, the shares available to them will be allocated among persons submitting orders in the Community Offering in an equitable manner as determined by the Board of Directors. The INSTITUTION may establish all terms and conditions of such offer.

The Community Offering, if any, may commence simultaneously with, during or subsequent to the completion of the Subscription Offering and if commenced simultaneously with or during the Subscription Offering the Community Offering may be limited to Community Purchases. The Community Offering must be completed within 45 days after the completion of the Subscription Offering unless otherwise extended by the OTS.

The INSTITUTION and the Holding Company, in their absolute discretion, reserve the right to reject any or all orders in whole or in part which are received in the Community Offering, at the time of receipt or as soon as practicable following the completion of the Community Offering.

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13. SYNDICATED COMMUNITY OFFERING ^

Shares of Conversion Stock not subscribed for in the Subscription ^ and Community ^ Offerings may be sold in a Syndicated ^ Community Offering, subject to such terms, conditions and procedures as may be determined by the Boards of Directors of the INSTITUTION and the Holding Company, in a manner that will achieve the widest distribution of the Conversion Stock subject to the right of the INSTITUTION and the Holding Company, in their absolute discretion, to accept or reject in whole or in part all subscriptions in the Syndicated ^ Community Offering. In the Syndicated ^ Community Offering, any person together with any Associate or group of persons Acting in Concert may purchase up to the maximum purchase limitation established for the ^ Community Offering, subject to the maximum and minimum purchase limitations specified in Section 14 and exclusive of an increase in the total number of shares issued due to an increase in the maximum of the Estimated Valuation Range of up to 15%. Shares purchased by any Person together with any Associate or group of persons Acting in Concert pursuant to Section 12 shall be counted toward meeting the maximum purchase limitation specified for this Section. Provided that the Subscription Offering has commenced, the INSTITUTION may commence the Syndicated ^ Community Offering at any time after the mailing to the Members of the Proxy Statement to be used in connection with the Special Meeting of Members, provided that the completion of the offer and sale of the Conversion Stock shall be conditioned upon the approval of this Plan by the Voting Members. If the Syndicated ^ Community Offering is not sooner commenced pursuant to the provisions of the preceding sentence, the Syndicated ^ Community Offering will be commenced as soon as practicable following the date upon which the Subscription ^ and Community ^ Offerings, if any, terminate.

If for any reason a ^ Syndicated ^ Community Offering of shares of Conversion Stock not sold in the Subscription and Community Offerings can not be effected, other purchase arrangements will be made for the sale of unsubscribed shares by the INSTITUTION, if possible. Such other purchase arrangements will be subject to the approval of the OTS.

14. LIMITATION ON PURCHASES

The following limitations shall apply to all purchases of shares of Conversion Stock:

A. The maximum number of shares of Conversion Stock which may be purchased in the Subscription Offering, Community Offering and/or ^ Syndicated Community Offering by any Person (or person through a single account) shall not exceed such number of shares as shall equal $60,000 divided by the Purchase Price.

B. The maximum number of shares of Conversion Stock which may be subscribed for or purchased in all categories in the Conversion by any Person (or persons through a single account) or Participant together with any Associate or group of persons Acting in Concert shall not exceed such number of shares as shall equal $100,000 divided by the Purchase Price, except for Employee Plans, which in the aggregate may subscribe for up to 10% of the Conversion Stock issued.

C. The maximum number of shares of Conversion Stock which may be purchased in all categories in the conversion by Officers and Directors of the INSTITUTION and their Associates in the aggregate shall not exceed 35% of the total number of shares of Conversion Stock issued.

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D. A minimum of 25 shares of Conversion Stock must be purchased by each Person purchasing shares in the conversion to the extent those shares are available; provided, however, that the minimum number of shares requirement will not apply if the number of shares of Conversion Stock purchased times the price per share exceeds $500.

If the number of shares of Conversion Stock otherwise allocable pursuant to Sections 8 through 13, inclusive, to any Person or that Person's Associates would be in excess of the maximum number of shares permitted as set forth above, the number of shares of Conversion Stock allocated to each such person shall be reduced to the lowest limitation applicable to that Person, and then the number of shares allocated to each group consisting of a Person and that Person's Associates shall be reduced so that the aggregate allocation to that Person and his Associates complies with the above maximums, and such maximum number of shares shall be reallocated among that Person and his Associates as they may agree, or in the absence of an agreement, in proportion to the shares subscribed by each (after first applying the maximums applicable to each Person, separately).

Depending upon market or financial conditions, the Board of Directors of the INSTITUTION and the Holding Company, without further approval of the Members, may decrease or increase the purchase limitations in this Plan, provided that the maximum purchase limitations may not be increased to a percentage in excess of 5%. Notwithstanding the foregoing, the maximum purchase limitation may be increased up to 9.99% provided that orders for Conversion Stock exceeding 5% of the shares being offered shall not exceed, in the aggregate, 10% of the total offering. If the INSTITUTION and the Holding Company increase the maximum purchase limitations, the INSTITUTION and the Holding Company are only required to resolicit Persons who subscribed for the maximum purchase amount and may, in the sole discretion of the INSTITUTION and the Holding Company, resolicit certain other large subscribers. For purposes of this
Section 14, the Directors of the INSTITUTION and the Holding Company shall not be deemed to be Associates or a group affiliated with each other or otherwise Acting in Concert solely as a result of their being Directors of the INSTITUTION or the Holding Company.

In the event of an increase in the total number of shares offered in the conversion due to an increase in the maximum of the Estimated Valuation Range of up to 15% (the "Adjusted Maximum") the additional shares will be used in the following order of priority: (i) to fill the Employees Plan's subscription to up to 10% of the Adjusted Maximum; (ii) in the event that there is an oversubscription at the Eligible Account Holder level, to fill unfilled subscriptions of Eligible Account Holders exclusive of the Adjusted Maximum according to Section 8, with preference given to Community Purchasers; (iii) in the event that there is an oversubscription at the Supplemental Eligible Account Holder level, to fill unfilled subscriptions of Supplemental Eligible Account Holders exclusive of the Adjusted Maximum according to Section 10, with preference given to Community Purchasers; (iv) in the event that there is an oversubscription at the Other Member level, to fill unfilled subscriptions of Other Members exclusive of the Adjusted Maximum in accordance with Section 11, with preference given to Community Purchasers; and (v) to fill unfilled Subscriptions in the Community Offering exclusive of the Adjusted Maximum, with preference given to Community Purchasers.

Each Person purchasing Conversion Stock in the Conversion shall be deemed to confirm that such purchase does not conflict with the above purchase limitations contained in this Plan.

For a period of three years following the conversion, no Officer, Director or their Associates shall purchase, without the prior written approval of the OTS, any outstanding shares of common stock of the Holding Company, except from a broker-dealer registered with the SEC. This provision shall not apply to negotiated transactions involving more than one percent of the outstanding shares of common stock of the Holding Company, the exercise of any options pursuant to a stock option plan or purchases

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of common stock of the Holding Company, made by or held by any Tax-Qualified Employee Stock Benefit Plan or Non-Tax Qualified Employee Stock Benefit Plan of the INSTITUTION or the Holding Company (including the Employee Plans) which may be attributable to any Officer or Director. As used herein, the term "negotiated transaction" means a transaction in which the securities are offered and the terms and arrangements relating to any sale are arrived at through direct communications between the seller or any person acting on its behalf and the purchaser or his investment representative. The term "investment representative" shall mean a professional investment advisor acting as agent for the purchaser and independent of the seller and not acting on behalf of the seller in connection with the transaction.

15. PAYMENT FOR CONVERSION STOCK

All payments for Conversion Stock subscribed for in the Subscription, Community^ and Syndicated ^ Community Offerings must be delivered in full to the INSTITUTION, together with a properly completed and executed Order Form, or Purchase Order in the case of the ^ Syndicated ^ Community Offering, on or prior to the expiration date specified on the Order Form or Purchase Order, as the case may be, unless such date is extended by the INSTITUTION; provided, however, that if the Employee Plans subscribes for shares during the Subscription Offering, the Employee Plan will not be required to pay for the shares at the time they subscribe but rather may pay for such shares of Conversion Stock upon consummation of the Conversion. The INSTITUTION may make scheduled discretionary contributions to an Employee Plan provided such contributions do not cause the INSTITUTION to fail to meet its regulatory capital requirement.

Notwithstanding the foregoing, the INSTITUTION and the Holding Company shall have the right, in their sole discretion, to permit institutional investors to submit contractually irrevocable orders in the Community Offering^ and Syndicated ^ Community Offering and to thereafter submit payment for the Conversion Stock for which they are subscribing in the Community Offering^ and Syndicated ^ Community Offering at any time prior to the completion of the Conversion.

Payment for Conversion Stock subscribed for shall be made either in cash (if delivered in person), check or money order. Alternatively, subscribers in the Offerings may pay for the shares subscribed for by authorizing the INSTITUTION on the Order Form or Purchase Order to make a withdrawal from the subscriber's Qualifying Deposit at the INSTITUTION in an amount equal to the purchase price of such shares. Such authorized withdrawal, whether from a savings, passbook or certificate account, shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate account, and the remaining balance does not meet the applicable minimum balance requirement, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the passbook rate. Funds for which a withdrawal is authorized will remain in the subscriber's Qualifying Deposit but may not be used by the subscriber until the Conversion Stock has been sold or the 45-day period (or such longer period as may be approved by the OTS) following the Subscription Offering has expired, whichever occurs first. Thereafter, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the Purchase Price per share. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Interest will be paid by the INSTITUTION at not less than the passbook annual rate on payments for Conversion Stock received in cash or by money order or check. Such interest will be paid from the date payment is received by the INSTITUTION until consummation or termination of the conversion. If for any reason the Conversion is not consummated, all payments made by subscribers in the Offerings will be refunded to them with interest. In case of amounts authorized for withdrawal from Qualifying Deposits, refunds will be made by canceling the authorization for withdrawal.

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16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS

As soon as practicable after the Prospectus prepared by the Holding Company and INSTITUTION has been declared effective by the OTS and the SEC, Order Forms will be distributed to the Participants at their last known addresses appearing on the records of the INSTITUTION for the purpose of subscribing to shares of Conversion Stock in the Subscription Offering and will be made available for use in the Community Offering. Notwithstanding the foregoing, the INSTITUTION may elect to send Order Forms only to those Persons who request them after such notice as is approved by the OTS and is adequate to apprise the Participants of the pendency of the Subscription Offering has been given. Such notice may be included with the proxy statement for the Special Meeting of Members and may also be included in a notice of the pendency of the conversion and the Special Meeting of Members sent to all Eligible Account Holders in accordance with regulations of the OTS.

Each Order Form or Purchase Order will be preceded or accompanied by the Prospectus (if a holding company form of organization is utilized) or the Offering Circular (if the holding company form of organization is not utilized) describing the Holding Company (if utilized), the INSTITUTION, the Conversion Stock and the Offerings. Each Order Form or Purchase Order will contain, among other things, the following:

A. A specified date by which all Order Forms and Purchase Orders must be received by the INSTITUTION, which date shall be not less than twenty (20), nor more than forty-five (45) days, following the date on which the Order Forms are mailed by the INSTITUTION, and which date will constitute the termination of the Subscription Offering;

B. The purchase price per share for shares of Conversion Stock to be sold in the Offerings;

C. A description of the minimum and maximum number of shares of Conversion Stock which may be subscribed for pursuant to the exercise of Subscription Rights or otherwise purchased in the Community Offering^ or Syndicated ^ Community Offering;

D. Instructions as to how the recipient of the Order Form or Purchase Order is to indicate thereon the number of shares of Conversion Stock for which such person elects to subscribe and the available alternative methods of payment therefor;

E. An acknowledgment that the recipient of the Order Form or Purchase Order has received a final copy of the Prospectus or Offering Circular, as the case may be, prior to execution of the Order Form or Purchase Order.

F. A statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can only be exercised by delivering within the subscription period such properly completed and executed Order Form, together with cash (if delivered in person), check or money order in the full amount of the purchase price as specified in the Order Form for the shares of Conversion Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the Order Form that the INSTITUTION withdraw said amount from the subscriber's Qualifying Deposit at the INSTITUTION) to the INSTITUTION; and

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G. A statement to the effect that the executed Order Form or Purchase Order, once received by the INSTITUTION, may not be modified or amended by the subscriber without the consent of the INSTITUTION.

Notwithstanding the above, the INSTITUTION and the Holding Company reserve the right in their sole discretion to accept or reject orders received on photocopied or facsimiled order forms or whose payment is to be made by wire transfer.

17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORMS: INSUFFICIENT PAYMENT

In the event Order Forms (a) are not delivered and are returned to the INSTITUTION by the United States Postal Service or the INSTITUTION is unable to locate the addressee, (b) are not received back by the INSTITUTION or are received by the INSTITUTION after the expiration date specified thereon, (c) are defectively filled out or executed, (d) are not accompanied by the full required payment, or, in the case of institutional investors in the Community Offering^ and Syndicated ^ Community Offering, by delivering irrevocable orders together with a legally binding commitment to pay in cash, check, money order or wire transfer the full amount of the purchase price prior to 48 hours before the completion of the conversion for the shares of Conversion Stock subscribed for (including cases in which accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (e) are not mailed pursuant to a "no mail" order placed in effect by the account holder, the subscription rights of the person to whom such rights have been granted will lapse as though such person failed to return the completed Order Form within the time period specified thereon; provided, however, that the INSTITUTION may, but will not be required to, waive any immaterial irregularity on any Order Form or Purchase Order or require the submission of corrected Order Forms or Purchase Orders or the remittance of full payment for subscribed shares by such date as the INSTITUTION may specify. The interpretation of the INSTITUTION of terms and conditions of the Plan and of the Order Forms or Purchase Orders will be final, subject to the authority of the OTS.

18. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION

A. All shares of Conversion Stock purchased by Directors or Officers of the INSTITUTION or the Holding Company in the conversion shall be subject to the restriction that, except as provided in Section 18B, below, or as may be approved by the OTS, no interest in such shares may be sold or otherwise disposed of for value for a period of one (1) year following the date of purchase.

B. The restriction on disposition of shares of Conversion Stock set forth in Section 18A above shall not apply to the following:

(i) Any exchange of such shares in connection with a merger or acquisition involving the INSTITUTION or the Holding Company, which has been approved by the OTS; and

(ii) Any disposition of such shares following the death of the person to whom such shares were initially sold under the terms of the Plan.

C. With respect to all shares of Conversion Stock subject to restrictions on resale or subsequent disposition, each of the following provisions shall apply;

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(i) Each certificate representing shares restricted within the meaning of Section 18A, above, shall bear a legend prominently stamped on its face giving notice of the restriction;

(ii) Instructions shall be issued to the stock transfer agent for the Holding Company not to recognize or effect any transfer of any certificate or record of ownership of any such shares in violation of the restriction on transfer; and

(iii) Any shares of capital stock of the Holding Company issued with respect to a stock dividend, stock split, or otherwise with respect to ownership of outstanding shares of Conversion Stock subject to the restriction on transfer hereunder shall be subject to the same restriction as is applicable to such Conversion Stock.

19. VOTING RIGHTS OF STOCKHOLDERS

Upon conversion, the holders of the capital stock of the INSTITUTION shall have the exclusive voting rights with respect to the INSTITUTION as specified in its charter. The holders of the common stock of the Holding Company shall have the exclusive voting rights with respect to the Holding Company.

20. ESTABLISHMENT OF LIQUIDATION ACCOUNT

The INSTITUTION shall establish at the time of conversion a liquidation account in an amount equal to its net worth as of the latest practicable date prior to conversion. The liquidation account will be maintained by the INSTITUTION for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their Savings Accounts at the INSTITUTION. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to his Savings Account, hold a related inchoate interest in a portion of the liquidation account balance, in relation to his Savings Account balance at the Eligibility Record Date and Supplemental Eligibility Record Date or to such balance as it may be subsequently reduced, as hereinafter provided.

In the unlikely event of a complete liquidation of the INSTITUTION (and only in such event), following all liquidation payments to creditors (including those to Account Holders to the extent of their Savings Accounts) each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a liquidating distribution from the liquidation account, in the amount of the then adjusted subaccount balance for his Savings Account then held, before any liquidation distribution may be made to any holders of the INSTITUTION's capital stock. No merger, consolidation, purchase of bulk assets with assumption of Savings Accounts and other liabilities, or similar transactions with an FDIC institution, in which the INSTITUTION is not the surviving institution, shall be deemed to be a complete liquidation for this purpose. In such transactions, the liquidation account shall be assumed by the surviving institution.

The initial subaccount balance for a Savings Account held by an Eligible Account Holder or Supplemental Eligible Account Holder shall be determined by multiplying the opening balance in the liquidation account by a fraction, the numerator of which is the amount of such Eligible Account Holder's and Supplemental Eligible Account Holder's Qualifying Deposit and the denominator of which is the total amount of all Qualifying Deposits of all Eligible Account Holders and Supplemental Eligible Account Holders in the INSTITUTION. Such initial subaccount balance shall not be increased, but shall be subject to downward adjustment as described below.

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If, at the close of business on any annual closing date, commencing on or after the effective date of conversion, the deposit balance in the Savings Account of an Eligible Account Holder or Supplemental Eligible Account Holder is less than the lesser of (i) the balance in the Savings Account at the close of business on any other annual closing date subsequent to the Eligibility Record Date or Supplemental Eligibility Record Date, as applicable, or (ii) the amount of the Qualifying Deposit in such Savings Account, the subaccount balance of such Savings Account shall be adjusted by reducing such subaccount balance in an amount proportionate to the reduction in such deposit balance. In the event of such downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any subsequent increase in the deposit balance of the related Savings Account. If any such Savings Account is closed, the related subaccount shall be reduced to zero.

The creation and maintenance of the liquidation account shall not operate to restrict the use or application of any of the net worth accounts of the INSTITUTION.

21. TRANSFER OF SAVINGS ACCOUNTS

Each person holding a Savings Account at the INSTITUTION at the time of conversion shall retain an identical Savings Account at the INSTITUTION following conversion in the same amount and subject to the same terms and conditions (except as to voting and liquidation rights).

22. RESTRICTIONS ON ACQUISITION OF THE INSTITUTION AND HOLDING COMPANY

A. In accordance with OTS regulations, for a period of three years from the date of consummation of conversion, no Person, other than the Holding Company, shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of the INSTITUTION without the prior written consent of the OTS.

B.1. The charter of the INSTITUTION contains a provision stipulating that no person, except the Holding Company, for a period of five years following the date of conversion shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of the INSTITUTION, without the prior written approval of the OTS. In addition, such charter may also provide that for a period of five years following the conversion, shares beneficially owned in violation of the above-described charter provision shall not be entitled to vote and shall not be voted by any person or counted as voting stock in connection with any matter submitted to stockholders for a vote. In addition, special meetings of the stockholders relating to changes in control or amendment of the charter may only be called by the Board of Directors, and shareholders shall not be permitted to cumulate their votes for the election of directors.

B.2. The Certificate of Incorporation of the Holding Company will contain a provision stipulating that in no event shall any record owner of any outstanding shares of the Holding Company's common stock who beneficially owns in excess of 10% of such outstanding shares be entitled or permitted to any vote in respect to any shares held in excess of 10%. In addition, the Certificate of Incorporation and Bylaws of the Holding Company provide for staggered terms of the directors, noncumulative voting for directors, limitations on the calling of special meetings, a fair price provision for certain business combinations and certain notice requirements.

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C. For the purposes of this Section 22, B.1.:

(i) The term "person" includes an individual, a group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities of an insured institution;

(ii) The term "offer" includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value;

(iii) The term "acquire" includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise; and

(iv) The term "security" includes non-transferable subscription rights issued pursuant to a plan of conversion as well as a "security" as defined in 15 U.S.C. ss.78c(a)(10).

23. PAYMENT OF DIVIDENDS AND REPURCHASES OF STOCK

The INSTITUTION shall not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its regulatory capital to be reduced below (i) the amount required for the Liquidation Account or (ii) the federal regulatory capital requirement in
Section 567.2 of the Rules and Regulations of the OTS. Otherwise, the INSTITUTION may declare dividends or make capital distributions in accordance with applicable law and regulations.

24. AMENDMENT OF PLAN

If deemed necessary or desirable, the Plan may be substantively amended at any time prior to solicitation of proxies from Members to vote on the Plan by a two-thirds vote of the INSTITUTION's Board of Directors, and at any time thereafter by such vote of such Board of Directors with the concurrence of the OTS. Any amendment to the Plan made after approval by the Members with the approval of the OTS shall not necessitate further approval by the Members unless otherwise required by the OTS. The Plan may be terminated by majority vote of the INSTITUTION's Board of Directors at any time prior to the Special Meeting of Members to vote on the Plan, and at any time thereafter with the concurrence of the OTS.

By adoption of the Plan, the Members of the INSTITUTION authorize the Board of Directors to amend or terminate the Plan under the circumstances set forth in this Section.

25. CHARTER AND BYLAWS

By voting to adopt the Plan, members of the INSTITUTION will be voting to adopt a charter and bylaws to read in the form of charter and bylaws for a federally chartered stock institution. The effective date of the INSTITUTION's amended charter and bylaws shall be the date of issuance and sale of the Conversion Stock as specified by the OTS.

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26. CONSUMMATION OF CONVERSION

The conversion of the INSTITUTION shall be deemed to take place and be effective upon the completion of all requisite organizational procedures for obtaining the federal stock charter for the INSTITUTION and sale of all Conversion Stock.

27. REGISTRATION AND MARKETING

Within the time period required by applicable laws and regulations, the Holding Company will register the securities issued in connection with the conversion pursuant to the Securities Exchange Act of 1934 and will not deregister such securities for a period of at least three years thereafter, except that the maintenance of registration for three years requirement may be fulfilled by any successor to the Holding Company. In addition, the Holding Company will use its best efforts to encourage and assist a market-maker to establish and maintain a market for the Conversion Stock and to list those securities on a national or regional securities exchange or the NASDAQ System.

28. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES

The INSTITUTION will make reasonable efforts to comply with the securities laws of all States in the United States in which Persons entitled to subscribe for shares of Conversion Stock pursuant to the Plan reside. However, no such Person will be issued subscription rights or be permitted to purchase shares of Conversion Stock in the Subscription Offering if such Person resides in a foreign country or in a state of the United States with respect to which any of the following apply: (i) a small number of Persons otherwise eligible to subscribe for shares under the Plan reside in such state; (ii) the issuance of subscription rights or the offer or sale of shares of Conversion Stock to such Persons would require the INSTITUTION or the Holding Company, as the case may be, under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify its securities for sale in such state; or (iii) such registration or qualification would be impracticable for reasons of cost or otherwise.

29. EXPENSES OF CONVERSION

The INSTITUTION shall use its best efforts to assure that expenses incurred by it in connection with the conversion shall be reasonable.

30. CONDITIONS TO CONVERSION

The conversion of the INSTITUTION pursuant to this Plan is expressly conditioned upon the following:

(a) Prior receipt by the INSTITUTION of rulings of the United States Internal Revenue Service and the State of Georgia taxing authorities, or opinions of counsel, substantially to the effect that the conversion will not result in any adverse federal or state tax consequences to Eligible Account Holders or the INSTITUTION and the Holding Company before or after the conversion;

(b) The sale of all of the Conversion Stock offered in the conversion; and

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(c) The completion of the conversion within the time period specified in Section 3 of this Plan.

31. INTERPRETATION

All interpretations of this Plan and application of its provisions to particular circumstances by a majority of the Board of Directors of the INSTITUTION shall be final, subject to the authority of the OTS.

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EXHIBIT 10.1


DIRECTOR INDEXED SALARY CONTINUATION PLAN

AGREEMENT

This Agreement, made and entered into this 15th day of December, 1995, by and between Quitman Federal Savings & Loan Association, a Bank organized and existing under the laws of the State of Georgia, hereinafter referred to as "the Bank", and Walter B. Holwell, a Key Employee and the Director of the Bank hereinafter referred to as "the Director."

The Director has been on the Board of the Bank for several years and has now and for years past faithfully served the Bank. It is the consensus of the Board of Directors of the Bank (the Board) that the Director's services have been of exceptional merit, in excess of the compensation paid and an invaluable contribution to the profits and position of the Bank in its field of activity. The Board further believes that the Director's experience, knowledge of corporate affairs, reputation and industry contacts are of such value and his continued services are so essential to the Bank's future growth and profits that it would suffer severe financial loss should the Director terminate his services.

Accordingly, it is the desire of the Bank and the Director to enter into this Agreement under which the Bank will agree to make certain payments to the Director upon his retirement and, alternatively, to his beneficiary(ies) in the event of his premature death while employed by the Bank.

It is the intent of the parties hereto that this Agreement be considered an arrangement maintained primarily to provide supplemental retirement benefits for the Director, for purposes of the Employee Retirement Security Act of 1974 (ERISA). The Director is fully advised of the Bank's financial status and has had substantial input in the design and operation of this benefit plan.

Therefore, in consideration of the Director's services performed in the past and those to be performed in the future and based upon the mutual promises and covenants herein contained, the Bank and the Director, agree as follows:

I. DEFINITIONS

A. Effective Date:

The Effective Date of this Agreement shall be December 15,

1995.


B. Plan Year:

Any reference to "Plan Year" shall mean a calendar year from January 1 to December 31. In the year of implementation, the term "Plan Year" shall mean the period from the effective date to December 31 of the year of the effective date.

C. Retirement Date:

Retirement Date shall mean retirement from service with the Bank which becomes effective on the first day of the calendar month following the month in which the Director reaches his sixty-fifth (65th) birthday or such later date as the Director may actually retire.

D. Termination of Service:

Termination of Service shall mean voluntary resignation of service by the Director or the Bank's discharge of the Director without cause [as defined in subparagraph III (D) hereinafter], prior to the Normal Retirement Age [described in subparagraph I (J) hereinafter].

E. Pre-Retirement Account:

A Pre-Retirement Account shall be established as a liability reserve account on the books of the Bank for the benefit of the Director. Prior to termination of service or the Director's retirement, such liability reserve account shall be increased or decreased each Plan Year (including the Plan Year in which the Director ceases to serve on the Board of the Bank) by an amount equal to the annual earnings or loss for that Plan Year determined by the Index [described in subparagraph I (G) hereinafter], less the Cost of Funds Expense for that Plan Year [described in subparagraph I (H) hereinafter].

F. Index Retirement Benefit:

The Index Retirement Benefit for the Director for any year shall be equal to the excess of the annual earnings (if any) determined by the Index [subparagraph I (G)] for that Plan Year over the Cost of Funds Expense [subparagraph I (H)] for that Plan Year.

G. Index:

The Index for any Plan Year shall be the aggregate annual after-tax income from the life insurance contracts described hereinafter as defined by FASB Technical Bulletin 85-4. This Index shall be applied as if such insurance contracts were

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purchased on the effective date hereof.

Insurance Company:                          The Guardian Life Insurance Company
Policy Form:                                Whole Life
Policy Name:                                Life Paid Up at 96
Insured's Age and Sex:                      39, Male
Riders:                                     None
Ratings:                                    None
Option:                                     None
Face Amount:                                $100,000
Premiums Paid:                              $4,111.70
Number of Premium Payments:                 Twenty Six
Assumed Issue Date:                         December 15, 1995

If such contracts of life insurance are actually purchased by the Bank then the actual policies as of the dates they were purchased shall be used in calculations under this Agreement. If such contracts of life insurance are not purchased or are subsequently surrendered or lapsed, then the Bank shall receive annual policy illustrations that assume the above described policies were purchased from the above named insurance company(ies) on the Effective Date from which the increase in policy value will be used to calculate the amount of the Index.

In either case, references to the life insurance contract are merely for purposes of calculating a benefit. The Bank has no obligation to purchase such life insurance and, if purchased, the Director and his beneficiary(ies) shall have no ownership interest in such policy and shall always have no greater interest in the benefits under this Agreement than that of an unsecured general creditor of the Bank.

H. Cost of Funds Expense:

The Cost of Funds Expense for any Plan Year shall be calculated by taking the sum of the amount of premiums set forth in the Indexed policies described above plus the amount of any benefits paid to the Director pursuant to this Agreement (Paragraph III hereinafter) plus the amount of all previous years after-tax Costs of Funds Expense, and multiplying that sum by the average after-tax cost of funds of the Bank's third quarter Call Report for the Plan Year as filed with the Federal Reserve.

I. Change of Control

Change of Control shall be deemed to be the cumulative transfer of more than fifty percent (50%) of the voting stock of the Bank holding company from the Effective Date of this Agreement. For the purposes of this Agreement, transfers

- 3 -

on account of deaths or gifts, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a change in control.

J. Normal Retirement Age:

Normal Retirement Age shall mean the date on which the Director attains age sixty-five (65).

II. EMPLOYMENT

No provision of this Agreement shall be deemed to restrict or limit any existing employment agreement by and between the Bank and the Director, nor shall any conditions herein create specific employment rights to the Director nor limit the right of the Employer to discharge the Director with or without cause. In a similar fashion, no provision shall limit the Director's rights to voluntarily sever his employment at any time.

III. INDEX BENEFITS

The following benefits provided by the Bank to the Director are in the nature of a fringe benefit and shall in no event be construed to effect nor limit the Director's current or prospective salary increases, cash bonuses or profit-sharing distributions or credits.

A. Retirement Benefits:

Should the Director continue to serve on the Board of the Bank until his "Normal Retirement Age" defined in subparagraph I(J), he shall be entitled to receive the balance in his Pre-Retirement Account [as defined in subparagraph I (E)] in ten (10) equal annual installments commencing thirty (30) days following the Director's Retirement Date [as defined in subparagraph I (C)]. In addition to these payments, commencing with the Plan Year in which the Director attains his Retirement Date, the Index Retirement Benefit [as defined in subparagraph I (F) above] for each year shall be paid to the Director until his death.

B. Termination of Service:

Subject to subparagraph III (D) hereinafter, should the Director suffer a termination of service [defined in subparagraph I (D)], he shall be entitled to receive ten percent (10%), times the number of full years (to a maximum of 100%) the Director has served on the board of the Bank, times the balance in the Pre-Retirement Account paid over ten (10) years in equal installments commencing at the Retirement Date
[subparagraph I (C)]. In addition to these payments, ten percent (10%) times full years of service with the Bank, times the

- 4 -

Index Retirement Benefit for each year shall be paid to the Director until his death.

C. Death:

Should the Director die prior to having received the full balance of the Pre- Retirement Account, the unpaid balance of the Pre-Retirement Account shall be paid in a lump sum to the beneficiary selected by the Director and filed with the Bank. In the absence of or a failure to designate a beneficiary, the unpaid balance shall be paid in a lump sum to the personal representative of the Director's estate.

D. Discharge for Cause:

Should the Director be discharged for cause at any time prior to his Retirement Date, all Index Benefits under this Agreement [subparagraphs III (A), (B) or (C)] shall be forfeited. The term "for cause" shall mean gross negligence or gross neglect or the conviction of a felony or gross-misdemeanor involving moral turpitude, fraud, dishonesty or willful violation of any law that results in any adverse effect on the Bank. If a dispute arises as to discharge "for cause", such dispute shall be resolved by arbitration as set forth in this Agreement.

E. Death Benefit:

Except as set forth above, there is no death benefit provided under this Agreement.

IV. RESTRICTIONS UPON FUNDING

The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Agreement. The Director, his beneficiary(ies) or any successor in interest to him shall be and remain simply a general creditor of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation.

The Bank reserves the absolute right at its sole discretion to either fund the obligations undertaken by this Agreement or to refrain from funding the same and to determine the exact nature and method of such funding. Should the Bank elect to fund this Agreement, in whole or in part, through the purchase of life insurance, mutual funds, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part. At no time shall the Director be deemed to have any lien or right, title or interest in or to any specific funding investment or to any assets of the Bank.

- 5 -

If the Bank elects to invest in a life insurance, disability or annuity policy upon the life of the Director, then the Director shall assist the Bank by freely submitting to a physical exam and supplying such additional information necessary to obtain such insurance or annuities.

V. CHANGE OF CONTROL

Upon a Change of Control [as defined in subparagraph I (I) herein], if the Director's service on the Board is subsequently terminated then he shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if he has served continuously on the Board of the Bank until that time. The Director will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger or consolidation of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

VI. MISCELLANEOUS

A. Alienability and Assignment Prohibition:

Neither the Director, his/her surviving spouse nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owned by the Director or his beneficiary, nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Director or any beneficiary attempts assignment, commutation, hypothecation, transfer or disposal of the benefits hereunder, the Bank's liabilities shall forthwith cease and terminate.

B. Binding Obligation of Bank and any Successor in Interest:

The Bank expressly agrees that it shall not merge or consolidate into or with another bank or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Agreement. This Agreement shall be binding upon the parties hereto, their successors, beneficiary(ies), heirs and personal representatives.

C. Revocation:

It is agreed by and between the parties hereto that, during the lifetime of the Director, this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual written assent of the Director and the Bank.

- 6 -

D. Gender:

Whenever in this Agreement words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply.

E. Effect on Other Bank Benefit Plans:

Nothing contained in this Agreement shall affect the right of the Director to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan constituting a part of the Bank's existing or future compensation structure.

F. Headings:

Headings and subheadings in this Agreement are inserted for reference and convenience only and shall not be deemed a part of this Agreement.

G. Applicable Law:

The validity and interpretation of this Agreement shall be governed by the laws of the State of Georgia.

VII. ERISA PROVISION

A. Named Fiduciary and Plan Administrator:

The "Named Fiduciary and Plan Administrator" of this plan shall be Quitman Federal Savings & Loan Association until its removal by the Board. As Named Fiduciary and Administrator, the Bank shall be responsible for the management, control and administration of the Salary Continuation Agreement as established herein. He may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

B. Claims Procedure and Arbitration:

In the event a dispute arises over benefits under this Agreement and benefits are not paid to the Director (or to his beneficiary in the case of the Director's death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Plan Administrator named above within ninety (90) days from the date payments are refused. The Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within ninety (90) days of receipt of such claim their specific

- 7 -

reasons for such denial, reference to the provisions of this Agreement upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Plan Administrator fails to take any action within the aforesaid ninety-day period.

If claimants desire a second review they shall notify the Plan Administrator in writing within ninety (90) days of the first claim denial. Claimants may review this Agreement or any documents relating thereto and submit any written issues and comments they may feel appropriate. In its sole discretion, the Plan Administrator shall then review the second claim and provide a written decision within ninety (90) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of this Agreement upon which the decision is based.

If claimants continue to dispute the benefit denial based upon completed performance of this Agreement or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to a Board of Arbitration for final arbitration. Said Board shall consist of one member selected by the claimant, one member selected by the Bank, and the third member selected by the first two members. The Board shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such Board with respect to any controversy properly submitted to it for determination.

Where a dispute arises as to the Bank's discharge of the Director "for cause" such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement and executed the original thereof on the 15th day of December, 1995 and that, upon execution, each has received a conforming copy.

QUITMAN FEDERAL SAVINGS & LOAN ASSOCIATION

/s/ Lisha Barwick                              By:  /s/ Melvin Plair
--------------------------------                    ----------------------------
Witness                                             Title



/s/ Lisha Barwick                              By:  /s/ Walter B. Holwell
--------------------------------                    ----------------------------
Witness                                             Walter B. Holwell

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ENDORSEMENT METHOD SPLIT DOLLAR PLAN AGREEMENT

Insurer:                             The Guardian Life Insurance Company

Policy Number:                       4029853

Bank:                                Quitman Federal Savings & Loan Association

Insured:                             Walter B. Holwell

Relationship of Bank to Insured:     Employer

The respective rights and duties of the Bank and the insured in the subject policy shall be as defined in the following:

I. DEFINITIONS

Refer to the policy contract for the definition of all terms in this Agreement.

II. POLICY TITLE AND OWNERSHIP

Title and ownership shall reside in the Bank for its use and for the use of the Insured all in accordance with this Agreement. The Bank alone may, to the extent of its interest, exercise the right to borrow or withdraw on the policy cash values. Where the Bank and the Insured (or assignee, with the consent of the Insured) mutually agree to exercise the right to increase the coverage under the subject split dollar policy, then, in such event, the rights, duties and benefits of the parties to such increased coverage shall continue to be subject to the terms of this Agreement.

III. BENEFICIARY DESIGNATION RIGHTS

The Insured (or assignee) shall have the right and power to designate a beneficiary or beneficiaries to receive his share of the proceeds payable upon the death of the Insured and to elect and change a payment option for such beneficiary, subject to any right or interest the Bank may have in such proceeds, as provided in this Agreement.

IV. PREMIUM PAYMENT METHOD

The Bank shall pay an amount equal to the planned premiums and any other premium payments that might become necessary to keep the policy in force.

- 9 -

V. TAXABLE BENEFIT

Annually the Insured will receive a taxable benefit equal to the assumed cost of insurance as required by the Internal Revenue Service. The Bank (or its administrator) will report to the Employee the amount of imputed income received each year on Form W-2 or its equivalent.

VI. DIVISION OF DEATH PROCEEDS

Subject to Paragraph VII herein, the division of the death proceeds of the policy is as follows:

A. The Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to an amount equal to eighty percent (80%) of the net at risk insurance portion of the proceeds. The net at risk insurance portion is the total proceeds less the cash value of the policy.

B. The Bank shall be entitled to the remainder of such proceeds.

C. The Bank and the Insured (or assignees) shall share in any interest due on the death proceeds on a pro rata basis as the proceeds due each respectively bears to the total proceeds, excluding any such interest.

VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY

The Bank shall at all times be entitled to an amount equal to the policy's cash value, as that term is defined in the policy contract, less any policy loans and unpaid interest or cash withdrawals previously incurred by the Bank and any applicable surrender charges. Such cash value shall be determined as of the date of surrender or death as the case may be.

VIII. PREMIUM WAIVER

If the policy contains a premium waiver provision, such waived amounts shall be considered for all purposes of this Agreement as having been paid by the Bank.

IX. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS

In the event the policy involves an endowment or annuity element, the Bank's right and interest in any endowment proceeds or annuity benefits, on expiration of the deferment period, shall be determined under the provisions of this Agreement by regarding such endowment proceeds or the commuted value of such annuity benefits as the policy's cash value. Such endowment proceeds or annuity benefits shall be considered to be like death

- 10 -

proceeds for the purposes of division under this Agreement.

X. TERMINATION OF AGREEMENT

This Agreement shall terminate at the option of the Bank following thirty (30) days written notice to the Insured upon the happening of any one of the following:

1. The Insured shall leave the service of the Bank (voluntarily or involuntarily) prior to ten years from the date of first service, or

2. The Insured shall be discharged from employment with the Bank for cause. The term "for cause" shall mean gross negligence or gross neglect or the commission of a felony or gross-misdemeanor involving moral turpitude, fraud, dishonesty or wilful violation of any law that results in any adverse effect on the Bank.

Upon such termination, the Insured (or assignee) shall have a ninety
(90) day option to receive from the Bank an absolute assignment of the policy in consideration of a cash payment to the Bank, whereupon this Agreement shall terminate. Such cash payment shall be the greater of:

1. The Bank's share of the cash value of the policy on the date of such assignment, as defined in this Agreement.

2. The amount of the premiums which have been paid by the Bank prior to the date of such assignment.

Should the Insured (or assignee) fail to exercise this option within the prescribed ninety (90) day period, the Insured (or assignee) agrees that all of his rights, interest and claims in the policy shall terminate as of the date of the termination of this Agreement.

Except as provided above, this Agreement shall terminate upon distribution of the death benefit proceeds in accordance with Paragraph VI above.

XI. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS

The Insured may not, without the written consent of the Bank, assign to any individual, trust, or other organization, any right, title or interest in the subject policy nor any rights, options, privileges or duties created under this Agreement.

XII. AGREEMENT BINDING UPON THE PARTIES

This Agreement shall bind the Insured and the Bank, their heirs, successors, personal representatives and assigns.

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XIII. NAMED FIDUCIARY AND PLAN ADMINISTRATOR

Quitman Federal Savings & Loan Association is hereby designed the "Named Fiduciary" until resignation or removal by the board of directors. As Named Fiduciary, Quitman Federal Savings & Loan Association shall be responsible for the management, control, and administration of this Split Dollar Plan as established herein. The Named Fiduciary may allocate to others certain aspects of the management and operation responsibilities of the plan, including the employment of advisors and the delegation of any ministerial duties to qualified individuals.

XIV. FUNDING POLICY

The funding policy for this Split Dollar Plan shall be to maintain the subject policy in force by paying, when due, all premiums required.

XV. CLAIMS PROCEDURE FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN

Claims forms or claim information as to the subject policy can be obtained by contacting The Benefit Marketing Group, Inc. (770-952-1529). When the Named Fiduciary has a claim which may be covered under the provisions described in the insurance policy, he should contact the office named above and they will either complete a claim form and forward it to an authorized representative of the Insurer or advise the named Fiduciary what further requirements are necessary. The Insurer will evaluate and make a decision as to payment. If the claim is payable, a benefit check will be issued to the Named Fiduciary.

In the event that a claim is not eligible under the policy, the Insurer will notify the Named Fiduciary of the denial pursuant to the requirements under the terms of the policy. If the Named Fiduciary is dissatisfied with the denial of the claim and wishes to contest such claim denial, he should contact the office named above and they will assist in making inquiry to the Insurer. All objections to the Insurer's actions should be in writing and submitted to the office named above for transmittal to the Insurer.

XVI. GENDER

Whenever in this Agreement words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply.

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XVII. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

The Insurer shall not be deemed a party to this Agreement, but will respect the right s of the parties as herein developed upon receiving an executed copy of this Agreement. Payment or other performance in accordance with the policy provisions shall fully discharge the Insurer for any and all liability.

Executed at Quitman, Georgia this 15th day of December, 1995.

QUITMAN FEDERAL SAVINGS & LOAN ASSOCIATION

/s/ Lisha Barwick                 By:  /s/ Melvin Plair
---------------------------            -----------------------------------------
Witness                                Title



/s/ Lisha Barwick                 By:  /s/ Walter B. Holwell
---------------------------            -----------------------------------------
Witness                                Walter B. Holwell

- 13 -

BENEFICIARY DESIGNATION FORM

Primary Designation:

         Name                                   Relationship
         ----                                   ------------


Kim T. Holwell                              Wife
------------------------------              ------------------------------


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


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

Contingent Designation:

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


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


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

/s/ Walter B. Holwell                       12/15/95
------------------------------              -----------------------------
Walter B. Holwell                           Date

- 14 -

EXHIBIT 10.2


EXECUTIVE INDEXED SALARY CONTINUATION PLAN

AGREEMENT

This Agreement, made and entered into this 15th day of December, 1996, by and between Quitman Federal Savings & Loan Association, a Bank organized and existing under the laws of the State of Georgia, hereinafter referred to as "the Bank," and Brenda C. Renfroe, a Key Employee and an Executive of the Bank, hereinafter referred to as "the Executive."

The Executive has been in the employ of the Bank for several years and has now and for years past faithfully served the Bank. It is the consensus of the Board of Directors of the Bank (the Board) that the Executive's services have been of exceptional merit, in excess of the compensation paid and an invaluable contribution to the profits and position of the Bank in its field of activity. The Board further believes that the Executive's experience, knowledge of corporate affairs reputation and industry contacts are of such value and his continued services are so essential to the Bank's future growth and profits that it would suffer severe financial loss should the Executive terminate his services.

Accordingly, it is the desire of the Bank and the Executive to enter into this Agreement under which the Bank will agree to make certain payments to the Executive upon his retirement and, alternatively, to his beneficiary(ies) in the event of his premature death while employed by the Bank.

It is the intent of the parties hereto that this Agreement be considered an arrangement maintained primarily to provide supplemental retirement benefits for the Executive, as a member of a select group of management or highly-compensated employees of the Bank, and to be considered a non-qualified benefit plan for purposes of the Employee Retirement Security Act of 1974 (ERISA). The Executive is fully advised of the Bank's financial status and has had substantial input in the design and operation of this benefit plan.

Therefore, in consideration of the Executive's services performed in the past and those to be performed in the future and based upon the mutual promises and covenants herein contained, the Bank and the Executive, agree as follows:

I. DEFINITIONS

A. Effective Date:

The Effective Date of this Agreement shall be December 15, 1996.

B. Plan Year:

Any reference to the "Plan Year" shall mean a calendar year from January 1 to December 31. In the year of implementation, the term "Plan Year" shall mean the period from the effective date to December 31 of the year of the effective date.


C. Retirement Date:

Retirement Date shall mean retirement from service with the Bank which becomes effective on the first day of the calendar month following the month in which the Executive reaches his sixty-fifth (65th) birthday or such later date as the Executive may actually retire.

D. Termination of Service:

Termination of Service shall mean voluntary resignation of service by the Executive or the Bank's discharge of the Executive without cause [as defined in subparagraph III (D) hereinafter], prior to the Normal Retirement Age [described in subparagraph I (J) hereinafter].

E. Pre-Retirement Account:

A Pre-Retirement Account shall be established as a liability reserve account on the books of the Bank for the benefit of the Executive. Prior to termination of service or the Executive's retirement, such liability reserve account shall be increased or decreased each Plan Year (including the Plan Year in which the Executive ceases to be employed by the Bank) by an amount equal to the annual earnings or loss for that Plan Year determined by the Index [described in subparagraph I (G) hereinafter], less the Opportunity Cost for that Plan Year
[described in subparagraph I (H) hereinafter].

F. Index Retirement Benefit:

The Index Retirement Benefit for the Executive for any year shall be equal to the excess of the annual earnings (if any) determined by the Index [subparagraph I (G)] for that Plan Year over the Opportunity Cost [subparagraph I (H)] for that Plan Year.

G. Index:

The Index for any Plan Year shall be the aggregate annual after-tax income from the life insurance contracts described hereinafter as defined by FASB Technical Bulletin 85-4. This Index shall be applied as if such insurance contracts were purchased on the effective date hereof.

Insurance Company:        The Guardian Life Insurance Company
Policy Form:              Whole Life
Policy Name:              Life Paid up at 96
Insured's Age and Sex:    48, Female
Riders:                   Paid-Up Additions Rider
Ratings:                  Table 3
Face Amount:              $100,000


Premiums Paid:                              $6,212.40
Number of Premium Payments:                 Seventeen
Assumed Purchase Date:                      December 15, 1996

If such contracts of life insurance are actually purchased by the Bank then the actual policies as of the dates they were purchased shall be used in calculations under this Agreement. If such contracts of life insurance are not purchased or are subsequently surrendered or lapsed, then the Bank shall receive annual policy illustrations that assume the above described policies were purchased from the above named insurance company(ies) on the Effective Date from which the increase in policy value will be used to calculate the amount of the Index.

In either case, references to the life insurance contract are merely for purposes of calculating a benefit. The Bank has no obligation to purchase such life insurance and, if purchased, the Executive and his beneficiary(ies) shall have no ownership interest in such policy and shall always have no greater interest in the benefits under this Agreement than that of an unsecured general creditor of the Bank.

H. Opportunity Cost:

The Opportunity Cost for any Plan Year shall be calculated by taking the sum of the amount of premiums set forth in the Indexed policies described above plus the amount of any after-tax benefits paid to the Executive pursuant to this Agreement (Paragraph III hereinafter) plus the amount of all previous years after-tax Opportunity Cost, and multiplying that sum by the average after-tax yield of a one year Treasury bill for the Plan Year.

I. Change of Control:

Change of control shall be deemed to be the cumulative transfer of more than fifty percent (50%) of the voting stock of the Bank from the Executive Date of this Agreement. For the purposes of this Agreement, transfers on account of deaths or gifts, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a change in control.

J. Normal Retirement Age:

Normal Retirement Age shall mean the date on which the Executive attains age sixty-five (65).

II. EMPLOYMENT

No provision of this Agreement shall be deemed to restrict or limit any existing employment agreement by and between the Bank and the Executive, nor shall any


conditions herein create specific employment rights to the Executive nor limit the right of the Employer to discharge the Executive with or without cause. In a similar fashion, no provision shall limit the Executive's rights to voluntarily sever his employment at any time.

III. INDEX BENEFITS

The following benefits provided by the Bank to the Executive are in the nature of a fringe benefit and shall in no event be construed to effect nor limit the Executive's current or prospective salary increases, cash bonuses or profit-sharing distributions or credits.

A. Retirement Benefits:

Should the Executive continue to be employed by the Bank until his "Normal Retirement Age" defined in subparagraph I (J), he shall be entitled to receive the balance in his Pre-Retirement Account [as defined in subparagraph I (E) in ten (10) equal annual installments commencing thirty (30) days following the Executive's Normal Retirement Date. In addition to these payments, commencing with the Plan Year in which the Executive attains his Retirement Date, the Index Retirement Benefit [as defined in subparagraph I (F) above] for each year shall be paid to the Executive until his death.

B. Termination of Service:

Subject to subparagraph III (D) hereinafter, should the Executive suffer a termination of service [defined in subparagraph I (D)], he shall be entitled to receive ten percent (10%), times the number of full years (to a maximum of 100%) the Director has served on the Board from the date of first service on the Board prior to his termination of service, times the balance in the Pre-Retirement Account paid over ten (10) years in equal installments commencing at the Retirement Date [subparagraph I (C)]. In addition to these payments, ten percent (10%) times full years of service with the Bank, times the Index Retirement Benefit for each year shall be paid to the Executive until his death.

C. Death:

Should the Executive die prior to having received the full balance of the Pre- Retirement Account, the unpaid balance of the Pre-Retirement Account shall be paid in a lump sum to the beneficiary selected by the Executive and filed with the Bank. In the absence of or a failure to designate a beneficiary, the unpaid balance shall be paid in a lump sum to the personal representative of the Executive's estate.


D. Discharge for Cause:

Should the Executive be discharged for cause at any time prior to his Retirement Date, all Index Benefits under this Agreement [subparagraphs III (A), (B) or (C)] shall be forfeited. The term "for cause" shall mean gross negligence or gross neglect or the conviction of a felony or gross-misdemeanor involving moral turpitude, fraud, dishonesty or willful violation of any law that results in any adverse effect on the Bank. If a dispute arises as to discharge "for cause," such dispute shall be resolved by arbitration as set forth in this Agreement.

E. Death Benefit:

Except as set forth above, there is no death benefit provided under this Agreement.

IV. RESTRICTIONS UPON FUNDING

The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Agreement. The Executive, his beneficiary(ies) or any successor in interest to him shall be and remain simply a general creditor of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation.

The Bank reserves the absolute right at its sole discretion to either fund the obligations undertaken by this Agreement or to refrain from funding the same and to determine the exact nature and method of such funding. Should the Bank elect to fund this Agreement, in whole or in part, through the purchase of life insurance, mutual funds, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part. At no time shall the Executive be deemed to have any lien or right, title or interest in or to any specific funding investment or to any assets of the Bank.

If the Bank elects to invest in a life insurance, disability or annuity policy upon the life of the Executive, then the Executive shall assist the Bank by freely submitting to a physical exam and supplying such additional information necessary to obtain such insurance or annuities.

V. CHANGE OF CONTROL

Upon a Change of Control [as defined in subparagraph I (I) herein], if the Executive's employment is subsequently terminated then he shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if he had been continuously employed by the Bank until his Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger or consolidation of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.


VI. MISCELLANEOUS

A. Alienability and Assignment Prohibition:

Neither the Executive, his/her surviving spouse nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive or his beneficiary, nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary attempts assignment, commutation, hypothecation, transfer or disposal of the benefits hereunder, the Bank's liabilities shall forthwith cease and terminate.

B. Binding Obligation of Bank and any Successor in Interest:

The Bank expressly agrees that it shall not merge or consolidate into or with another bank or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Agreement. This Agreement shall be binding upon the parties hereto, their successors, beneficiary(ies), heirs and personal representatives.

C. Revocation:

It is agreed by and between the parties hereto that, during the lifetime of the Executive, this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual written assent of the Executive and the Bank.

D. Gender:

Whenever in this Agreement words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply.

E. Effect on Other Bank Benefit Plans:

Nothing contained in this Agreement shall affect the right of the Executive to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan constituting a part of the Bank's existing or future compensation structure.


F. Headings:

Headings and subheadings in this Agreement are inserted for reference and convenience only and shall not be deemed a part of this Agreement.

G. Applicable Law:

The validity and interpretation of this Agreement shall be governed by the laws of the State of Georgia.

VII. ERISA PROVISION

A. Named Fiduciary and Plan Administrator:

The "Named Fiduciary and Plan Administrator" of this plan shall be Quitman Federal Savings & Loan Association until its removal by the Board. As Named Fiduciary and Administrator, the Bank shall be responsible for the management, control and administration of the Salary Continuation Agreement as established herein. The Named Fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

B. Claims Procedure and Arbitration:

In the event a dispute arises over benefits under this Agreement and benefits are not paid to the Executive (or to his beneficiary in the case of the Executive's death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Plan Administrator named above within ninety (90) days from the date payments are refused. The Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within ninety (90) days of receipt of such claim their specific reasons for such denial, reference to the provisions of this Agreement upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Plan Administrator fails to take any action within the aforesaid ninety-day period.

If claimants desire a second review they shall notify the Plan Administrator in writing within ninety (90) days of the first claim denial. Claimants may review this Agreement or any documents relating thereto and submit any written issues and comments they may feel appropriate. In its sole discretion, the Plan Administrator shall then review the second claim and provide a written decision within ninety (90) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of this Agreement upon which the decision is based.


If claimants continue to dispute the benefit denial based upon completed performance of this Agreement or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to a Board of Arbitration for final arbitration. Said Board shall consist of one member selected by the claimant, one member selected by the Bank, and the third member selected by the first two members. The Board shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such Board with respect to any controversy properly submitted to it for determination.

Where a dispute arises as to the Bank's discharge of the Executive "for cause," such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement and executed the original thereof on the 15th day of December, 1996, and that, upon execution, each has received a conforming copy.

QUITMAN FEDERAL SAVINGS & LOAN ASSOCIATION

                                       By:
-------------------------------            -------------------------------------
Witness                                                   Title


                                       By:
-------------------------------            -------------------------------------
Witness                                    Brenda C. Renfroe


LIFE INSURANCE

ENDORSEMENT METHOD SPLIT DOLLAR PLAN

AGREEMENT

Insurer:                             The Guardian Life Insurance Company

Policy Number:                       3644016

Bank:                                Quitman Federal Savings & Loan Association

Insured:                             Brenda C. Renfroe

Relationship of Insured to Bank:     Director

The respective rights and duties of the Bank and the Insured in the subject policy shall be as defined in the following:

I. DEFINITIONS

Refer to the policy contract for the definition of all terms in this Agreement.

II. POLICY TITLE AND OWNERSHIP

Title and ownership shall reside in the Bank for its use and for the use of the Insured all in accordance with this Agreement. The Bank alone may, to the extent of its interest, exercise the right to borrow or withdraw on the policy cash values. Where the Bank and the Insured (or assignee, with the consent of the Insured) mutually agree to exercise the right to increase the coverage under the subject split dollar policy, then, in such event, the rights, duties and benefits of the parties to such increased coverage shall continue to be subject to the terms of this Agreement.

III. BENEFICIARY DESIGNATION RIGHTS

The Insured (or assignee) shall have the right and power to designate a beneficiary or beneficiaries to receive his share of the proceeds payable upon the death of the Insured, and to elect and change a payment option for such beneficiary, subject to any right or interest the Bank may have in such proceeds, as provided in this Agreement.


IV. PREMIUM PAYMENT METHOD

The Bank shall pay an amount equal to the planned premiums and any other premium payments that might become necessary to keep the policy in force.

V. TAXABLE BENEFIT

Annually the Insured will receive a taxable benefit equal to the assumed cost of insurance as required by the Internal Revenue Service. The Bank (or its administrator) will report to the Employee the amount of imputed income received each year on Form W-2 or its equivalent.

VI. DIVISION OF DEATH PROCEEDS

Subject to Paragraph VII herein, the division of the death proceeds of the policy is as follows:

A. The Insured's beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to an amount equal to eighty percent (80%) of the net at risk insurance portion of the proceeds. The net at risk insurance portion is the total proceeds less the cash value of the policy.

B. The Bank shall be entitled to the remainder of such proceeds.

C. The Bank and the Insured (or assignees) shall share in any interest due on the death proceeds on a pro rata basis as the proceeds due each respectively bears to the total proceeds, excluding any such interest.

VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY

The Bank shall at all times be entitled to an amount equal to the policy's cash value, as that term is defined in the policy contract, less any policy loans and unpaid interest or cash withdrawals previously incurred by the Bank and any applicable surrender charges. Such cash value shall be determined as of the date of surrender or death as the case may be.

VIII. PREMIUM WAIVER

If the policy contains a premium waiver provision, such waived amounts shall be considered for all purposes of this Agreement as having been paid by the Bank.


IX. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS

In the event the policy involves an endowment or annuity element, the Bank's right and interest in any endowment proceeds or annuity benefits, on expiration of the deferment period, shall be determined under the provisions of this Agreement by regarding such endowment proceeds or the commuted value of such annuity benefits as the policy's cash value. Such endowment proceeds or annuity benefits shall be considered to be like death proceeds for the purposes of division under this Agreement.

X. TERMINATION OF AGREEMENT

This Agreement shall terminate at the option of the Bank following thirty (30) days written notice to the Insured upon the happening of any one of the following:

1. The Insured shall be in violation of the terms and conditions of that certain Executive Indexed Salary Continuation Plan Agreement dated the 15th of December, 1996, or

2. The Insured shall be discharged from service with the Bank for cause. The term "for cause" shall mean gross negligence or gross neglect or the commission of a felony or gross-misdemeanor involving moral turpitude, fraud, dishonesty or willful violation of any law that results in any adverse effect on the Bank.

Upon such termination, the Insured (or assignee) shall have a ninety
(90) day option to receive from the Bank an absolute assignment of the policy in consideration of a cash payment to the Bank, whereupon this Agreement shall terminate. Such cash payment shall be the greater of:

1. The Bank's share of the cash value of the policy on the date of such assignment, as defined in this Agreement.

2. The amount of the premiums which have been paid by the Bank prior to the date of such assignment.

Should the Insured (or assignee) fail to exercise this option within the prescribed ninety (90) day period, the Insured (or assignee) agrees that all of his rights, interest and claims in the policy shall terminate as of the date of the termination of this Agreement.

Except as provided above, this Agreement shall terminate upon distribution of the death benefit proceeds in accordance with Paragraph VI above.


XI. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS

The Insured may not, without the written consent of the Bank, assign to any individual, trust or other organization, any right, title or interest in the subject policy nor any rights, options, privileges or duties created under this Agreement.

XII. AGREEMENT BINDING UPON THE PARTIES

This Agreement shall bind the Insured and the Bank, their heirs, successors, personal representatives and assigns.

XIII. NAMED FIDUCIARY AND PLAN ADMINISTRATOR

Quitman Federal Savings & Loan Association is hereby designated the "Named Fiduciary" until resignation or removal by the board of directors. As Named Fiduciary, the bank shall be responsible for the management, control, and administration of this Split Dollar Plan as established herein. The Named Fiduciary may allocate to others certain aspects of the management and operation responsibilities of the plan, including the employment of advisors and the delegation of any ministerial duties to qualified individuals.

XIV. FUNDING POLICY

The funding policy for this Split Dollar Plan shall be to maintain the subject policy in force by paying, when due, all premiums required.

XV. CLAIM PROCEDURES FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN

Claim forms or claim information as to the subject policy can be obtained by contacting The Benefit Marketing Group, Inc. (770-952-1529). When the Named Fiduciary has a claim which may be covered under the provisions described in the insurance policy, he should contact the office named above, and they will either complete a claim form and forward it to an authorized representative of the Insurer or advise the named Fiduciary what further requirements are necessary. The Insurer will evaluate and make a decision as to payment. If the claim is payable, a benefit check will be issued to the Named Fiduciary.

In the event that a claim is not eligible under the policy, the Insurer will notify the Named Fiduciary of the denial pursuant to the requirements under the terms of the policy. If the Named Fiduciary is dissatisfied with the denial of the claim and wishes to contest such claim denial, he should contact the office named above and they will assist in making inquiry to the Insurer. All objections to the Insurer's actions should be in writing and submitted to the office named above for transmittal to the Insurer.


XVI. GENDER

Whenever in this Agreement words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply.

XVII. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

The Insurer shall not be deemed a party to this Agreement, but will respect the rights of the parties as herein developed upon receiving an executed copy of this Agreement. Payment or other performance in accordance with the policy provisions shall fully discharge the Insurer for any and all liability.

Executed at Quitman, Georgia this 15th day of December, 1996.

QUITMAN FEDERAL SAVINGS & LOAN ASSOCIATION

                                       By:
-------------------------------            -------------------------------------
Witness                                            Title


                                       By:
-------------------------------            -------------------------------------
Witness                                    Brenda C. Renfroe


BENEFICIARY DESIGNATION FORM

PRIMARY DESIGNATION:

         Name                                       Relationship
         ----                                       ------------


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


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


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

CONTINGENT DESIGNATION:

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


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


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


Brenda C. Renfroe Date

EXHIBIT 16


[SIMMONS & SIMMONS P.C. LETTERHEAD]

January 26, 1998

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Pursuant to 17 C.F.R. 228.304(a)(3) ("Item 304"), we have reviewed the language under heading "CHANGE IN AUDITOR" in the prospectus included as part of the Registration Statement on Form SB-2 to be filed with the Securities and Exchange Commission by Quitman Bancorp, Inc., the proposed parent holding company for Quitman Federal Savings Bank, the successor to Quitman Federal Savings and Loan Association. We do not disagree with the statements contained therein concerning our firm. We understand that this letter will also be filed as an exhibit to an application for conversion on Form AC filed by Quitman Federal Savings Bank with the Office of Thrift Supervision.

Sincerely,

SIMMONS & SIMMONS P.C.

/s/Edwin A. Simmons
Edwin A. Simmons


EXHIBIT 23.2


Stewart, Fowler, & Stalvey, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS

3208 Wildwood Plantation Drive - Post Office Box 1887 - Valdosta, GA 31603-1887 - (912) 244-1559-Fax(912) 245-7369

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the reference to our firm under the caption "Experts" included in the Registration Statement on Form SB-2 filed by Quitman Bancorp, Inc. and to the use therein of our report dated October 30, 1997, concerning the financial statements of Quitman Federal Savings and Loan Association.

/s/Stewart, Fowler & Stalvey, P.C.
Stewart, Fowler & Stalvey, P.C.


Valdosta, Georgia
January 27, 1998

Member of AICPA Division for CPA Firms - SEC and Private Companies Practice Sections

Curtis G. Fowler, C.P.A., C.F.P., P.F.S.  Richard A. Stalvey, C.P.A.   James E. Folsom, C.P.A.       Carlton W. Holley, C.P.A.
  C. Wayne Rambo, C.P.A.                    Scott Y. Haynes, C.P.A.    Kenneth E. Hughes, C.P.A.      Jeanne R. Kelley, C.P.A.
  Josie Miller, C.P.A.                        Sue D. Mink, C.P.A.  Susanne S. DeMersseman, C.P.A. Richard M. Stewart, C.P.A. Retired


Table of Contents Quitman Federal Savings and Loan Association Quitman, Georgia

INTRODUCTION                                                                                                      1
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1.  OVERVIEW AND FINANCIAL ANALYSIS                                                                               3
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   General Overview                                                                                               3
   History                                                                                                        4
   Strategic Direction                                                                                            4
   Balance Sheet Trends                                                                                           7
   Loan Portfolio                                                                                                10
   Securities                                                                                                    13
   Investments and Mortgage-Backed Securities                                                                    14
   Asset Quality                                                                                                 15
   Funding Composition                                                                                           17
   Asset/Liability Management                                                                                    19
   Net Worth and Capital                                                                                         20
   Income and Expense Trends                                                                                     21
   Subsidiaries                                                                                                  25
   Legal Proceedings                                                                                             25


2.  MARKET AREA ANALYSIS                                                                                         26
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   Market Area Demographics                                                                                      26
   Market area Deposit Characteristics                                                                           27


3.  COMPARISONS WITH PUBLICLY TRADED THRIFTS                                                                     28
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   Introduction                                                                                                  28
   Selection Screens                                                                                             28
   Selection Criteria                                                                                            30
   Comparable Group Profiles                                                                                     32
   Corporate Data                                                                                                37
   Key financial Data                                                                                            38
   Capital Data                                                                                                  39
   Asset Quality Data                                                                                            40
   Profitability Data                                                                                            41
   Income Statement Data                                                                                         42
   Growth Data                                                                                                   43
   Market Capitalization Data                                                                                    44
   Dividend Data                                                                                                 45
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   Pricing Data                                                                                                  46
   Earnings Data                                                                                                 47


4.  MARKET VALUE DETERMINATION                                                                                   48
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   Introduction                                                                                                  48
   Balance Sheet Strength                                                                                        49
   Asset Quality                                                                                                 50
   Earnings Quality, Predictability and Growth                                                                   51
   Market area                                                                                                   55
   Management                                                                                                    56
   Dividends                                                                                                     57
   Liquidity of the Issue                                                                                        58
   Subscription Interest                                                                                         59
   Recent Regulatory matters                                                                                     60
   Market for Seasoned Thrift Stocks                                                                             61
   Acquisition  Market                                                                                           65
   Adjustments to value                                                                                          70
   Valuation Approach                                                                                            71
   Valuation Conclusion                                                                                          74


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List of Figures Quitman Federal Savings and Loan Association Quitman, Georgia

FIGURE 1 - CURRENT BRANCH LIST                                                                                    3
FIGURE 2 - ASSET AND RETAINED EARNINGS CHART                                                                      7
FIGURE 3 - AVERAGE YIELDS AND COSTS                                                                               8
FIGURE 4 - KEY BALANCE SHEET DATA                                                                                 9
FIGURE 5 - KEY RATIOS                                                                                             9
FIGURE 6 - LOAN MIX AS OF SEPTEMBER 30, 1997 CHART                                                               10
FIGURE 7 - NET LOANS RECEIVABLE CHART                                                                            11
FIGURE 8 - LOAN MIX                                                                                              12
FIGURE 9 - SECURITIES CHART                                                                                      13
FIGURE 10 - INVESTMENT MIX                                                                                       14
FIGURE 11 - INVESTMENT PORTFOLIO MATURITY                                                                        14
FIGURE 12 - NON-PERFORMING ASSETS CHART                                                                          15
FIGURE 13 - NON-PERFORMING LOANS                                                                                 15
FIGURE 14 - ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES CHART                                                   16
FIGURE 15 - DEPOSIT MIX                                                                                          17
FIGURE 16 - DEPOSIT AND BORROWING TREND CHART                                                                    18
FIGURE 17 - NET PORTFOLIO VALUE                                                                                  19
FIGURE 18 - CAPITAL ANALYSIS                                                                                     20
FIGURE 19 - NET INCOME CHART                                                                                     21
FIGURE 20 - SPREAD AND MARGIN CHART                                                                              22
FIGURE 21 - INCOME STATEMENT TRENDS                                                                              23
FIGURE 22 - PROFITABILITY TREND CHART                                                                            24
FIGURE 25 - POPULATION DEMOGRAPHICS                                                                              26
FIGURE 26 - DEPOSIT TRENDS AND MARKET SHARE TABLES                                                               27
FIGURE 28 - KEY FINANCIAL INDICATORS                                                                             35
FIGURE 29 - COMPARABLE CORPORATE DATA                                                                            37
FIGURE 30 - COMPARABLE KEY FINANCIAL DATA                                                                        38
FIGURE 31 - COMPARABLE CAPITAL DATA                                                                              39
FIGURE 32 - COMPARABLE ASSET QUALITY DATA                                                                        40
FIGURE 33 - COMPARABLE PROFITABILITY DATA                                                                        41
FIGURE 34 - COMPARABLE INCOME STATEMENT DATA                                                                     42
FIGURE 35 - COMPARABLE GROWTH DATA                                                                               43
FIGURE 36 - COMPARABLE MARKET CAPITALIZATION DATA                                                                44
FIGURE 37 - COMPARABLE DIVIDEND DATA                                                                             45
FIGURE 38 - COMPARABLE PRICING DATA                                                                              46
FIGURE 39 - COMPARABLE EARNINGS DATA                                                                             47
FIGURE 40 - ASSET QUALITY TABLE                                                                                  50
FIGURE 41 - NET INCOME CHART                                                                                     52
FIGURE 42 - SPREAD AND MARGIN CHART                                                                              53
FIGURE 43 - SNL THRIFT INDEX CHART                                                                               61
FIGURE 44 - HISTORICAL SNL INDEX                                                                                 62
FIGURE 45 - EQUITY INDICES                                                                                       63
FIGURE 46 - HISTORICAL RATES                                                                                     64
FIGURE 47 - DEALS FOR LAST TEN QUARTERS                                                                          65
FIGURE 48 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO BOOK                                                  66
FIGURE 49 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO TANGIBLE BOOK                                         67
FIGURE 50 - THRIFT ACQUISITION MULTIPLES, PRICE TO EARNINGS                                                      67
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FIGURE 51 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO ASSETS                                                68
FIGURE 52 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO DEPOSITS                                              68
FIGURE 53 - DEAL MULTIPLES                                                                                       69
FIGURE 54 - ACQUISITION TABLE                                                                                    69
FIGURE 55 - VALUE RANGE OFFERING DATA                                                                            72
FIGURE 56 - COMPARABLE PRICING MULTIPLES TO THE BANK'S PROFORMA MIDPOINT                                         73
FIGURE 57 - COMPARABLE PRICING MULTIPLES TO THE BANK'S PROFORMA SUPERMAX                                         73
FIGURE 58 - RECENT STANDARD CONVERSION PROFORMA MULTIPLES TO THE BANK'S PROFORMA MIDPOINT                        73
FIGURE 59 - RECENT STANDARD CONVERSION PROFORMA MULTIPLES TO THE BANK'S PROFORMA SUPERMAX                        73
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List of Exhibits Quitman Federal Savings and Loan Association Quitman, Georgia

Exhibit

1 Consolidated Statements of Financial Condition 2 Consolidated Statements of Income 3 Consolidated Statements of Changes in Net Worth 4 Consolidated Statements of Cash Flows 5 Selected Data on All Public Thrifts 6 Industry Multiples
7 Standard Conversions 1996 to Date - Selected Market Data 8 Appraisal Proforma September 30, 1997 - 12 Months Data 9 Profile of FinPro, Inc.


FinPro

Conversion Valuation Appraisal Report Page: 1 - 1

Introduction

This report represents FinPro, Inc.'s ("FinPro") independent appraisal of the estimated pro-forma market value of the common stock ( the "Common Stock") of Quitman Federal Savings and Loan Association (the "Bank" or "Quitman") in connection with the Plan of Conversion ("Conversion") of Quitman from a federally chartered mutual savings bank to a federally chartered stock savings bank. Pursuant to the Plan of Conversion, (i) the Bank will convert from a federally chartered savings bank organized in mutual form to a federally chartered savings bank organized in the stock form, (ii) the Bank will offer and sell shares of its common stock in a subscription and community offering.

It is our understanding that the Bank will offer its stock in a subscription and community offering to the Bank's Eligible Account Holders, to Supplemental Eligible Account Holders of the Bank, to Other Participants, to the board members, officers and employees of the Bank, and to the community. This appraisal has been prepared in accordance with Regulation 563b.7 and with the "Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization" of the Office of Thrift Supervision ("OTS") which have been adopted in practice by the Federal Deposit Insurance Corporation ("FDIC"), including the most recent revisions as of October 21, 1994, and applicable regulatory interpretations thereof.

In the course of preparing our report, we reviewed the financial statements of the Bank's operations for the years ended September 30, 1997 and September 30, 1996. We also reviewed the Bank's Application for Approval of Conversion including the Proxy Statement and the Company's Form S-1 registration statement as filed with the Securities and Exchange Commission ("SEC"). We have conducted due diligence analysis of the Bank and the Company (hereinafter, collectively referred to as "the Bank") and held due diligence related discussions with the Bank's management and board, Stewart, Fowler & Stalvey (the Bank's independent audit firm), Trident Securities, Inc. (the Bank's underwriter), and Malizia, Spidi, Sloane & Fisch, P.C. (the Bank's special counsel). The valuation parameters set forth in the appraisal were predicated on these discussions but all conclusions related to the valuation were reached and made independent of such discussions.


Conversion Valuation Appraisal Report Page: 1 - 2

Where appropriate, we considered information based upon other publicly available sources, which we believe to be reliable; however, we cannot guarantee the accuracy or completeness of such information. We visited the Bank's primary market area and reviewed the market area economic condition. We also reviewed the competitive environment in which the Bank operates and its relative strengths and weaknesses. We compared the Bank's performance with selected publicly traded thrift institutions. We reviewed conditions in the securities markets in general and in the market for savings institutions in particular. Our analysis included a review of the estimated effects of the Conversion on the Bank, operation and expected financial performance as they related to the Bank's estimated pro-forma value.

In preparing our valuation, we relied upon and assumed the accuracy and completeness of financial and other information provided to us by the Bank and its independent accountants. We did not independently verify the financial statements and other information provided by the Bank and its independent accountants, nor did we independently value any of the Bank's assets or liabilities. This estimated valuation considers the Bank only as a going concern and should not be considered as an indication of its liquidation value.

Our valuation is not intended, and must not be construed, to be a recommendation of any kind as the advisability of purchasing shares of Common Stock in the Conversion. Moreover, because such valuation is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of Common Stock in the Conversion will thereafter be able to sell such shares at prices related to the foregoing valuation of the pro-forma market value thereof. FinPro is not a seller of securities within the meaning of any federal or state securities laws and any report prepared by FinPro shall not be used as an offer or solicitation with respect to the purchase or sale of any securities.

The estimated valuation herein will be updated as appropriate. These updates will consider, among other factors, any developments or changes in the Bank financial condition, operating performance, management policies and procedures and current conditions in the securities market for thrift institution common stock. Should any such developments or changes, in our opinion, be material to the estimated pro-forma market value of the Bank, appropriate adjustments to the estimated pro-forma market value will be made. The reasons for any such adjustments will be explained at that time.


Conversion Valuation Appraisal Report                               Page:  1 - 3
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1.  Overview and Financial Analysis

-------------------------------------------------
|                                               |
|                  General Overview             |
|                                               |
-------------------------------------------------

The Bank after the Conversion, will be a federally chartered stock savings bank. As of September 30, 1997, the Bank had $39.2 million in total assets, $34.5 million in deposits, $33.3 million in net loans and $3.0 million in equity.

The following table shows the Bank's branch network as of September 30, 1997.

Figure 1 - Current Branch List

Branch Office Town County State

100 West Screven Street Quitman Brooks Georgia


Conversion Valuation Appraisal Report                               Page:  1 - 4
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-------------------------------------------------
|                                               |
|                      History                  |
|                                               |
-------------------------------------------------

o Quitman Federal Savings & Loan was originally chartered in 1936.

o The office was originally located in the law offices of Attorney J.B. Baum.

o Moved offices into downstairs offices of Hotel Quitman.

o Moved to present site at 100 West Screven St. in 1964.

o Celebrated 60th Anniversary in 1996.

-------------------------------------------------
|                                               |
|                Strategic Direction            |
|                                               |
-------------------------------------------------

The Board of Directors of Quitman Federal Savings and Loan Association approved a plan ("the Plan") to convert from a federally chartered mutual savings bank into a federally chartered stock savings institution subject to approval by the Association's members. In connection with the plan, which includes the formation of a Holding Company, all of the capital stock of the Bank will be acquired by the Holding Company. The Holding Company will issue shares to depositors of the Bank, the community and the public at large. It is anticipated, for planning purposes that the initial public offering will raise gross proceeds of $5.0 million, based upon preliminary appraisal data for the midpoint of the value range. Conversion costs are estimated to be approximately $341 thousand at the midpoint.

The Board of Directors of the Bank believes that the savings bank to stock conversion is in the best interests of all parties associated with the bank. The resultant entity will:

o be financially stronger, primarily as a result of additional capital;

o be better positioned to compete in the markets the Bank serves;

o facilitate possible acquisition opportunities and possible diversification;

o provide access to capital markets;

o allow for a wider array of products and services; and,


Conversion Valuation Appraisal Report Page: 1 - 5

o provide financial capacity to buy or build critical mass in new geographic markets or in the markets it currently serves.

The mutual to stock conversion also provides the Bank and its Holding Company the corporate flexibility to raise additional capital and further diversify into bank related activities when such opportunities or needs arise. The Bank can utilize the Holding Company structure to:

o form new subsidiaries;

o purchase branches, acquire or merge with other banks, thrifts or financial services related company; and,

o repurchase its own stock without adverse tax consequences.

Although there are no current arrangements, understandings or agreements regarding any such opportunities, the Holding Company will be in a position after the conversion (subject to regulatory limitations and the Holding Company's financial condition) to take advantage of any such opportunity that may arise.

The following is a quick synopsis of the highlights of the planned conversion:

1. Convert to stock with anticipated trading to begin in February 1998;

2. Raise approximately $5.0 million in gross proceeds ($4.7 million in net proceeds) with 50% of the proceeds being put into the Bank and the other 50% left at the Holding Company;

3. Implement a new ESOP plan by purchasing 8%, or 40,000 shares;

4. Implement a new MRP plan by purchasing 4%, or 20,000 shares (in the aftermarket);

5. The Bank will repurchase stock at the rate of 0% for the first year, 5% for the second year, 5% for the third year, 10% for the fourth year, and 10% for the fifth year. The Bank reserves the right to apply for a waiver of the regulatory limits if certain economic conditions exist, such as closing the subscription at the maximum or supermaximum;

6. Based on regulatory factors and other considerations, consider the issuance of cash dividends based upon the financial performance of the Bank. The Plan, as currently drafted, includes annual cash dividends of $0.20 per share beginning twelve months after the conversion, growing to $0.31 per share in the last year, although the Bank reserves the right to not issue cash dividends at any time following the reorganization.


Conversion Valuation Appraisal Report Page: 1 - 6

7. Management recognizes that its fiduciary responsibility will require controlled, profitable growth to maintain the earnings of the Bank and appropriate capital levels. As such, if certain economic factors warrant, the Bank will explore the possibility of applying for a nontaxable capital distribution no sooner than eighteen months after the conversion. The economic conditions may include, but are not limited to, a possible oversubscription of the offering, limited deposit growth, or a change in the interest rate environment.

8. The Bank will undertake an analysis to determine the feasibility of forming realty and construction subsidiaries for the purpose of developing additional housing in the Quitman area.

The net proceeds will also be utilized to purchase or lease additional branch facilities outside of the Quitman and to leverage, or grow the Bank in total assets over the five year planning period. The Bank will constantly monitor the economic, business and market benefits of share repurchases and reserves the right to apply for a waiver to repurchase at an even quicker rate should economic, business or market conditions warrant same. One example of a condition that could cause accelerated buybacks is if the Bank raised proceeds at the maximum or supermaximum, generating more capital than it could safely and soundly deploy.

The Business Plan calls for the following major thrusts over the five-year planning horizon:

1. Converting to a stock institution to raise capital to fund growth opportunities and strengthen the capital position of the Bank;

2. Planned core business growth of the Bank;

3. Open one de-novo branch during October 1999;

4. Explore the possible relocation of the main office in 1998 to an improved location, offering additional drive-up and ATM services, or alternately, refurbish the existing facility;

5. Change in the loan mix toward adjustable mortgages and home equity products;

6. Change of the funding mix toward core deposits and away from time deposits.


Conversion Valuation Appraisal Report                               Page:  1 - 7
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-------------------------------------------------
|                                               |
|                Balance Sheet Trends           |
|                                               |
-------------------------------------------------

Since September 30, 1996, the Bank's balance sheet has grown $3.0 million or 8.35%. Retained earnings have increased $292 thousand from $2.7 million at September 30, 1996 to $3.0 million at September 30, 1997.

Figure 2 - Asset and Retained Earnings Chart

$ in thousands

[GRAPHIC OMITTED - Chart Information follows]

                    Sep-96         Sep-97
                    ------         ------

Assets              $36,173        $39,192
Retained Earnings   $ 2,667        $ 2,959

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 8

Both the interest rate spread and margin have increased between September 30, 1996 and September 30, 1997. The increase is due to both an increased yield on asset and a decreased cost of funds.

Figure 3 - Average Yields and Costs

-------------------------------------------------------------------------------------------------------------------------------
                                             At September 30,                     Year ended September 30,
                                          -------------------------------------------------------------------------------------
                                                     1997       |            1997            |              1996
                                          -------------------------------------------------------------------------------------
                                                       Weighted |                     Average|                         Average
                                               Actual  Average  | Average             Yield/ | Average                  Yield/
                                              Balance   Rate    | Balance  Interest    Cost  | Balance    Interest      Cost
                                          -------------------------------------------------------------------------------------
                                                                                    (Dollars in Thousands)
                                          -------------------------------------------------------------------------------------
Assets:
Interest-earning assets:
  Loans receivable                           $ 33,326     9.13%  $ 32,065   $ 2,942     9.18%  $ 29,351    $ 2,654      9.04%
  Mortgage-backed securities                      542     5.14%       140         8     5.71%         -          -      0.00%
  Investment securities                         3,309     5.94%     3,617       226     6.25%     3,732        216      5.79%
  Other earning assets                            548     5.26%       345        22     6.38%       671         37      5.51%
                                               ------     ----     ------     -----     ----     ------      -----      ----
    Total interest-earning assets              37,825     8.74%    36,167     3,198     8.84%    33,754      2,907      8.61%
Non-interest earning assets                     1,367               1,515                           897
                                                -----               -----     -----              ------      -----
  Total assets                               $ 39,192            $ 37,682   $ 3,198            $ 34,651    $ 2,907
                                             ========            ========   =======            ========    =======

Liabilities and Retained Earnings:
Interest-bearing liabilities:
 Deposits:
  NOW accounts                                  1,439     3.45%     1,488        49     3.29%     1,452         47      3.24%
  Savings accounts                              1,945     4.25%     2,185        82     3.75%     2,103         78      3.73%
  Money market accounts                             -     0.00%         -         -     0.00%         -          -      0.00%
  Certificates of deposit                      31,087     6.06%    29,427     1,782     6.06%    27,737      1,703      6.14%
  Other liabilities                             1,300     6.55%     1,175        65     5.53%       304         15      4.93%
                                               ------     ----     ------     -----     ----     ------      -----      ----
    Total interest-bearing liabilities         35,771     5.87%    34,275     1,978     5.77%    31,596      1,843      5.83%
Non-interest bearing liabilities                  463                 519                           428
                                               ------              ------     -----              ------
  Total liabilities                            36,234              34,794     1,978              32,024      1,843
                                               ======              ======     =====              ======      =====

Retained earnings                               2,958               2,888                         2,627
                                               ------              ------                        ------
  Total liabilities and retained earnings    $ 39,192            $ 37,682                      $ 34,651
                                             ========            ========                      ========

Net interest income                                                         $ 1,220                        $ 1,064
                                                                            =======                        =======
Interest rate spread                                      2.87%                         3.37%                           2.78%
                                                          ====                          ====                            ====
Net Yield on interest-earning assets                      3.18%                         3.31%                           3.15%
                                                          ====                          ====                            ====
Interest earning assets to interest
  bearing liabilities                                   105.74%                       105.52%                         106.83%
                                                        ======                        ======                          ======

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

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 9

The following tables set forth certain information concerning the financial position of the Bank along with selected ratios at the dates indicated.

Figure 4 - Key Balance Sheet Data

At September 30,

1997 1996
Selected Consolidated Financial Data: (unaudited) Total amount of:
  Assets                                  $ 39,192     36,173
  Cash and cash equivalents                    657        765
  Loans receivable, net                     33,326     30,805
  Investment securities available-for-sale   3,046      1,781
  Investment securities held-to-maturity       805      1,663
  Savings deposits                          34,471     31,729
  Other borrowings                           1,300      1,200
  Total equity                               2,959      2,667

Number of:
  Full service offices                           1          1
--------------------------------------------------------------

Source: Offering Prospectus

                             Figure 5 - Key Ratios

--------------------------------------------------------------------------------
                                                              Year Ended
                                                             September 30,
                                                        ---------------------
                                                             1997       1996
                                                        ---------------------
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on average assets                                    0.70%      0.30%
Return on average equity                                    9.34%      3.93%
Ratio of average equity to average assets                   7.46%      7.58%
Retained earnings to total assets                           7.55%      7.38%
Net interest spread                                         3.07%      2.78%
Net interest margin                                         3.37%      3.15%
Average interest-earning assets to average
  interest-bearing liabilities                            105.52%    106.83%
Net interest income after provision for loan loss, to
  total noninterest expense                               145.07%    111.35%

Asset Quality Ratios:
Non-performing loans as a percent of total assets           1.22%      2.41%
Non-performing assets as a percent of total asset           1.38%      2.41%
Non-performing loans as a percent of total loans            1.43%      2.83%
Allowance for loan losses as a percent of loans             1.03%      0.68%
Allowance for loan losses to non-performing loan           72.54%     24.11%

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

Source:  Offering Prospectus

Conversion Valuation Appraisal Report                              Page:  1 - 10
================================================================================


-------------------------------------------------
                    Loan Portfolio
-------------------------------------------------

The Bank originates primarily one-to-four family loans, although the Bank has diversified the portfolio on a limited basis over the last five years.

Figure 6 - Loan Mix as of September 30, 1997 Chart

[GRAPHIC OMITTED - Plotted Pie Follows]

Consumer             2.50%
Share loans          1.35%
Construction        10.52%
FHLMC pools          0.01%
Non residential     15.52%
Multi-family         2.01%
Residential         68.09%

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 11

The Bank increased its lending portfolio by $2.5 million, from $30.8 million at September 30, 1996, to $33.3 million at September 30, 1997. The Bank's net loan to asset ratio was 85.03% at September 30, 1997.

Figure 7 - Net Loans Receivable Chart

[GRAPHIC OMITTED - Plotted Chart follows]
$ in thousands

                              Sep-96         Sep-97
                              ------         ------

Loans receivable, net         $30,805        $33,326
Net loans to assets              85.2%         85.03%

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 12

Over the two year period presented below, the Bank's loan mix has shifted modestly away from one-to-four family real estate loans and toward construction and consumer loans.

Figure 8 - Loan Mix

------------------------------------------------------------------------------------------------------
                                                                         At September 30,
                                              --------------------------------------------------------
                                                              1997             |         1996
                                              --------------------------------------------------------
                                                      Amount         Percent   |  Amount      Percent
                                              --------------------------------------------------------
                                                                    (Dollars in Thousands)
------------------------------------------------------------------------------------------------------
Real estate loans:
  Conventional 1-4 family loans                     $23,656           68.09%    $23,717        70.43%
  Multi-family                                          699            2.01%        607         1.80%
  Commercial  real estate                             5,394           15.52%      5,083        15.09%
  Construction and land                               3,655           10.52%      3,142         9.33%
  FHLMC pools                                             4            0.01%          6         0.02%
Share loans                                             470            1.35%        476         1.41%
Consumer                                                867            2.50%        645         1.92%
                                                     ------          ------      ------       ------
Total loans receivable                               34,745          100.00%     33,675       100.00%
                                                     ------          ------      ------       ------

Less:
Loans in process                                      1,023                       2,609
Allowance for loan losses                               346                         210
Deferred loan origination fees and costs n losses        50                          52
                                                     ------                      ------
Loans receivable, net                               $33,326                     $30,805
                                                    =======                     =======

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

Source: Offering Prospectus


Conversion Valuation Appraisal Report                              Page:  1 - 13
================================================================================

-------------------------------------------------
|                                               |
|                     Securities                |
|                                               |
-------------------------------------------------

The Bank's security portfolio has grown $407 thousand since September 30, 1996.

Figure 9 - Securities Chart

[GRAPHIC OMITTED - Chart Plots follow]

                                Sep-96             Sep-97
                                ------             ------
            AFS securities      $1,781             $3,046
            HTM securities       1,663                805
                                 -----              -----
                 Total          $3,444             $3,851
                                ======             ======

Source:  Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 14

-------------------------------------------------
|                                               |
|     Investments and Mortgage-                 |
|         Backed Securities                     |
|                                               |
-------------------------------------------------

The Bank has shifted its investment portfolio away from agencies and has begun to purchase U.S. Government securities and mortgage-backed securities.

                           Figure 10 - Investment Mix

--------------------------------------------------------------------------------
                                                             September 30,
                                                --------------------------------
                                                        1997     |      1996
                                                --------------------------------
                                                         (Dollars in Thousands)
--------------------------------------------------------------------------------

U.S. Government obligations                           $   904          $     -
Agency securities                                       2,405            3,444
                                                --------------------------------
       Total investment securities                      3,309            3,444

Interest-bearing deposits                                 548              679
FHLB stock                                                228              219
Mortgage-backed securities                                542                -
Mortgage-backed securities held-for-sale                    -                -
                                                --------------------------------
      Total investments                               $ 4,627          $ 4,342

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

Source: Prospectus Tables

Figure 11 - Investment Portfolio Maturity

------------------------------------------------------------------------------------------------------------------------------------
                                                                  At September 30, 1997
                   -----------------------------------------------------------------------------------------------------------------
                                                                        Due in
                   -----------------------------------------------------------------------------------------------------------------
                     One Year or Less   Between One and Five Years Between Five and Ten Years  More than Ten Years        Total
                   -------------------  -------------------------- --------------------------  -------------------        -----

                    Carrying   Average     Carrying    Average       Carrying      Average     Carrying   Average   Carrying Average
                     Value      Yield       Value       Yield         Value         Yield       Value      Yield      Value   Yield
                   ----------------------------------------------------------------------------------------------------------------
                                                                      (in Thousands)
-----------------------------------------------------------------------------------------------------------------------------------
U.S. Government
  obligations        $ 100       4.68%       $ 904       6.27%       $     -        0.00%        $ -       0.00%   $ 1,004    6.42%
Agency securities        -          0%       2,305       6.25%             -        0.00%          -       0.00%     2,305    6.25%
                     -----       ----      -------       ----         ------        ----       -----       ----    -------    ----
  Total investment
    securities         100       4.68%       3,209       6.26%             -        0.00%          -       0.00%     3,309    6.30%

Interest-bearing
  deposits             548       5.69%           -       0.00%             -        0.00%          -       0.00%       548    5.69%
FHLB stock             228       7.25%           -       0.00%             -        0.00%          -       0.00%       228    7.25%
Mortgage-backed
  securities             -       0.00%          -        0.00%             -        0.00%        542       5.13%       542    5.13%
                     -----       ----      -------       ----         ------        ----       -----       ----    -------    ----
  Total investments  $ 876       5.98%     $ 3,209       6.26%       $     -        0.00%      $ 542       5.13%   $ 4,627    6.07%

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

Source: Prospectus Tables


Conversion Valuation Appraisal Report                              Page:  1 - 15
================================================================================

-------------------------------------------------
|                                               |
|                   Asset Quality               |
|                                               |
-------------------------------------------------

Non-performing loans have decreased from $871 thousand at September 30, 1996 to $477 thousand at September 30, 1997. As a percentage of assets, total non-performing assets have decreased from 2.41% at September 30, 1996 to 1.38% at September 30, 1997.

Figure 12 - Non-Performing Assets Chart

[GRAPHIC OMITTED - Chart Plots follow]
$ in thousands

                              Sep-96         Sep-97
                              ------         ------

Non-Performing Loans          $871           $477
REO                              -             64
NPAs to Pd End Assets         2.41%          1.38%

Source: Offering Prospectus

Figure 13 - Non-Performing Loans

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

                                                                  At September 30, 1997
                                                                     ($ in thousands)
----------------------------------------------------------------- -------------------------------------

Non-performing loans                                                       $477
----------------------------------------------------------------- -------------------------------------

Real estate owned, net                                                      $64
----------------------------------------------------------------- -------------------------------------

       Total non-performing assets                                         $541
----------------------------------------------------------------- -------------------------------------

Non-performing loans as a percentage of total loans                       1.43%
----------------------------------------------------------------- -------------------------------------

Non-performing assets as a percent of total assets                        1.38%
----------------------------------------------------------------- -------------------------------------

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 16

The Bank has grown its allowance for loan and lease losses from $210 thousand at September 30, 1996 to $346 thousand at September 30, 1997. ALLL to non-performing assets was 63.96% as of September 30, 1997.

Figure 14 - Allowance for Possible Loan and Lease Losses Chart

[GRAPHIC OMITTED - Chart Plots follow]

             $ in thousands

                Sep-96              Sep-97
                ------              ------
ALLL            $210                $346
ALLL to NPA    24.11%              63.96%

Source: Offering Prospectus


Conversion Valuation Appraisal Report                              Page:  1 - 17
================================================================================

-------------------------------------------------
|                                               |
|                Funding Composition            |
|                                               |
-------------------------------------------------

The Bank's deposit mix as of September 30, 1997, is presented below. Time deposits comprise 90.17% of the deposit mix.

                             Figure 15 - Deposit Mix

     -------------------------------------------------------------------
                                At September 30, 1997
                                             Balance         Percentage
     Category                             in thousands       of Deposits
     -------------------------------------------------------------------

     NOW accounts                             $ 1,439           4.18%
     Regular Savings accounts                   1,945           5.65%

     Certificates of deposits:
     Term of 1-3 months                             1           0.01%
     Term of 4-6 months                         1,406           4.08%
     Term of 7-12 months                        9,978          28.90%
     Term of 13-24 months                       9,628          27.93%
     Term of 25-36 months                       2,176           6.32%
     Term of 36-48 months                       1,221           3.55%
     Term of 49-120 months                        344           1.00%
     Jumbo certificates                         6,333          18.37%

     Total deposits                          $ 34,471         100.00%
     -------------------------------------------------------------------

Source:  Offering Prospectus

Conversion Valuation Appraisal Report                              Page:  1 - 18
================================================================================

Deposits have grown $2.7 million from $31.7 at September 30, 1996 to $34.5 million at September 30, 1997, or 8.64%. The Bank had $1.3 million in borrowings as of September 30, 1997.

Figure 16 - Deposit and Borrowing Trend Chart

[GRAPHIC OMITTED - Chart Plots follow]
$ in thousands

                                         Sep-96         Sep-97
                                         ------         ------
                    Total Deposits      $31,729        $34,471
                    Borrowed Funds        1,200          1,300

Source:  Offering Prospectus

Conversion Valuation Appraisal Report                              Page:  1 - 19
================================================================================

-------------------------------------------------
|                                               |
|             Asset/Liability Management        |
|                                               |
-------------------------------------------------

The Bank manages its interest rate risk through normal balance sheet activities and does not utilize any hedging techniques. The following chart illustrates the Bank's net portfolio value at June 30, 1997, as calculated by the OTS.

Figure 17 - Net Portfolio Value

[GRAPHIC OMITTED - Chart Plots follow]

Net Portfolio Value
$ in thousands

NPV

       -200              $3,472,000
       at par            $3,301,000
       +200              $3,120,000
Tangible Equity          $2,744
4% of Assets             $1,532

Source: OTS Risk Management Division


Conversion Valuation Appraisal Report                              Page:  1 - 20
================================================================================

-------------------------------------------------
|                                               |
|              Net Worth and Capital            |
|                                               |
-------------------------------------------------

At September 30, 1997, the Bank had capital in excess of the minimum requirements for all three measures.

                          Figure 18 - Capital analysis

-------------------------------------------------------------------------
Regulatory Capital Position
                                                 At        Percent of
                                        September 30,1997  Adj. Assets
-------------------------------------------------------------------------
                                          $ in thousands

GAAP Capital                                     $2,959      7.55%
                                 ========================================

Tangible Capital
Actual capital                                   $2,953      7.54%
Regulatory requirement                             $588      1.50%
                                                  -----      ----
    Excess:                                      $2,365      6.04%
                                 ========================================
Core Capital
Actual capital                                   $2,953      7.54%
Regulatory requirement                           $1,176      3.00%
                                                 ------      ----
    Excess:                                      $1,777      4.54%
                                 ========================================
Risked-Based Capital
Actual capital                                   $3,299      14.25%
Regulatory requirement                           $1,852      8.00%
                                                 ------      ----
    Excess:                                      $1,447      6.25%
                                 ========================================

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

Source:  Offering Prospectus

Conversion Valuation Appraisal Report                              Page:  1 - 21
================================================================================

-------------------------------------------------
|                                               |
|             Income and Expense Trends         |
|                                               |
-------------------------------------------------

The Bank earned $263 thousand for the year ended September 30, 1997. The September 30, 1996 net income is skewed due to the one-time SAIF assessment of $186 thousand.

Figure 19 - Net Income Chart

[GRAPHIC OMITTED - Chart Plots follow]

        $ in thousands

Sep-96              Sep-97
------              ------
$103                $263

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 22

The following chart illustrates the Bank's spread and margin over the past two years.

Figure 20 - Spread and Margin Chart

[GRAPHIC OMITTED - Chart Plots follow]

              Sep-96              Sep-97
              ------              ------

Spread         2.78%               3.07%
Margin         3.15%               3.37%

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 23

A summary of the Bank's income statement is presented below.

Figure 21 - Income Statement Trends

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

                                                         For the Nine Months
                                                         Ended September 30,
                                                    --------------------------
                                                           1997         1996
                                                    --------------------------
                                                           ($ In Thousands)
                                                    --------------------------
 Total interest Income                                   $ 3,198      $ 2,907
 Total interest expense                                    1,978        1,844
                                                          ------      -------
      Net interest income                                  1,220        1,063
 Provision for loan losses                                   136           36
                                                          ------      -------
 Net interest income after provision for loan losses       1,084        1,027
                                                          ------      -------

 Total non-interest income                                    45           49
 Total non-interest expense                                  747          922
                                                          ------      -------
 Income before taxes                                         382          154
                                                          ------      -------
 Income tax provision                                        119           51

 Net income                                               $  263      $   103
                                                          ======      =======
 -----------------------------------------------------------------------------

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 24

The ROA and ROE have increased since September 30, 1996. The September 30, 1996 ratios are artificially skewed due to the $186 thousand one-time SAIF assessment and the September 30, 1997 ratio includes a one time provision of $100 thousand. On a core basis the ROA at September 30, 1997 would be 9.61% and the ROE would be 12.57%

Figure 22 - Profitability Trend chart

[GRAPHIC OMITTED - Chart Plots follow]

                              Sep-96                   Sep-97
                              ------                   ------
                     ROAA        .30%                     .70%
                     ROAE       3.93%                    9.34%

Source:  Offering Prospectus

Conversion Valuation Appraisal Report                              Page:  1 - 25
================================================================================

-------------------------------------------------
|                                               |
|                    Subsidiaries               |
|                                               |
-------------------------------------------------


The Bank currently has no subsidiaries.


-------------------------------------------------
|                                               |
|                 Legal Proceedings             |
|                                               |
-------------------------------------------------

The Bank is not currently involved in any legal proceedings which with have a material effect on the financial statements of the Bank.


Conversion Valuation Appraisal Report                              Page:  1 - 26
================================================================================


2.  Market Area Analysis


-------------------------------------------------
|                                               |
|              Market Area Demographics         |
|                                               |
-------------------------------------------------

The following tables contain detailed demographics for the primary, secondary and tertiary market areas defined as 5, 10 and 20 mile radii, respectively. All data is from the 1990 census and Claritas, Inc.

Figure 25 - Population Demographics

                                                               5 Mile Radius           10 Mile Radius         20 Mile Radius
----------------------------------------------------------------------------------------------------------------------------
Population by Race                                                 6,874                   10,261                 91,245
White                                                              51.88%                   58.71%                 67.59%
Black                                                              45.89%                   38.98%                 29.59%
Hispanic                                                            1.43%                    1.68%                  1.61%
Asian & P.I.                                                        0.26%                    0.23%                  0.76%
Other                                                               0.54%                    0.64%                  0.63%

Households by income                                               2,558                    3,850                 33,555
Under $5,000                                                       15.36%                   13.61%                  9.15%
$5,000 to $14,999                                                  23.63%                   21.20%                 20.74%
$15,000 to $24,999                                                 22.81%                   22.32%                 18.73%
$25,000 to $34,999                                                 15.99%                   17.84%                 16.24%
$35,000 to $49,999                                                 12.56%                   14.32%                 14.99%
$50,000 to $74,999                                                  6.85%                    8.08%                 12.62%
$75,000 to $99,999                                                  0.74%                    0.62%                  3.11%
$100,000 to $149,999                                                1.63%                    1.54%                  1.85%
$150,000 or More                                                    0.44%                    0.47%                  2.57%

1997 Est. Average Household Income                              $ 25,828                 $ 27,397               $ 38,563
1997 Est. Median Household Income                               $ 19,829                 $ 21,802               $ 25,848
1997 Est. Per Capita Income                                     $  9,862                 $ 10,254               $ 14,547

median age                                                         34.32                    34.27                  31.75
average age                                                        37.22                    36.73                  34.29

Population
2002 Projection                                                    6,700                    9,884                 94,231
1997 Estimate                                                      6,874                   10,261                 91,245
Population 1990                                                    7,060                   10,703                 85,761
Population 1980                                                    7,304                   11,198                 80,227
Growth 1980 - 1990                                                 -3.34%                   -4.43%                  6.90%

Population 16+ by Occupation                                       2,538                    4,106                 36,786
Executive & Managerial                                              7.17%                    7.95%                  9.57%
Professional Specialty                                              8.26%                    8.23%                 12.21%
Technical Support                                                   1.45%                    1.82%                  2.90%
Sales                                                               9.21%                    9.43%                 12.62%
Administrative Support                                             10.37%                   11.05%                 13.14%
Service:  Private Household                                         0.78%                    0.88%                  0.66%
Service:  Protective                                                2.14%                    2.11%                  1.83%
Service:  Other                                                    13.57%                   11.94%                 12.08%
Farming Forestry & Fishing                                          7.45%                    9.35%                  5.08%
Precision Production & Craft                                       10.09%                   10.62%                 10.27%
Machine Operator                                                   17.59%                   14.93%                  9.89%
Trans. & Material Moving                                            4.45%                    5.44%                  4.39%
Laborers                                                            7.45%                    6.26%                  5.37%

Population by Education Level                                      4,226                    6,495                 50,448
Elementary                                                         21.68%                   20.09%                 14.02%
Some High School                                                   22.80%                   22.87%                 20.69%
High School Graduate                                               33.30%                   34.78%                 32.04%
Some College                                                        9.02%                    9.17%                 14.07%
Associates Degree Only                                              2.86%                    3.43%                  4.26%
Bachelors Degree Only                                               5.10%                    4.88%                  8.91%
Graduate Degree                                                     5.23%                    4.78%                  6.01%

Housing Units by Occupancy Status                                  2,671                    4,094                 33,414
Occupied                                                           91.56%                   90.96%                 90.56%
Vacant                                                              8.44%                    9.04%                  9.44%

Owner Occupied Property Values                                     1,048                    1,454                 12,586
Less than $25,000                                                  28.72%                   26.62%                 15.28%
$25- $49,999                                                       37.15%                   36.42%                 29.93%
$50 - $74,999                                                      19.34%                   22.10%                 28.06%
$75- $99,999                                                        9.95%                   10.25%                 15.48%
$100 - $149,999                                                     4.15%                    3.78%                  7.29%
$150 - $199,999                                                     0.51%                    0.47%                  2.11%
$200 - $399,999                                                     0.19%                    0.35%                  1.76%
More than $400,000                                                  0.00%                    0.00%                  0.11%

Unemployment                                                        4.27%                    3.66%                  3.86%

Source: Claritas


Conversion Valuation Appraisal Report                              Page:  1 - 27
================================================================================

-------------------------------------------------
|                                               |
|         Market area Deposit Characteristics   |
|                                               |
-------------------------------------------------

Market Area

There is a moderate level of competition for deposits in this market area, with 5 institutions operating 6 active branch offices competing for $104.6 million in deposits. This market has a very low average branch size of $17.4 million.

The Bank's deposits have grown 13.65% between June 30, 1994 and June 30, 1996.

Figure 26 - Deposit Trends and Market Share Tables

($ in 000's)

                                     Competition - Quitman -10 Mile Market Share
                                     Total Deposits    Mkt Share         $ Growth        % Growth     Avg Branch
                                       in Millions                                                    in Millions
Institution                               1996           1996           1994 - 1996     1994 - 1996      1996      Count
--------------------------------------------------------------------------------------------------------------------------
Bank of Quitman                            25.8           24.67%             1.3           5.31%         25.8        1
Brooks County FCU                           0.2            0.19%            -0.1         -33.33%          0.2        1
Citizens NB of Quitman                     34.4           32.89%             1.6           4.88%         17.2        2
Quitman FS&LA                              30.8           29.45%             3.7          13.65%         30.8        1
Thomas County FS&LA                        13.4           12.81%             1.3          10.74%         13.4        1
==========================================================================================================================
Total                                     104.6          100.00%             7.8           8.06%         17.4        6

Source: FDIC, data


Conversion Valuation Appraisal Report                              Page:  1 - 28
================================================================================

3.  Comparisons With Publicly Traded Thrifts


-------------------------------------------------
|                                               |
|                    Introduction               |
|                                               |
-------------------------------------------------

This chapter presents an analysis of the Bank's operations against a Comparable Group of publicly traded savings institutions. The Comparable Group ("Comparable Group") was selected from a universe of 399 public thrifts as of December 8, 1997. The Comparable Group was selected based upon similarity of characteristics to the Bank. The Comparable Group multiples provide the basis for the fair market valuation of the Bank. Factors that influence the Bank's value such as balance sheet structure and size, profitability, income and expense trends, capital levels, credit risk, interest rate risk and recent operating results can be measured against the Comparable Group. The Comparable Group current market pricing, coupled with the appropriate adjustments for differences between the Bank and the Comparable Group, will then be utilized as the basis for the pro-forma valuation of the Bank to-be-issued common stock.

-------------------------------------------------
|                                               |
|                 Selection Screens             |
|                                               |
-------------------------------------------------

When selecting the Comparables, it was determined that the balance sheet size of the institution was of greater importance than geography due to the importance economies of scale plays in a small organization.

The selection screens utilized to identify possible Comparables from the list of 399 public thrifts at December 8, 1997 included:

1. The IPO date had to be on or before June 30, 1996, eliminating any recent conversions.

2. The conversion type had to be a full standard conversion.

3. The total asset size had to be less than or equal to $100 million.

4. The ROAA had to be less than or equal to 0.85%

5. The current price to tangible book multiple had to be less than or equal to

165%.


Conversion Valuation Appraisal Report Page: 1 - 29

This resulted in 12 institutions.

[GRAPHIC OMITTED]

Of these, two institutions were eliminated for the following reasons:

[GRAPHIC OMITTED]

This resulted in a comparable group of 10 institutions.

[GRAPHIC OMITTED]


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-------------------------------------------------
|                                               |
|                 Selection Criteria            |
|                                               |
-------------------------------------------------

Excluded from the Comparable Group were institutions that were pending mergers or acquisitions along with companies whose prices appear to be distorted by speculative factors or unusual operating conditions. Also, institutions that completed their conversions within the last year were also excluded as the earnings of newly converted institutions do not reflect a full years benefit from the reinvestment of proceeds, and thus the price/earnings multiples and return on equity measures for these institutions tend to be skewed upward and downward respectively.

In an ideal world, all of the Comparable Group would contain the exact characteristics of the Bank. The goal of the selection criteria process is to find those institutions that most closely match those of the Bank. None of the Comparables selected will be exact clones of the Bank.

The members of the Comparable Group were selected based upon the following criteria:

1. Asset size

2. Profitability

3. Capital level

4. Asset mix

5. Operating strategy

6. Date of conversion

1. Asset size The Comparable Group should have a similar asset size to the Bank. Large institutions are not appropriate for the peer group due to a more extensive branch network, greater financial strength, more access to diverse markets and more capacity in terms of infrastructure. The Comparable Group ranged in size from $41.7 million to $97.3 million in total assets with an average of $71.9 million. The Bank's asset size was $39.2 million as of September 30, 1997 and will be $43.3 million on a proforma basis at the midpoint of the valuation range.


Conversion Valuation Appraisal Report Page: 1 - 31

2. Profitability The Comparable Group should have similar financial conditions and recent earnings that are comparable to the Bank. They should show a comparable return on equity and return on assets measures. As such, the Comparable Group have ROAAs averaging 0.31% and ROAEs averaging 1.49% for the most recent quarter available. The Comparable Group profitability measures had a dispersion about the mean for the ROAA measure ranging from a low of (0.86%) to a high of 0.80% while the ROAE measure ranged from a low of (10.59%) to a high of 6.60%. The Bank had an ROAA of (0.70%) and ROAE of (9.34%) for the year ended September 30, 1997.

3. Capital level The Comparable Group should have a capital level similar to the Bank's. Capital is important in that it is a determinant of asset size and regulatory rating. Institutions with capital in a similar range as the Bank were selected. The average equity to assets ratio for the Comparable Group was 14.09% with a high of 25.04% and a low of 8.65%. At September 30, 1997, the Bank had an equity to assets ratio of 7.55%. On a proforma basis, at the midpoint the Bank would have an equity to assets ratio of 16.23%.

4. Asset Mix The asset mix is very important in the selection criteria for Comparables. At September 30, 1997, the Bank had a total net loan to asset ratio of 85.03%. The average loan to asset ratio for the Comparables was 64.48%, ranging from a low of 51.58% to a high of 76.81%.

5. Operating strategy An institution's operating characteristics are important because they determine future performance. They also affect expected rates of return and investor's general perception of the quality, risk and attractiveness of a given company. Specific operating characteristics include profitability, balance sheet growth, asset quality, capitalization, and non-financial factors such as management strategies and lines of business.

6. Date of conversion Recent conversions, those completed after June 30, 1996, were excluded since the earnings of a newly converted institution do not reflect a full year's benefits of reinvestment of conversion proceeds. Additionally, new issues tend to trade at a discount to the market averages.


Conversion Valuation Appraisal Report                              Page:  1 - 32
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-------------------------------------------------
|                                               |
|             Comparable Group Profiles         |
|                                               |
-------------------------------------------------

o Albion Banc Corp. ALBC is a SAIF insured thrift that operates 2 branches in New York state and has $68.6 million in assets. ALBC had the fourth highest efficiency ratio, 83.05%, primarily due to the second highest noninterest expense ratio, 3.20%, in the Comparable Group. ALBC was select based on asset size, lack of intangibles, dependence on net interest income, high efficiency ratio, number of offices and modest profitability.

o Am Trust Capital Corp. ATSB is a SAIF insured institution that operates 2 branches in Indiana and is $69.7 million in assets. ATSB has the highest level of nonperforming loans in the Comparable Group, 2.70%. Am Trust also has the second highest efficiency ratio 88.42%. ATSB was selected to the Group based on asset size, level of capital, modest profitability, yield on assets, high efficiency ratio, level of intangibles, number of branches, and dependence on net interest income.

o CSB Financial Group Inc. CSBF is a SAIF insured institution that operates 2 branches located in Centralia, Illinois. CSBF had the second lowest interest income as a percent of average assets of the Comparable Group, 6.68%, and the highest level of capital, 25.04%. CSB Financial was the only Comparable without any borrowings. CSBF had the highest level of intangibles 5.53%. It was selected as a Comparable based on its asset size, dependence on net interest income, low level of non-interest income, lack of borrowings, high efficiency ratio, number of branches, moderate reserve levels and moderate loan to asset ratio.

o Falmouth Bancorp Inc. FCB has 2 branches and is a BIF insured institution located in Falmouth, Massachusetts. Falmouth is the second largest thrift in the Comparable Group with $93.9 million in assets. FCB has lowest loans to deposits ratio 72.81% and the highest level of reserves to non-performing loans 806.45%, along with the lowest level of nonperforming assets, 0.07%. Falmouth has the third highest margin in the Comparable Group, 3.70%, despite having the lowest yield on assets, 6.64%, which is mitigated by the lowest interest expense 3.03%. FCB was included in the Comparable Group based on its asset size, number of branches, lack of intangibles, modest level of borrowings, capital levels, modest profitability, and low yield on assets.


Conversion Valuation Appraisal Report Page: 1 - 33

o First Financial Bancorp Inc. FFBI is a SAIF insured institution with 2 branches located in Belvidere, Illinois. FFBI had the highest deposit to asset ratio, 81.07%, the lowest equity to asset ratio, 8.65%, and the worst ROAA (0.86%) and ROAE (10.59%). First Financial also had the worst loan growth rate (100.44%). FFBI was included with the Comparable Group based on its size, loan to asset ratio, deposit to assets ratio, asset quality, ROAA and ROAE ratios, number of branches and lack of intangibles.

o Gilmer Financial Svcs, Inc. GLMR is a SAIF insured institution that operates 1 office in Gilmer, Texas. GLMR has the highest efficiency ratio at 89.32%. GLMR had the second lowest ROAA and ROAE (0.52%) and (5.64%)respectively. Gilmer had the lowest margin 2.39%, despite having the highest asset yield, 7.78%, which was more than offset by the highest liability cost, 5.43%. GLMR was included in the Comparable Group based on its asset size, modest interest income, level of loans, lack of intangibles capital levels and capital levels.

o Home Building Bancorp. HBBI is a SAIF insured, Indiana institution that operates 2 branches. HBBI had assets of $41.7 million, the smallest in the Comparable Group. Home Building had the second highest asset yield, 7.58% and the second lowest efficiency ratio, 65.74%, in the Comparable Group. HBBI was included in the Comparable Group based on its asset size, lack of intangibles, number of branches, dependence on net interest income, low level of non-interest income, moderate level of non-performing assets, and high cost of funds.

o Harvest Home Financial Corp. HHFC is a SAIF insured thrift that operates 3 offices in Cheviot, Ohio. HHFC had the highest level of borrowings 22.43%, and the highest ROAA and ROAE, 0.80% and 6.60%, respectively. Harvest Home had the second lowest level of nonperforming assets 0.11% and the lowest efficiency ratio 57.52% in the Comparable Group. HHFC was selected based on its balance sheet size, capital levels, number of branches, loan to asset ratio, lack of intangibles, high cost of funds and its dependence on net interest income.

o Sobieski Bancorp Inc. SOBI is a SAIF insured institution that operates 3 branches and is based in South Bend, Illinois. SOBI had the highest loans to assets ratio, 76.81%, and the second highest loan growth rate, 22.17%, in the Comparable Group. Sobieski had no intangibles. SOBI was included in the Comparable Group based on its asset size, capital levels, modest profitability, lack of intangibles, limited branch network and modest noninterest income.


Conversion Valuation Appraisal Report Page: 1 - 34

o SouthFirst Bancshares Inc. SZB is located in Sylacauga, Alabama and operates 2 branches. SouthFirst is one of two Comparables to trade on AMEX. SZB has the highest level of noninterest income, 1.51%, but also has the highest level of noninterest expense, 4.13%. SouthFirst was included due to its limited branch network, asset quality, high level of noninterest expense, modest profitability, lack of intangibles, high efficiency ratio and capital levels.

All data presented in figures 28 through 39 is from SNL Securities utilizing the most recent quarter for balance sheet and income statement related items. All data for the Bank is from the prospectus or the audited financials. The market pricing data for the Comparables is as of December 8, 1997.


Conversion Valuation Appraisal Report Page: 1 - 35

Figure 28 - Key Financial Indicators

The Bank and the Comparable Group

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

                                                                       The Bank at             Comparable Group
                                                                   September 30, 1997          Quarter Average
                                                                                                 (Most Recent
                                                                                                   Quarter)
--------------------------------------------------------------- -------------------------- -------------------------
Balance Sheet Data
--------------------------------------------------------------- -------------------------- -------------------------

Gross Loans to Deposits                                                  96.68%                     90.13%
--------------------------------------------------------------- -------------------------- -------------------------

Total Net Loans to Assets                                                85.03%                     64.48%
--------------------------------------------------------------- -------------------------- -------------------------

Deposits to Assets                                                       87.95%                     71.91%
--------------------------------------------------------------- -------------------------- -------------------------

Borrowed Funds to Assets                                                  3.32%                     12.89%
--------------------------------------------------------------- -------------------------- -------------------------



Balance Sheet Growth
--------------------------------------------------------------- -------------------------- -------------------------

Asset Growth Rate                                                         8.35%                     1.69%
--------------------------------------------------------------- -------------------------- -------------------------

Loan Growth Rate                                                          8.18%                    (0.75%)
--------------------------------------------------------------- -------------------------- -------------------------

Deposit Growth Rate                                                       8.64%                    (3.37%)
--------------------------------------------------------------- -------------------------- -------------------------



Capital
--------------------------------------------------------------- -------------------------- -------------------------

Equity to Assets                                                          7.55%                     14.09%
--------------------------------------------------------------- -------------------------- -------------------------

Tangible Equity to Assets                                                 7.54%                     13.98%
--------------------------------------------------------------- -------------------------- -------------------------

Intangible Assets to Equity                                               0.00%                     0.65%
--------------------------------------------------------------- -------------------------- -------------------------

Regulatory Core Capital to Assets                                         7.54%                     14.11%
--------------------------------------------------------------- -------------------------- -------------------------

Equity + Reserves to Assets                                               8.43%                     14.51%
--------------------------------------------------------------- -------------------------- -------------------------

Total Capital to Risk Adjusted Assets                                    14.25%                     27.86%
--------------------------------------------------------------- -------------------------- -------------------------


Conversion Valuation Appraisal Report Page: 1 - 36

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

                                                                        The Bank               Comparable Group
--------------------------------------------------------------- -------------------------- -------------------------
Asset Quality
--------------------------------------------------------------- -------------------------- -------------------------

Non-Performing Loans to Loans                                             1.43%                     0.95%
--------------------------------------------------------------- -------------------------- -------------------------

Reserves to Non-Performing Loans                                         72.54%                    157.99%
--------------------------------------------------------------- -------------------------- -------------------------

Non-Performing Assets to Assets                                           1.38%                     0.68%
--------------------------------------------------------------- -------------------------- -------------------------

Non-Performing Assets to Equity                                          18.28%                     6.26%
--------------------------------------------------------------- -------------------------- -------------------------

Reserves to Loans                                                         1.03%                     0.66%
--------------------------------------------------------------- -------------------------- -------------------------

Reserves to Non-Performing Assets + 90 Days Del.                         63.96%                    152.69%
--------------------------------------------------------------- -------------------------- -------------------------



Profitability
--------------------------------------------------------------- -------------------------- -------------------------

Return on Average Assets                                                  0.70%                     0.31%
--------------------------------------------------------------- -------------------------- -------------------------

Return on Average Equity                                                  9.34%                     1.49%
--------------------------------------------------------------- -------------------------- -------------------------



Income Statement
--------------------------------------------------------------- -------------------------- -------------------------

Net Interest Margin                                                       3.07%                     3.24%
--------------------------------------------------------------- -------------------------- -------------------------

Interest Income to Average Assets                                         8.49%                     7.25%
--------------------------------------------------------------- -------------------------- -------------------------

Interest Expense to Average Assets                                        5.25%                     4.13%
--------------------------------------------------------------- -------------------------- -------------------------

Net Interest Income to Average Assets                                     3.24%                     3.12%
--------------------------------------------------------------- -------------------------- -------------------------

Noninterest Income to Average Assets                                      0.12%                     0.44%
--------------------------------------------------------------- -------------------------- -------------------------

Noninterest Expense to Average Assets                                     1.98%                     2.72%
--------------------------------------------------------------- -------------------------- -------------------------

Efficiency Ratio                                                         59.10%                     75.94%
--------------------------------------------------------------- -------------------------- -------------------------

Overhead Ratio                                                           57.59%                     73.34%
--------------------------------------------------------------- -------------------------- -------------------------

Source: The Bank Offering Prospectus, FinPro calculations and SNL Securities Note: All of the Bank data is for the year ended September 30, 1997. Note: All of the Comparable data is as of the most recent quarter.


Conversion Valuation Appraisal Report                              Page:  1 - 37
================================================================================

-------------------------------------------------
|                                               |
|                   Corporate Data              |
|                                               |
-------------------------------------------------

Figure 29 - Comparable Corporate Data

[GRAPHIC OMITTED]

Source: SNL Securities



Conversion Valuation Appraisal Report Page: 1 - 38

Key financial Data

Selected balance sheet ratios for the Comparable Group are shown in the following table:

Figure 30 - Comparable Key Financial Data

[GRAPHIC OMITTED]

Source: SNL Securities



Conversion Valuation Appraisal Report Page: 1 - 39

Capital Data

Figure 31 - Comparable Capital Data

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 40


Asset Quality Data

Figure 32 - Comparable Asset Quality Data

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 41


Profitability Data

Figure 33 - Comparable Profitability Data

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 42


Income Statement Data

Figure 34 - Comparable Income Statement Data

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 43


Growth Data

Figure 35 - Comparable Growth Data

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 44


Market Capitalization Data

Figure 36 - Comparable Market Capitalization Data

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 45


Dividend Data

Figure 37 - Comparable Dividend Data

[GRAPHIC OMITTED]

Source: SNL Securities


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Pricing Data

Figure 38 - Comparable Pricing Data

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 47


Earnings Data

Figure 39 - Comparable Earnings Data

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 48

4. Market Value Determination


Introduction

The estimated pro-forma market value of the Bank, along with certain adjustments to its value relative to market values for the Comparable Group are delineated in this section. The adjustments delineated in this section are made from potential investors' viewpoints. A potential investor includes depositors holding subscription rights and unrelated parties who may purchase stock in the community offering and who are assumed to be aware of all relevant and necessary facts as they pertain to the value of the Bank relative to other publicly traded thrift institutions and relative to alternative investment opportunities.

There are numerous criteria on which the market value adjustments are based, but the major ones utilized for purposes of this report include:

o Balance Sheet

o Asset Quality

o Earnings Quality, Predictability and Growth

o Market Area

o Management

o Dividends

o Liquidity of the Issue

o Subscription Interest

o Recent Regulatory Matters

o Market for Seasoned Thrift Stocks

o Acquisition Market

After identifying the adjustments that should be made to market value, the pro-forma market value for the Bank is computed and adjusted. The estimated pro-forma market value for the Bank is then compared with the market valuation ratios of the Comparable Group, recently converted public thrifts and the aggregate ratios for all public thrifts.


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-------------------------------------------------
|                                               |
|               Balance Sheet Strength          |
|                                               |
-------------------------------------------------

The balance sheet strength of an institution is an important market value determinant, as the investment community considers such factors as bank liquidity, capitalization, asset composition, funding mix, intangible levels and interest rate risk in assessing the attractiveness of investing in the common stock of a thrift. Following is a synopsis of the key financial elements of the Bank measured against the Comparable Group. The numbers utilized for the Bank in this comparison were on a pro-forma basis.

Liquidity - The liquidity of the Bank and the Comparable Group appear similar and were sufficient to meet all regulatory guidelines.

Capitalization - The Comparable Group's average equity to assets ratio of 14.09% is higher than the Bank's ratio of 7.55%, but will be below the Bank's pro forma equity to assets ratio of 16.23% at the midpoint of the valuation range.

Asset Composition - The Bank's net loan to asset ratio of 85.03% is above the average for the Comparable Group of 64.48%.

Funding Mix - The Bank is funded through deposits, borrowings and retained earnings. The Comparable Group had 12.89% of its funding base from borrowings while the Bank's ratio is 3.32%. The Bank's low level of borrowings leaves room for an additional funding source in the future.

Intangible Levels - One of the most important factors influencing market values is the level of intangibles that an institution carries on its books. The Comparable Group has a limited level of intangibles averaging 0.65% of equity. Thrifts trade more on tangible book than on book. The Bank had no intangibles on its books at September 30, 1997.

Interest Rate Risk - The Bank has a high level of interest rate risk on a cumulative gap basis, however, the net portfolio value is above the tangible equity level for all rate shocks.

Based on these factors, the Bank's market value should not be adjusted in comparison to the Comparable Group for these measures.


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-------------------------------------------------
|                                               |
|                   Asset Quality               |
|                                               |
-------------------------------------------------

The asset quality of an institution is an important determinant of market value. The investment community considers levels of nonperforming loans, REO and levels of ALLL in assessing the attractiveness of investing in the common stock of an institution.

                         Figure 40 - Asset Quality Table

--------------------------------------------------------------------------------
                            As of September 30, 1997
--------------------------------------------------------------------------------
                              Dollars in Thousands
Nonperforming Loans                                                 $477
REO                                                                  $64
ALLL                                                                $541
ALLL to Loans                                                      1.03%
ALLL to Nonperforming Loans                                       72.54%
--------------------------------------------------------------------------------

The Bank's ALLL to loans ratio of 1.03%, is above the Comparable Group's 0.66%. However, the ALLL to nonperforming loan ratio of 72.54% is less than half that of the Comparable Group's 157.99%. As the Bank's nonperforming assets to assets ratio of 1.38% is more than twice that of the Comparable Group's 0.68%, a slight downward adjustment is warranted for this element.


Conversion Valuation Appraisal Report Page: 1 - 51


| | | Earnings Quality, Predictability and Growth | | |

The earnings quality, predictability and growth are critical components in the establishment of market values for thrifts. Thrift earnings are primarily a function of:

o net interest income

o loan loss provision

o non-interest income

o non-interest expense

The quality and predictability of earnings is dependent on both internal and external factors. Some internal factors include the mix of the balance sheet, the interest rate sensitivity of the balance sheet, the asset quality, and the infrastructure in place to deliver the assets and liabilities to the public. External factors include the competitive market for both assets and liabilities, the global interest rate scenario, local economic factors and regulatory issues.

Each of these factors can influence the earnings of an institution, and each of these factors is volatile. Investors prefer stability and consistency. As such, solid, consistent earnings are preferred to high but risky earnings. Investors also prefer earnings to be diversified and not entirely dependent on interest income.


Conversion Valuation Appraisal Report Page: 1 - 52

The Bank's earnings for September 30, 1996 reflect the one-time SAIF special assessment of $186 thousand and the September 30,1997 net income of $263 thousand reflects a one time loan loss provision of $100 thousand. Net income for the year ended September 30, 1996 would be $220 thousand if adjusted for the after tax effect of the one time assessment.

Figure 41 - Net Income Chart

[GRAPHIC OMITTED- Chart Plots follow]

                    Sep-96         Sep-97
                    ------         ------

Net Income           $103           $263
ROAA                  .30%           .70%

Source: Offering Prospectus


Conversion Valuation Appraisal Report Page: 1 - 53

The Bank's net interest spread and margin increased in fiscal 1997.

Figure 42 - Spread and Margin Chart

                               Sep-96             Sep-97
                               ------             ------
          Spread                2.78%              3.07%
          Margin                3.15%              3.37%
Source:  Offering Prospectus

The Bank has been posted loan loss provisions sufficient to cover periodic charge-offs and to maintain solid reserve ratios. At September 30, 1997, the Bank had an allowance for loan and lease losses (ALLL) to total loans ratio of 1.03%, which is higher than that of the Comparable Group's 0.66%.

The Bank has generated less non-interest income than the Comparable Group. For the year ended September 30, 1997, the Bank had 0.12% of non-interest income to average assets compared to the Comparable average of 0.44%.

For the year ended September 30, 1997, the Bank had a non-interest expense to average assets ratio of 1.98% which was less than the 2.72% average of the Comparable Group. On a percentage basis, non-interest expense, net of non-interest income of 0.12%, is 1.86%, which puts the Bank at a 42 basis points advantage with respect to the Comparable Group's net of 2.28%.


Conversion Valuation Appraisal Report Page: 1 - 54

Currently, investors are focusing on earnings sustainability as the interest rate volatility has caused wide variation in income levels. With the intense competition for both assets and deposits, banks can not easily replace lost spread and margin with balance sheet growth.

Though the Bank has a nominal level of noninterest income and does not expect to undertake any fee generating business in the near term, the low level of noninterest expense provides the Bank with a ROA and ROE higher than the Comparable Group averages. It is anticipated, however, that the Bank will lose much of its competitive advantage in noninterest expense after the conversion as new expenses such as legal and amortization of benefit plans begin. Also, de novo branching for growth will increase operating expenses substantially. Therefore, no adjustment is warranted to the market value for earnings.


Conversion Valuation Appraisal Report                              Page:  1 - 55
================================================================================

-------------------------------------------------
|                                               |
|                    Market area                |
|                                               |
-------------------------------------------------

The market area that an institution serves has a significant impact on value, as future success is interrelated with the economic, demographic and competitive aspects of the market. Specifics on the Bank's market were delineated in Section
2 - Market Area Analysis.

Demographically, the Bank's markets are not favorable. Population in the market area declined over the past seventeen years and is projected to decline through the year 2002. The number of households is low and not expected to grow by more than 2% over the next five years. Median income in 1997 had the largest distributions in the $5,000 $14,999 and $15,000 to $25,000 ranges, indicating low levels of income. More than 20% of the households have no automobiles and over 65% have a value of less than $50,000.

The Bank's market has experienced a $7.8 million increase, or 8.06%, in deposits over the two year period ending June 30, 1996. Quitman's growth of $3.7 million contributed almost half of the market's total growth. The average branch size, however, indicates a high level of competition.

Based on these factors a slight downward adjustment is warranted for this factor since the Bank will have to substantially outperform other local institutions to attain growth in this market.


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================================================================================

-------------------------------------------------
|                                               |
|                     Management                |
|                                               |
-------------------------------------------------

The Bank has developed a good management team with considerable banking experience and length of service with the bank. The Bank, due to its size, does not have much depth in management which limits the strategic initiatives that the Bank may undertake. As the Comparables are of similar size, they face a similar problem.

The Board is active and oversees and advises on all key strategic and policy decisions. The organization chart appears reasonable for an institution of the Bank's size and complexity.

As such, no adjustment appears to be warranted for this factor.


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-------------------------------------------------
|                                               |
|                    Dividends                  |
|                                               |
-------------------------------------------------

Historically, banks have not established dividend policies immediately at or after conversion to stock ownership. Rather, newly converted institutions, in general, have preferred to establish an earnings track record, fully invest the conversion proceeds, and allow for seasoning of the stock before establishing a dividend policy. In the late 1980's and early 1990's however, there has been a tendency toward initiating dividend policies concurrent with the conversion as a means of increasing the attractiveness of the issue and to utilize the proceeds.

The last few years have seen yet another shift away from dividend policies concurrent with conversion. Recent issues have been fully or over subscribing without the need for the additional enticement of dividends. After the conversion is another issue, however. Recent pressures on ROE and on internal rate of returns to investors has prompted the industry toward cash dividends. This trend is exacerbated by the lack of growth potential. Typically, when institutions are in a growth mode, they issue stock dividends or do not declare a dividend. When growth is stunted, these institutions shift toward reducing equity levels and thus utilize cash dividends as a tool in this regard.

Seven of the ten comparable institutions had declared dividends. The average dividend payout ratio for the Comparable Group was 28.73%, ranging from a high of 114.81% to a low of 0.00%.

The Bank will have the capital levels to afford to pay dividends. As such, no adjustment is indicated for this factor.


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================================================================================

-------------------------------------------------
|                                               |
|               Liquidity of the Issue          |
|                                               |
-------------------------------------------------

The Comparable Group is by definition composed only of companies that trade in the public markets with all of the Comparables trading on NASDAQ or AMEX. Typically, the number of shares outstanding and the market capitalization provides an indication of how much liquidity there will be in a given stock. The actual liquidity can be measured by volume traded over a given period of time.

The market capitalization values of the Comparable Group range from a low of $2.70 million to a high of $28.37 million with an average market capitalization of $11.56 million. The Bank expects to have $7.0 million of market capital at the midpoint on a pro-forma basis.

Based on the comparison with the Comparable Group and the above data, no adjustment appears warranted.


Conversion Valuation Appraisal Report                              Page:  1 - 59
================================================================================

-------------------------------------------------
|                                               |
|               Subscription Interest           |
|                                               |
-------------------------------------------------

The outcome of subscription offerings has been, historically, difficult to predict. Since 1992, however, the conversions have experienced robust subscription interest with the exception of late 1994 when the pricing multiples were high. During late 1994, many subscriptions had the need to resolicit due to lack of professional investor demand. During 1995, the investor demand returned and the subscription interest increased, primarily the result of lower market multiples. There were some offerings in July and June 1996 that went off at or below the midpoint, indicating a possible shift away from interest in thrift public offerings at that time. The vast majority of recent conversions have oversubscribed and gone off at the maximum or super-maximum.

Of more importance is the general strength of the aftermarket. Thrift stock prices have soared upwards in recent months (see Figure 40) and is showing strength across the board. Additionally, as shown in Exhibit 7, the most recent conversions (within the last 3 months) have demonstrated a strong price appreciation.

Recently, there were two deals which over subscribed, resulting in re-solicitations.

As such, an upward adjustment for subscription interest is warranted at this time.


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================================================================================

-------------------------------------------------
|                                               |
|             Recent Regulatory matters         |
|                                               |
-------------------------------------------------

As a result of large after-market price increases of conversions during 1993 and early 1994, the regulatory agencies have issued guidelines on appraisals for conversions. The regulators publicly indicated that only modest immediate after-market price increases are appropriate for converting institutions. The guidelines issued November 22, 1994, indicate that the reasonableness and adequacy of an appraisal will be partially judged by the immediate price movement of the conversion stock in the after-market, using a very short time frame of the second day of trading following closing. The guidelines further discuss that the average price appreciation for all IPOs has been between 10 and 15%, which was deemed to be too high.

At around the same time period, IPO pricing was elevated on a book basis and IPOs in late 1994 did not experience much appreciation. In fact, numerous IPOs actually depreciated. 1995 brought back lower premiums to book but they have been rising throughout 1996 to approximately the same levels as late 1994. 1997 has continued the trend with IPOs popping over 40% on average, for the first day of trading.

The recent interest in thrift IPOs has caused large oversubscriptions, which in turn have caused large price appreciations in the aftermarket. Recently, regulators have been indicating the need for increased pricing of new issues in the attempt lessen the aftermarket appreciation. Also, regulators have been concerned with capital redistributions from thrifts which have converted within the past three years. Regulatory agencies are publicly indicating that they will enforce the limits of stock buy backs to: 0% in the first year, 5% in the second year and 5% in the third year.

This threat to newly converted institutions, of not being able to use all of the capital markets tools available, will hurt the stocks attractiveness, as it will put them at a significant competitive disadvantage to the rest of the industry.

As such, a slight downward adjustment for this measure is warranted based on the uncertainty surrounding the regulatory environment.


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================================================================================

-------------------------------------------------
|                                               |
|       Market for Seasoned Thrift Stocks       |
|                                               |
-------------------------------------------------

Data for all public thrifts as of December 8, 1997 is provided in Exhibit 5. A common measure utilized as a proxy for the performance of the thrift industry is the SNL thrift index graphically shown below and tabularly shown on the following page:

Figure 43 - SNL Thrift Index Chart

[GRAPHIC OMITTED]

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 62

Figure 44 - Historical SNL Index

-------------------------------------------------------------------------------------------------------------------
                                     SNL THRIFT INDEX MONTHLY PERFORMANCE
                                      January 2, 1992 to December 8, 1997
-------------------------------------------------------------------------------------------------------------------
                                  SNL       % Change     % Change    % Change    % Change    % Change     % Change
                                 Thrift        Since       Since        Since       Since       Since       Since
                    Date         Index       1/2/92       1/4/93      1/3/94     12/30/94    12/29/95     12/31/96
                    ----         -----       ------       ------      ------     --------    --------     --------
                   Jan-92         143.9         -            -           -           -           -            -
                   Jul-92         175.1        21.7%         -           -           -           -            -
                   Jan-93         201.1        39.7%         -           -           -           -            -
                   Jul-93         220.5        53.2%         9.6%        -           -           -            -
                   Jan-94         252.5        75.5%        25.6%        -           -           -            -
                   Jul-94         273.8        90.3%        36.2%        8.4%        -           -            -
                   Jan-95         256.1        78.0%        27.3%        1.4%        -           -            -
                   Jul-95         328.2       128.1%        63.2%       30.0%       28.2%        -            -
                   Jan-96         370.7       157.6%        84.3%       46.8%       44.7%        -            -
                   Jul-96         389.9       171.0%        93.9%       54.4%       52.2%        5.2%         -
                   Jan-97         520.1       261.4%       158.6%      106.0%      103.1%       40.3%         -
                   Jul-97         684.5       375.7%       240.4%      171.1%      167.3%       84.7%        31.6%
                08-Dec-97         799.6       455.7%       297.6%      216.7%      212.2%      115.7%        53.7%

Source: SNL Securities


Conversion Valuation Appraisal Report Page: 1 - 63

Figure 45 - Equity Indices

[GRAPHIC OMITTED]

Index Comparisons

                          SNL              S&P           DJIA
-------------------------------------------------------------------
              6/30/94    269.6            444.3         3,625.0
             12/30/94    244.7            459.3         3,834.4
              6/30/95    313.5            544.8         4,556.1
             12/29/95    376.5            615.9         5,117.1
              6/28/96    387.2            670.6         5,654.6
             12/31/96    483.6            740.7         6,448.3
              6/30/97    624.5            885.2         7,672.8
             12/8/97     799.6            982.4         8,110.8
-------------------------------------------------------------------

As the Figures 40 and 42 illustrate, the performance of the SNL index has been robust through 1992, 1993, 1994 and 1995. The dip in the index, occurring in late 1994, was the product of the interest rate rise during that period along with the overall uneasiness in the stock market in general. The rate scenario covering the same period as the SNL index can be seen in the following chart.


Conversion Valuation Appraisal Report Page: 1 - 64

Figure 46 - Historical Rates

[GRAPHIC OMITTED]

Source: Prudential Bache Securities

As the graph demonstrates, the rate rise in late 1994 correlates closely to the fall in thrift prices. The drop in rates in 1995 was one of the primary drivers of the rapid rise in the SNL index. During 1996, rates increased slightly and then remained stable, fueling the rise in the conversion prices. 1997 has seen a continuation of this trend, with the average IPO pricing at 70.9%, 69.7%, 70.9%, and 73.6% of book value for the first, second, third, and fourth quarters of 1997, respectively.

Thrift pricing in general was robust in 1995 due to the falling interest rates, the industry consolidation and renewed earnings. Contrasting this view, in late 1994 investors faced shrinking spreads and margins due to rising rates and consolidation that was tailing off and slowing down. The blockbuster level of consolidations have led many investors to think that all institutions are fair game for acquisitions and prices have risen accordingly.

As Figure 45 and 46 show, in 1997, the SNL index has continued to increase as a result of the flat interest rate environment. In addition, the market continues to demonstrate evidence of acquisition speculation.

As such, a downward adjustment for this measure is warranted, as newly converted thrifts will not trade at the same multiples as seasoned thrifts because investors do not have a proven track record on which to base investment decisions. Additionally, newly converted thrifts need time to reinvest proceeds and leverage the capital raised in the IPO.


Conversion Valuation Appraisal Report Page: 1 - 65


Acquisition Market

The level of bank and thrift deals is cyclical, with banks peaking in the third quarter of each year and thrifts peaking in the second quarter. The overall trend, however, has been downward.

Figure 47 - Deals for Last Ten Quarters

[GRAPHIC OMITTED - Chart Plots follows]

          1995-2    1995-3    1995-4    1996-1    1996-2    1996-3    1996-4    1997-1    1997-2    1997-3    1997-4
          ------    ------    ------    ------    ------    ------    ------    ------    ------    ------    ------

Bank      85        92        80        79        87        91        82        66        74        84        49
Thrift    35        27        22        22        29        21        19        25        31        17        21

Source: SNL Securities
Note: Figures for the fourth quarter of 1997 are through December 8, 1997.


Conversion Valuation Appraisal Report Page: 1 - 66

From 1994 through December 8, 1997, thrift deal prices remained high. As illustrated by the following graphs and tables, thrift deal prices as a multiple of book value and earnings continue to climb through December 8, 1997, for all thrifts and thrifts in the Mid-Atlantic region. The deal multiples for similar sized thrifts has declined on a book basis, but continues to increase on an earnings basis in 1997.

Figure 48 - Current Thrift Acquisition Multiples, Price to Book

Historical Price to Book Analysis

[GRAPHIC OMITTED]


Conversion Valuation Appraisal Report Page: 1 - 67

Figure 49 - Current Thrift Acquisition Multiples, Price to Tangible Book

Historical Price to Tangible Book Value

[GRAPHIC OMITTED]

Figure 50 - Thrift Acquisition Multiples, Price to Earnings

Historical Median Price to Earnings

[GRAPHIC OMITTED]


Conversion Valuation Appraisal Report Page: 1 - 68

Figure 51 - Current Thrift Acquisition Multiples, Price to Assets

Histroical Price to Assets

[GRAPHIC OMITTED]

Figure 52 - Current Thrift Acquisition Multiples, Price to Deposits

Historical Price to Deposits

[GRAPHIC OMITTED]


Conversion Valuation Appraisal Report Page: 1 - 69

Figure 53 - Deal Multiples

-------------------------------------------------------------------------------------------------
Median Price to LTM Earnings                        1994        1995        1996      1997 YTD
Thrifts - Nationwide                                13.8        18.6        17.7        25.3
Thrifts - Mid-Atlantic                              13.3        17.9        17.0        21.7
Thrifts - Deal Value less than 10 Million           14.7        23.9        18.9        48.2
Average Price to Book
Thrifts - Nationwide                               154.5        144.7       149.5       180.3
Thrifts - Mid-Atlantic                             153.9        156.5       156.9       198.4
Thrifts - Deal Value less than 10 Million          143.8        134.5       145.6       137.4
Average Price to Tangible Book
Thrifts - Nationwide                               158.9        149.1       153.6       185.2
Thrifts - Mid-Atlantic                             160.4        157.6       159.4       204.1
Thrifts - Deal Value less than 10 Million          145.3        135.0       145.6       137.4
Average Price to Assets
Thrifts - Nationwide                                13.9        14.8        15.0        18.2
Thrifts - Mid-Atlantic                              13.2        15.3        17.7        16.5
Thrifts - Deal Value less than 10 Million           10.6        12.1        14.0        15.8
Average Price to Deposits
Thrifts - Nationwide                                17.1        19.2        19.9        24.4
Thrifts - Mid-Atlantic                              16.2        20.3        24.5        25.2
Thrifts - Deal Value less than 10 Million           12.3        15.3        16.7        19.3
-------------------------------------------------------------------------------------------------

Currently there are no pending acquisitions in Georgia. The acquisition multiples associated with all deals are shown below.

Figure 54 - Acquisition Table

                                    At Announcement Offer Divided By
                                    --------------------------------

                                Book Value                       LTM EPS
                                ----------                       -------

Pending Merger Median              192%                           25.9x

Completed Merger Median            201%                           23.6x
Source: SNL Securities

A slight downward adjustment is warranted for this factor at time of conversion, since new conversions are not readily available for acquisition for well over one year from the date of conversion and since the market prices of the Comparables already have this acquisition premium built in their prices.


Conversion Valuation Appraisal Report                              Page:  1 - 70
================================================================================

-------------------------------------------------
|                                               |
|            Adjustments to value               |
|                                               |
-------------------------------------------------

Overall, FinPro believes that the Bank pro-forma market value should be discounted relative to the Comparable Group, reflecting the following adjustments.

Key Valuation Parameters                                    Valuation Adjustment
----------------------------------------------------------- --------------------

Balance Sheet Strength                                      No Adjustment

Asset Quality                                               Slight Downward

Earnings Quality                                            No Adjustment

Market Area                                                 Slight Downward

Management                                                  No Adjustment

Dividends                                                   No Adjustment

Liquidity of the Issue                                      No Adjustment

Subscription Interest                                       Upward

Recent Regulatory Matters                                   Slight Downward

Market for Seasoned Thrift Stocks                           Downward

Acquisition Market                                          Slight Downward

As a result of all the factors discussed, a full offering discount of approximately 40% from the average trading values of the comparable companies appears to be reasonable.


Conversion Valuation Appraisal Report                              Page:  1 - 71
================================================================================

-------------------------------------------------
|                                               |
|               Valuation Approach              |
|                                               |
-------------------------------------------------

In applying the accepted valuation methodology promulgated by the regulators,
i.e., the pro-forma market value approach, four key pricing multiples were considered. The four multiples include:

Price to earnings ("P/E")

Price to tangible book value ("P/TB")

Price to book value ("P/B")

Price to assets ("P/A")

All of the approaches were calculated on a pro-forma basis including the effects of the conversion proceeds. All of the assumptions utilized are presented in Exhibits 8 and 9.

To ascertain the pro-forma estimated market value of the Bank, the market multiples for the Comparable Group, all publicly traded thrifts and the recent (1996 to date) standard conversion group were assessed.

Since thrift earnings in general have had a high degree of volatility over the past decade, the P/B approach had gained in importance and is utilized frequently as the benchmark for market value. It is interesting to note that the P/B approach is more of a benchmark than a reliable valuation technique. A better approach is the P/TB approach. In general, investors tend to price financial institutions on a tangible book basis, because it incorporates the P/B approach adjusted for intangibles. Most recently, the P/E approach has regained favor among investors.

The evidence of the movement towards the P/E Multiple can be seen in the acquisition, trading and IPO markets. The P/LTM EPS multiple for the pending acquisitions is 25.9x, for all public thrifts the trading P/LTM is 19.44x and for recent IPO's is 25.3x.

As such, in estimating the market value for the Bank, the most emphasis was placed on the P/E approach. The P/B and P/TB were given much less weight and the P/A ratio was not given much weight at all.

In terms of the market multiples, most weight was given to the Comparable Group and the recent (1997 to date) standard conversions. Less weight was ascribed to all public thrifts and all Georgia thrifts. The multiples for the Comparable Group, all publicly traded thrifts, and Georgia publicly traded thrifts are shown in Exhibit 6.


Conversion Valuation Appraisal Report Page: 1 - 72

Based upon the approximately 40% discount defined in the section above, the Bank pricing at the midpoint is estimated to be $5,000,000. Based upon a range below and above the midpoint value, the relative values are $4,250,000 at the minimum and $5,750,000 at the maximum respectively. At the supermaximum of the range the offering value would be $6,612,500.

At the various levels of the estimated value range, the offering would result in the following offering data:

Figure 55 - Value Range Offering Data

[GRAPHIC OMITTED]

Source: FinPro Inc. Proforma Model


Conversion Valuation Appraisal Report Page: 1 - 73

This equates to the following multiples:

Figure 56 - Comparable Pricing Multiples to the Bank's Proforma Midpoint

                                         Comparables
                                    -----------------------------------------------------------------------
                                                     Price Relative to
                                    -----------------------------------------------------------------------
                                    Earnings               Book            Tangible Book            Assets
                                    -----------------------------------------------------------------------
The Bank (at midpoint)                12.99                71.23%               71.23%               11.56%
-----------------------------------------------------------------------------------------------------------
Comparable Group Median               33.53               114.22%              114.22%               15.63%
-----------------------------------------------------------------------------------------------------------
(Discount) Premium                   -61.26%              -37.64%              -37.64%              -26.04%
-----------------------------------------------------------------------------------------------------------

Source: FinPro Calculations

Figure 57 - Comparable Pricing Multiples to the Bank's Proforma Supermax

                                    -----------------------------------------------------------------------
                                                     Price Relative to
                                    -----------------------------------------------------------------------
                                    Earnings               Book            Tangible Book            Assets
                                    -----------------------------------------------------------------------
The Bank (at supermax)                15.63                78.74%               78.74%               14.82%
-----------------------------------------------------------------------------------------------------------
Comparable Group Median               33.53               114.22%              114.22%               15.63%
-----------------------------------------------------------------------------------------------------------
(Discount) Premium                   -53.39%              -31.06%              -31.06%               -5.18%
-----------------------------------------------------------------------------------------------------------

Source: FinPro Calculations

Figure 58 - Recent Standard Conversion Proforma Multiples to the Bank's Proforma Midpoint

                                    -----------------------------------------------------------------------
                                                     Price Relative to
                                    -----------------------------------------------------------------------
                                    Earnings               Book            Tangible Book            Assets
                                    -----------------------------------------------------------------------
The Bank (at midpoint)                12.99                71.23%               71.23%               11.56%
-----------------------------------------------------------------------------------------------------------
Recent Standard Conversions           21.30                71.93%               71.90%               17.00%
-----------------------------------------------------------------------------------------------------------
(Discount) Premium                   -39.01%               -0.97%               -0.93%              -32.00%
-----------------------------------------------------------------------------------------------------------

Source: FinPro Calculations

Figure 59 - Recent Standard Conversion Proforma Multiples to the Bank's Proforma Supermax

                                    -----------------------------------------------------------------------
                                                     Price Relative to
                                    -----------------------------------------------------------------------
                                    Earnings               Book            Tangible Book            Assets
                                    -----------------------------------------------------------------------
The Bank (at the supermax)            15.63                78.74%               78.74%               14.82%
-----------------------------------------------------------------------------------------------------------
Recent Standard Conversions           21.30                71.93%               71.90%               17.00%
-----------------------------------------------------------------------------------------------------------
(Discount) Premium                   -26.62%                9.47%                9.51%              -12.82%
-----------------------------------------------------------------------------------------------------------

Source: FinPro Calculations

As the tables above demonstrate, a discount of approximately 40% is applied to the Bank relative to the Comparable Group. When compared to recent standard conversions, the Bank is priced at a discount on both an earnings basis and on a book basis.

In figure 55, the Recent Conversion multiple is based on public offerings which have typically subscribed at the supermaximum. Figure 56 adjusts for this factor by calculating the discount or premium in comparison to the Bank's multiples at the supermaximum.


Conversion Valuation Appraisal Report                              Page:  1 - 74
================================================================================

-------------------------------------------------
|                                               |
|              Valuation Conclusion             |
|                                               |
-------------------------------------------------

It is, therefore, our opinion that as of December 19, 1997, the estimated pro-forma market value of the Bank in a full offering was $5,000,000 at the midpoint of a range with a minimum of $4,250,000 to a maximum of $5,750,000 at 15% below and 15% above the midpoint of the range respectively. Assuming an adjusted maximum value of 15% above the maximum value, the adjusted maximum value or supermaximum value in a full offering is $6,612,500. The stock will be issued at $10.00 per share.

Pro-forma comparisons of the Bank's value range with the Comparable Group, all public thrifts, Georgia public thrifts and the recent standard conversion group is shown in Exhibit 8.


Exhibit 1 Consolidated Statements of Financial Condition

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

                                     Assets                                                     At September 30,
                                     ------                                      ------------------------------------------
                                                                                               1997                 1996
                                                                                 ------------------------------------------
Assets:
Cash and cash equivalents:
  Cash and amounts due from banks                                                           $ 108,650             $ 86,461
  Interest-bearing deposits in other banks                                                    548,158              678,789
                                                                                            ---------             --------
    Total cash and cash equivalents                                                           656,808              765,250

Investment securities:
Available-for-sale ( Fair value $3,046,109 in 1997 and $1780,825 in 1996)                   3,046,109            1,780,875
Held-to-maturity ( Fair value $801,061 in 1997 and  1,642,828 in 1996)                        804,706            1,663,271
Loans receivable                                                                           33,325,719           30,805,187
Office properties and equipment, net                                                          322,527              310,921
Real Estate and other property acquired in settlement of loans                                 63,915                    -
Accrued interest recievable                                                                   381,218              370,047
Investment required by lawstock in FHLB, at cost                                              227,700              219,100
Cash value of life insurance                                                                  218,106              109,419
Other assets                                                                                  145,356              148,978
                                                                                         ------------         ------------

      Total assets                                                                       $ 39,192,164         $ 36,173,048
                                                                                         ============         ============

                           Liabilities and Net Worth
                           -------------------------

Liabilities:
------------
Deposits                                                                                 $ 34,470,803         $ 31,728,963
Advances from FHLB                                                                          1,300,000            1,200,000
Accrued interest payable                                                                      272,346              253,272
Income taxes payable                                                                          114,766               60,015
Other liabilities                                                                              75,696              263,958
                                                                                         ------------         ------------

      Total liabilities                                                                    36,233,611           33,506,208

Equity:
-------
Retained earnings                                                                           2,952,560            2,689,761
Net unrealized gains(losses) on Available-for-sale securities                                   5,993              (22,921)
                                                                                         ------------         ------------

      Total equity                                                                          2,958,553            2,666,840
                                                                                         ------------         ------------

      Total Liabilities and Retained earnings                                            $ 39,192,164         $ 36,173,048
                                                                                         ============         ============

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

Source: Audited Financial Statements


Exhibit 2 Consolidated Statements of Income $ in 000's

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

                                                                     For the Years Ended
                                                                         Septeber 30,
                                                           -----------------------------------
                                                                     1997             1996
                                                           -----------------------------------
Interest income:
  Loans receivable:
    First mortage loans                                         $ 2,833,489       $ 2,616,633
    Consumer and other loans                                        108,748            38,644
  Interest on FHLMC pool                                                219               636
  Investment securities                                             233,416           214,266
  Interest-bearing deposits                                          21,552            37,560
  Federal funds sold                                                    520                 -
                                                                  ---------         ---------
       Total interest income                                      3,197,944         2,907,739

Interest and dividend expense:
  Deposits                                                        1,913,045         1,828,770
  Interest on Federal Home Loan Bank advances                        65,418            14,900
       Total interest expense                                     1,978,463         1,843,670

Net interest income before provision for loan losses              1,219,481         1,063,069

Provision for loan losses                                           136,000            36,000
                                                                  ---------         ---------

Net interest income after provision for loan losses               1,083,481         1,027,069

Noninterest income:
  Other income                                                       45,536            49,196
  Gain/(loss) on sale of securities                                    (133)                -
                                                                  ---------         ---------
     Total non-interest income                                       45,403            49,196

Noninterest expense:
  Compensation                                                      255,966           221,056
  Other personnel expenses                                          150,382           138,188
  Occupancy expenses                                                 22,900            22,042
  Furniture & equipment expenses                                     69,892            67,268
  Federal deposit insurance                                          29,553            69,874
  Special SAIF assessment                                                 -           185,647
  Other operating expenses                                          218,181           218,283
                                                                  ---------         ---------
     Total noninterest expense                                      746,874           922,358

Income before provision for income taxes                            382,010           153,907

Provision for income taxes                                          119,211            50,621

Net income                                                        $ 262,799         $ 103,286
                                                                  =========         =========

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

Source: Audited Financial Statements


Exhibit 3 Consolidated Statements of Changes in Net Worth

-------------------------------------------------------------------------
                                              Year ended September 30,
                                           ------------------------------

                                               1997              1996
                                               ----              ----

Balance, October 1                         $ 2,689,761       $ 2,586,475

Net income                                     262,799           103,286
                                           -----------       -----------

Balance, September 30                      $ 2,952,560       $ 2,689,761
                                           ===========       ===========

-------------------------------------------------------------------------
Source:  Audited Financial Statements


Exhibit 4 Consolidated Statements of Cash Flows

---------------------------------------------------------------------------------------------------------------------------------
                                                                                                    For the Years Ended
                                                                                                        September 30,
                                                                                   ----------------------------------------------
                                                                                                  1997                   1996
                                                                                   ----------------------------------------------

Cash flows from operating activities:
   Net income                                                                                  $   262,799           $   103,286
  Adjustments to reconcile net income to net cash provided by
      operating activities:
      Depreciation                                                                                  41,067                42,601
      Provision for loan losses                                                                    136,000                36,000
      Increase (Decrease) in deferred income tax benefit                                           (51,972)               (1,185)
                                                                                               -----------           -----------
      Amortization (Accretion) of securities and loan                                               11,022                 9,856

Changes in assets and liabilities:
     (Increase ) Decrease in accrued interest receivable                                           (11,171)              (39,840)
     Increase (Decrease) in accrued interest payable                                                19,074               (16,116)
     Increase (Decrease) in other liabilites                                                      (188,262)              208,601
     Increase (Decrease) in income taxes payable                                                    60,483                 2,934
     (Increase) Decrease in other assets                                                            49,862               (47,383)
                                                                                               -----------           -----------
     Net cash provided by operating activities                                                     328,902               298,754

Cash flows from investing activities:
  Capital expenditures                                                                             (52,673)              (22,478)
  Purchase of available-for-sale securities                                                     (1,740,910)           (1,408,307)
  Purchase of held-to-maturity securities                                                                -              (864,994)
  Proceeds from sale of foreclosed property                                                              -                86,733
  Proceeds from maturity of held-to-maturity securities                                            300,000             1,050,000
  Net (increase) decrease in loans                                                              (2,720,447)           (2,961,051)
  Purchase of stock in Federal Home Loan Bank                                                       (8,600                     -
  Principal collected on mortage-backed securities                                                   2,289                     -
  Proceeds from sale of available-for-sale securities                                              400,063                     -
  Proceeds from sale of held-to-maturity securities                                                549,781               777,874
  Proceeds from maturity of available-for-sale securities                                          100,000               550,000
  Increase in cash value of life insurance                                                        (108,687)             (109,419)
                                                                                               -----------           -----------
     Net cash used in investing activities                                                      (3,279,184)           (2,901,642)

Cash flows from financing activities:
  Net increase (decrease) in deposits                                                            2,741,840             1,965,769
  Proceeds from FHLB advances                                                                      100,000               700,000
                                                                                               -----------           -----------
     Net cash provided by financing activities                                                   2,841,840             2,665,769

Increase (decrease) in cash and cash equivalents                                                  (108,442)               62,881

Cash and cash equivalents, beginning of year                                                       765,250               702,369
                                                                                               -----------           -----------
Cash and cash equivalents, end of year                                                         $   656,808           $   765,250
                                                                                               ===========           ===========

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
      Income taxes net of refunds                                                              $    60,000           $    27,806
      Interest                                                                                   1,959,389             1,659,786
---------------------------------------------------------------------------------------------------------------------------------

Source: Audited Financial Statements


Exhibit 5

Selected Data on all Public Thrifts

[OMITTED]


Exhibit 6

Industry Multiples
Pricing Data as of December 8, 1997

[OMITTED]


Exhibit 7

Standard Conversions - 1996 to Date
Selected Market Data
Market Data as of 12/08/97

[OMITTED]


Exhibit 8                                              Appraisal - No Foundation


                  Quitman Federal Savings and Loan Association
                 Pro-Forma Analysis Sheet - Twelve Months Ended
                               September 30, 1997
                                Includes SOP 93-6

                                                   -----------------------------------------------------------------------
                                                       Minimum          Midpoint           Maximum        Supermaximum
                                                   -----------------------------------------------------------------------

Price-Earnings Ratio
--------------------------------------------------------------------------------------------------------------------------
Comparable                                  Mean  |                                47.90
                                           Median |                                33.53
--------------------------------------------------------------------------------------------------------------------------
State                                       Mean  |                                40.23
                                                  |-----------------------------------------------------------------------
                                           Median |                                24.22
--------------------------------------------------------------------------------------------------------------------------
National                                    Mean  |                                23.23
                                                  |-----------------------------------------------------------------------
                                           Median |                                19.44
--------------------------------------------------------------------------------------------------------------------------
Recent Conversion                           Mean  |                                22.31
                                                  |-----------------------------------------------------------------------
                                           Median |                                21.30
--------------------------------------------------------------------------------------------------------------------------
Bank                                        Mean  |              11.49             12.99             14.29          15.63
--------------------------------------------------------------------------------------------------------------------------

Price-Book Ratio
--------------------------------------------------------------------------------------------------------------------------
Comparable                                  Mean  |                               110.54%
                                                  |-----------------------------------------------------------------------
                                           Median |                               114.22%
--------------------------------------------------------------------------------------------------------------------------
State                                       Mean  |                               184.94%
                                                  |-----------------------------------------------------------------------
                                           Median |                               170.03%
--------------------------------------------------------------------------------------------------------------------------
National                                    Mean  |                               171.50%
                                                  |-----------------------------------------------------------------------
                                           Median |                               156.91%
--------------------------------------------------------------------------------------------------------------------------
Recent Conversion                           Mean  |                                71.06%
                                                  |-----------------------------------------------------------------------
                                           Median |                                71.93%
--------------------------------------------------------------------------------------------------------------------------
Bank                                        Mean  |              66.67%            71.23%            75.02%         78.74%
--------------------------------------------------------------------------------------------------------------------------

Price-Tangible Book Ratio
--------------------------------------------------------------------------------------------------------------------------
Comparable                                  Mean  |                               111.23%
                                                  |-----------------------------------------------------------------------
                                           Median |                               114.22%
--------------------------------------------------------------------------------------------------------------------------
State                                       Mean  |                               200.97%
                                                  |-----------------------------------------------------------------------
                                           Median |                               170.03%
--------------------------------------------------------------------------------------------------------------------------
National                                    Mean  |                               178.20%
                                                  |-----------------------------------------------------------------------
                                           Median |                               160.41%
--------------------------------------------------------------------------------------------------------------------------
Recent Conversion                           Mean  |                                71.05%
                                                  |-----------------------------------------------------------------------
                                           Median |                                71.90%
--------------------------------------------------------------------------------------------------------------------------
Bank                                        Mean  |              66.67%            71.23%            75.02%         78.74%
--------------------------------------------------------------------------------------------------------------------------

Price-Assets Ratio
--------------------------------------------------------------------------------------------------------------------------
Comparable                                  Mean  |                                16.06%
                                                  |-----------------------------------------------------------------------
                                           Median |                                15.63%
--------------------------------------------------------------------------------------------------------------------------
State                                       Mean  |                                18.17%
                                                  |-----------------------------------------------------------------------
                                           Median |                                16.10%
--------------------------------------------------------------------------------------------------------------------------
National                                    Mean  |                                19.69%
                                                  |-----------------------------------------------------------------------
                                           Median |                                17.70%
--------------------------------------------------------------------------------------------------------------------------
Recent Conversion                           Mean  |                                16.79%
                                                  |-----------------------------------------------------------------------
                                           Median |                                17.00%
--------------------------------------------------------------------------------------------------------------------------
Bank                                        Mean  |               9.97%            11.56%            13.10%         14.82%
--------------------------------------------------------------------------------------------------------------------------

Page 1

Exhibit 8                                              Appraisal - No Foundation


Valuation Parameters
--------------------
Prior Twelve Mos. Earning Base               Y
Period Ended September 30, 1997                                   $ 263 (1)

Pre-Conversion Book Value                    B
As of September 30, 1997                                        $ 2,959

Pre-Conversion Assets                        A
As of September 30, 1997                                       $ 39,192

Return on Money                              R                     3.48%(2)

Conversion Expenses                                               $ 341
                                             X                     6.82%(3)

Proceeds Not Invested                                             $ 600 (4)

Estimated ESOP Borrowings                                          $400
ESOP Purchases                               E                     8.00%(5)
Cost of ESOP Borrowings                                             $40 (5)
Cost of ESOP Borrowings                      S                     0.00%(5)
Amort of ESOP Borrowings                     T                       10 Years

Amort of MRP Amount                          N                        5 Years
Estimated MRP Amount                                              $ 200 (6)
MRP Purchases                                M                     4.00%
MRP Expense                                                        $ 40

Foundation Amount                                                   $ - (7)
Foundation Amount                            F                     0.00%
Foundation Opportunity Cost                                          $0
Tax Benefit                                  Z                       $0 (8)

Tax Rate                                    TAX                   37.00%

Percentage Sold                             PCT                  100.00%

Amount to be issued to Public $5,000 (9)

Earnings Multiple (1 if stub period, 0 if full twelve months) 12 0

(1) Net income for the twelve months ended September 30, 1997.
(2) Net Return assumes a reinvestment rate of 5.52 percent (the 1 year Treasury at September 30, 1997), and a tax rate of 37%.
(3) Conversion expenses reflect estimated expenses as presented in the offering document.
(4) Includes Stock from ESOP and MRP.
(5) Assumes ESOP is amortized straight line over 10 years.
(6) Assumes MRP is amortized straight line over 5 years.
(7) Not applicable.
(8) Not Applicable.

Page 2

Pro Forma Calculation

Calculation of Estimated Value (V) at Midpoint Value

3. V= P/E*Y = $5,000,000 1-P/E*PCT*((1-X-E-M-F)*R-(1-TAX)*E/T-(1-TAX)*M/N)

2. V= P/B*(B+Z) = $5,000,000 1-P/B*PCT*(1-X-E-M-F)

1. V= P/A*A = $5,000,000 1-P/A*PCT*(1-X-E-M-F)

                                                                               Pre Foundation
                                                   -----------------------------------------------------------------------
                                                                              Appraised Value
                                                   -----------------------------------------------------------------------
Conclusion                                                Minimum           Midpoint          Maximum       SuperMaximum *
                                                   -----------------------------------------------------------------------
 Total Shares                                               425,000           500,000           575,000           661,250
 Price per Share                                                $10               $10               $10               $10
 Full Conversion Value                                   $4,250,000        $5,000,000        $5,750,000        $6,612,500
 Exchange Shares                                                  0                 0                 0                 0
 Exchange Percent                                              0.00%             0.00%             0.00%             0.00%
 Conversion Shares                                          425,000           500,000           575,000           661,250
 Conversion Percent                                          100.00%           100.00%           100.00%           100.00%
 Gross Proceeds                                          $4,250,000        $5,000,000        $5,750,000        $6,612,500
 Exchange Value                                                  $0                $0                $0                $0
 Exchange Ratio                                               0.000             0.000             0.000             0.000
                                                   -----------------------------------------------------------------------

* SuperMaximum is an overallotment option that is 15% above the maximum amount.

Page 3

Exhibit 8 Appraisal - No Foundation

                                                                  Proforma Effect of Conversion Proceeds
                                                                         As of September 30, 1997
                                                                           (Dollars in Thousands)
------------------------------------------         -----------------------------------------------------------------------
| Conversion Proceeds                    |               Minimum          Midpoint           Maximum          SuperMax
------------------------------------------         -----------------------------------------------------------------------
Total Shares Offered                                            425               500               575               661
Conversion Shares Offered                                       425               500               575               661
Price Per Share                                                 $10               $10               $10               $10
                                                   -----------------------------------------------------------------------
Gross Proceeds                                               $4,250            $5,000            $5,750            $6,613
Plus: Value issued to Foundation            (9)                  $0                $0                $0                $0
                                                   -----------------------------------------------------------------------
Pro Forma Market Capitalization                              $4,250            $5,000            $5,750            $6,613
                                                   =======================================================================
Gross Proceeds                                               $4,250            $5,000            $5,750            $6,613
Less:  Est. Conversion Expenses                                $324              $341              $359              $378
                                                   =======================================================================
Net Proceeds                                                 $3,926            $4,659            $5,391            $6,235
                                                   =======================================================================
------------------------------------------
| Estimated Income from Proceeds         |
------------------------------------------
Net Conversion Proceeds                                      $3,926            $4,659            $5,391            $6,235
Less:  ESOP Adjustment                      (3)                $340              $400              $460              $529
Less:  MRP Adjustment                       (3)                $170              $200              $230              $265
                                                   -----------------------------------------------------------------------
Net Proceeds Reinvested                                      $3,416            $4,059            $4,701            $5,441
Estimated Incremental Rate of Return                           3.48%             3.48%             3.48%             3.48%
                                                   -----------------------------------------------------------------------
Estimated Incremental Return                                   $119              $141              $164              $189
Less:  Cost of ESOP                         (4)                  $0                $0                $0                $0
Less:  Amortization of ESOP                 (7)                 $21               $25               $29               $33
Less:  MRP Adjustment                       (7)                 $21               $25               $29               $33
                                                   -----------------------------------------------------------------------
Pro-forma Net Income                                            $77               $91              $106              $123
Earnings Before Conversion                                     $263              $263              $263              $263
                                                   -----------------------------------------------------------------------
Earnings Excluding Adjustment                                  $340              $354              $369              $386
Earnings Adjustment                         (6)                  $0                $0                $0                $0
                                                   -----------------------------------------------------------------------
Earnings After Conversion                                      $340              $354              $369              $386
------------------------------------------
| Pro-forma Net Worth                    |
------------------------------------------
Net Worth at September 30, 1997                             $ 2,959           $ 2,959           $ 2,959           $ 2,959
Net Conversion Proceeds                                       3,926             4,659             5,391             6,235
Plus: MHC Adjustment                        (7)                   0                 0                 0                 0
Plus:  After tax Foundation Contribution                          -                 -                 -                 -
Less:  ESOP Adjustment                      (1)                (340)             (400)             (460)             (529)
Less:  MRP Adjustment                       (2)                (170)             (200)             (230)             (265)
                                                   -----------------------------------------------------------------------
Pro-forma Net Worth                                          $6,375            $7,018            $7,660            $8,400
------------------------------------------
| Pro-forma Tangible Net Worth           |
------------------------------------------
Pro-forma Net Worth                                          $6,375            $7,018            $7,660            $8,400
Less:  Intangible                           (5)                  $0                $0                $0                $0
                                                   -----------------------------------------------------------------------
Pro-forma Tangible Net Worth                                 $6,375            $7,018            $7,660            $8,400
------------------------------------------
| Pro-forma Assets                       |
------------------------------------------
Total Assets at September 30, 1997                         $ 39,192          $ 39,192          $ 39,192          $ 39,192
Net Conversion Proceeds                                      $3,926            $4,659            $5,391            $6,235
Plus: MHC Adjustment                        (7)                   0                 0                 0                 0
Plus:  Tax Benefit of Foundation                                  -                 -                 -                 -
Less:  ESOP Adjustment                      (1)                (340)             (400)             (460)             (529)
Less:  MRP Adjustment                       (2)                (170)             (200)             (230)             (265)
                                                   -----------------------------------------------------------------------
Pro-forma Assets Excluding Adjustment                        42,608            43,251            43,893            44,633
Plus:  Adjustment                           (6)                   0                 0                 0                 0
                                                   -----------------------------------------------------------------------
Pro-forma Total Assets                                      $42,608           $43,251           $43,893           $44,633
                                                   -----------------------------------------------------------------------

Page 4

Exhibit 8 Appraisal - No Foundation

                                                                   Proforma Effect of Conversion Proceeds
                                                                          As of September 30, 1997
                                                                           (Dollars in Thousands)
                                                   ---------------------------------------------------------------------------
                                                              Minimum          Midpoint           Maximum          SuperMax
                                                   ---------------------------------------------------------------------------
------------------------------------------
| Stockholder's Equity Per Share         |
------------------------------------------
Net Worth at September 30, 1997                                  $6.96             $5.92             $5.15             $4.47
Estimated Net Proceeds                                           $9.24             $9.32             $9.38             $9.43
Plus: MHC Adjustment                                             $0.00             $0.00             $0.00             $0.00
Plus:  Foundation Contribution                                   $0.00             $0.00             $0.00             $0.00
Less:  ESOP Stock                                               ($0.80)           ($0.80)           ($0.80)           ($0.80)
Less:  MRP Stock                                                ($0.40)           ($0.40)           ($0.40)           ($0.40)
                                                                ------            ------            ------            ------
Pro-forma Net Worth Per Share                                   $15.00            $14.04            $13.33            $12.70
Less:  Intangible                                                $0.00             $0.00             $0.00             $0.00
                                                                ------             -----             -----             -----
Pro-forma Tangible Net Worth Per Share                          $15.00            $14.04            $13.33            $12.70
------------------------------------------
| Net Earnings Per Share                 |
------------------------------------------
Historical Earnings Per Share               (8)                  $0.67             $0.57             $0.49             $0.43
Incremental return Per Share                (8)                  $0.30             $0.30             $0.31             $0.31
ESOP Adjustment Per Share                   (8)                 ($0.05)           ($0.05)           ($0.05)           ($0.05)
MRP Adjustment Per Share                    (8)                 ($0.05)           ($0.05)           ($0.05)           ($0.05)
Normalizing Adjustment Per Share                                 $0.00             $0.00             $0.00             $0.00
                                                                 -----             -----             -----             -----
Proforma Earnings Per Share                 (8)                  $0.87             $0.77             $0.70             $0.64
------------------------------------------
| Shares Utilized                        |
------------------------------------------
Shares Utilized                                                    394               464               534               613
------------------------------------------
| Pro-forma Ratios                       |
------------------------------------------
Price/EPS without Adjustment                                     11.49             12.99             14.29             15.63
Price/EPS with Adjustment                                        11.49             12.99             14.29             15.63
Price/Book Value per Share                                       66.67%            71.23%            75.02%            78.74%
Price/Tangible Book Value                                        66.67%            71.23%            75.02%            78.74%
Market Value/Assets                                               9.97%            11.56%            13.10%            14.82%
                                                   -----------------------------------------------------------------------

(1) ESOP Borrowings are deducted from net worth and assets, and amortized over 10 years.
(2) MRP Borrowings are omitted from net worth and assets, and amortized over 5 years.
(3) Consists of ESOP and MRP amortization.
(4) The ESOP loan is from the Holding Company and therefore, there are no costs.
(5) Not applicable.
(6) Not applicable.
(7) ESOP and MRP are amortized over 10 and 5 years respectively, and tax impacted at 37%.
(8) All EPS computations are done in accordance with SOP 93-6.
(9) Not applicable.

Page 5

Exhibit 8 Appraisal - No Foundation

Total Shares Offered                                            425               500               575               661
Price Per Share                                                 $10               $10               $10               $10
                                                   -----------------------------------------------------------------------
Gross Proceeds                                                4,250             5,000             5,750             6,613
Estimated Insider Purchases                                    -385              -385              -385              -385
ESOP Purchases                                                 -340              -400              -460              -529
                                                   -----------------------------------------------------------------------
Proceeds to Base Fee On                                       3,525             4,215             4,905             5,699
Underwriters Percentage                                        2.50%             2.50%             2.50%             2.50%
                                                   -----------------------------------------------------------------------
Underwriters Fee                                                 88               105               123               142
Advisory Fee                                                      0                 0                 0                 0
                                                   -----------------------------------------------------------------------
Total Underwriters Fee                                           88               105               123               142
All Other Expenses                                              236               236               236               236
                                                   -----------------------------------------------------------------------
Total Expense                                                   324               341               359               378

Shares Outstanding                                              425               500               575               661
Less:  New ESOP Adjustment                                       34                40                46                53
Less:  Old ESOP Adjustment                  (1)                   0                 0                 0                 0
Plus:  New SOP 93-6 ESOP Shares             (2)                   3                 4                 5                 5
Plus:  Old SOP 93-6 ESOP Shares             (2)                   0                 0                 0                 0
Shares for all EPS Calculations                                 394               464               534               613


Dilution of Stock Options                                                       10.78%
Dilution of MRP                                                                  4.31%

                                                                              Post Foundation
                                                   -----------------------------------------------------------------------
                                                                              Appraised Value
                                                   -----------------------------------------------------------------------
Conclusion                                                 Minimum          Midpoint           Maximum        SuperMaximum
                                                   -----------------------------------------------------------------------
 Shares Issued and Exchanged                                425,000           500,000           575,000           661,250
 Price per Share                                                $10               $10               $10               $10
 Shares Issued to Foundation                                      -                 -                 -                 -
 Total Shares                                               425,000           500,000           575,000           661,250
 Exchange Shares                                                  -                 -                 -                 -
 Conversion Shares                                          425,000           500,000           575,000           661,250
 Implied Exhange Ratio                                            -                 -                 -                 -
 Gross Proceeds                                          $4,250,000        $5,000,000        $5,750,000        $6,612,500
 Exchange Value                                                  $0                $0                $0                $0
                                                   -----------------------------------------------------------------------

MRP Dilution
Shares Outstanding                                              425               500               575               661
Less:  New ESOP Adjustment                                       34                40                46                53
Plus:  New MRP issued                       (1)                  17                20                23                27
Plus:  New SOP 93-6 ESOP Shares             (2)                   3                 4                 5                 5
                                            (2)
Shares for all EPS Calculations                                 411               484               557               640
EPS                                                          $ 0.84            $ 0.75            $ 0.68            $ 0.62

BV/Share                                                     $14.42            $13.50            $12.81            $12.21

Page 6

Exhibit 8 Appraisal - No Foundation

Option dilution
Shares Outstanding                                              425               500               575               661
Less:  New ESOP Adjustment                                       34                40                46                53
Plus:  Options                              (1)                  43                50                58                66
Plus:  New SOP 93-6 ESOP Shares             (2)                   3                 4                 5                 5
                                            (2)
Shares for all EPS Calculations                                 437               514               592               679
EPS                                                          $ 0.78            $ 0.69            $ 0.62            $ 0.57

BV/Share                                                     $14.55            $13.67            $13.02            $12.46


Aftertax expense                                                 $0                $0                $0                $0

EPS                                                           $0.87             $0.77             $0.70             $0.64

Adjusted EPS                                                   0.86              0.76              0.69              0.63

Page 7

                                    Exhibit 9

                                     FinPro
----------------------------
|                          |
|      About the Firm      |
|                          |
----------------------------

FinPro, Inc. was established in 1988 as a full service management consulting firm specializing in providing advisory services to the Financial Institutions Industry. FinPro provides management advisory services for Banks, Thrifts, Finance Companies and NonBank Banks. Additionally, FinPro has performed work for the Federal Bankruptcy Court, Federal Deposit Insurance Corporation, Office of Thrift Supervision and the Resolution Trust Corporation. FinPro is recognized as an expert in banking and in loan analysis by the Federal Bankruptcy Court.

FinPro is independently owned, not associated or affiliated with any transaction oriented firm. This provides FinPro with an unbiased platform from which to make analytical recommendations. FinPro believes that a client deserves to be told all of the alternatives, along with their associated benefits and downsides and that a decision should be made on its merits. This uniquely positions FinPro as an objective third party willing to suggest the unpopular strategies, unlike its competitors who rely on a transaction to get paid.

FinPro is headquartered in Liberty Corner, New Jersey and has a branch office in Buffalo, New York. FinPro focuses geographically on the Mid-Atlantic region, but has performed work in all other regions across the nation.

FinPro principals are frequent speakers and presenters at financial institution trade association functions. In addition, FinPro designed the Statistical Report Analysis currently produced quarterly by the New Jersey Savings League for its members. FinPro also hosts a tri-annual Presidents Breakfast for Presidents of New Jersey Community Banks.

FinPro maintains a library of databases encompassing bank and thrift capital markets data, census data, branch deposit data, national peer data, market research data along with many other related topics. As such, FinPro can provide quick, current and precise analytical assessments based on timely data. In addition, FinPros geographic mapping capabilities give it a unique capability to thematically illustrate multiple issues and to provide targeted marketing opportunities to its clients.


FinPro, Inc.
About the Firm Page: 2

FinPro has also designed and built PC-based software programs to utilize as tools in its work. Examples include:

o A proprietary software program (LaRS Registered) to perform loan review analytics.

o A duration based asset/liability model.

o A five year strategic planning, three year business planning, and one year budgetary model that completely simulates an entire institution.

o A branch and product profitability model.

o A market performance grid and branch improvement grid model.

Using systems such as these, FinPro provides state-of-the-art end products in all of its product and service areas.


FinPro, Inc.
About the Firm                                                           Page: 3
--------------------------------------------------------------------------------

----------------------------
|                          |

Key Player Biographies |
| |

Donald J. Musso - Managing Director and President

Donald founded FinPro, Inc. in 1987 as a consulting and investment banking firm located in New Jersey that specializes in providing advisory services to the financial institutions industry. Mr. Musso has a broad background in capital markets, bank valuations, enhancing franchise value, corporate finance, mergers and acquisitions, asset/liability management, strategic planning, market feasibility and differentiation, branch acquisition, sales, consolidation and profitability, financial modeling and analysis, balance sheet restructuring, product and segment profitability, business development and project management. Besides his consulting experience, he has solid industry experience, having worked for two $10 billion plus east coast financial institutions.

Mr. Musso has provided expert testimony on financial institutions matters for the Federal Bankruptcy Court, the Office of Thrift Supervision and the United States Attorneys Office.

He is a frequent speaker on Financial Institution related topics and has assisted trade groups in various activities.

Prior to establishing FinPro, Donald had direct industry experience having managed the Corporate Planning and Mergers and Acquisitions departments for Meritor Financial Group, a $20 billion institution in Philadelphia. Before that, he had responsibility for the banking, thrift and real estate consulting practice in the State of New Jersey for Deloitte Haskins & Sells.

Donald has a B.S. in Finance from Villanova University and a M.B.A. in Finance from Fairleigh Dickenson University.


FinPro, Inc.
About the Firm Page: 4

Steven P. Musso - Managing Director

Steve joined FinPro in 1989 and is one of the founding members of the firm. He has extensive experience in performing a wide array of market feasibility studies, branch profitability analysis, CRA analysis, loan reviews and work-outs and strategic planning engagements.

Steve manages the FinPro office in Western New York. Additionally, he is responsible for managing many strategic planning, loan reviews, market feasibility and CRA engagements.

Steve is responsible for the development of FinPros CRA, market feasibility and Loan Review products.

Steve is currently a licensed real estate agent in New Jersey. Prior to joining FinPro he practiced real estate in Philadelphia, Pennsylvania.

Mr. Musso has a B.S. in Finance from Syracuse University.


FinPro, Inc.
About the Firm Page: 5

Kenneth G. Emerson, CPA - Director

Ken joined FinPro in October 1996 and has concentrated on bank valuations, strategic plans, and branch profitability. His twelve years of experience at banks and brokerage firms, with respect to accounting, reporting, and information systems serve him well in this capacity. Kens prior employers include Summit Bancorp, Valley Savings Bank, Howard Savings Bank, Carteret Mortgage Company, CIT Data Corp., and Mahler & Emerson Inc. While at those institutions his responsibilities included asset/liability, cash, back office, operations, objective, and LAN management, in addition to regulatory reporting (FRB, FDIC, OTS, State of New Jersey Department of Banking, and NASD), SEC reporting, shareholder reporting, budgeting, acquisitions, sales, conversions, interfaces, and FASB implementation.

Mr. Emerson has a B.A. in Accounting from Franklin & Marshall College.


FinPro, Inc.
About the Firm Page: 6

Dennis E. Gibney - Senior Financial Analyst

Dennis has been concentrating on the firms asset/liability products. Market feasibility, competitive analysis, branch profitability and branch sales/acquisitions are other areas of specialization.

Dennis joined the firm in June of 1996. He received a B.S. from Babson College with a triple-major in Finance, Investments and Economics. Prior to joining the firm, Dennis received broad based experience in the securities industry

Dennis worked for Merrill Lynch & Co. supporting their Mortgage-Backed trading desk in New York as an Allocations Specialist and for Sandler ONeill & Partners, where he provided sales and trade support.


EXHIBIT 99.3


Quitman Bancorp, Inc. Proposed Holding company for Quitman Federal Savings Bank Quitman, Georgia

Proposed Marketing Materials

12-19-97


Marketing Materials Quitman Bancorp, Inc. Quitman, Georgia

Table of Contents

I. Press Releases
A. Explanation
B. Schedule
C. Distribution List
D. Press Release Examples

II. Advertisements
A. Explanation
B. Schedule
C. Advertisement Examples

III. Question and Answer Brochure

IV. Individual Letters and Community Meeting Invitations

V. IRA Mailing
A. Explanation
B. Quantity
C. IRA Mailing Example

VI. Counter Cards and Lobby Posters
A. Explanation
B. Quantity

VII. Proxy Reminder
A. Explanation
B. Example


I. Press Releases

A. Explanation

In an effort to assure that all customers receive prompt accurate information in a simultaneous manner, Trident advises the Savings Bank to forward press releases to area newspapers, radio stations, etc. at various points during the conversion process.

Only press releases approved by Conversion Counsel and the OTS will be forwarded for publication in any manner.

B. Schedule

1. OTS Approval of Conversion

2. Close of Stock Offering


C. Distribution List

National Distribution List

National Thrift News                         Wall Street Journal
--------------------                         -------------------
212 West 35th Street                         World Financial Center
13th Floor                                   200 Liberty
New York, New York  10001                    New York, NY  10004
Richard Chang

American Banker                              SNL Securities
---------------                              --------------
One State Street Plaza                       Post Office Box 2124
New York, New York  10004                    Charlottesville, Virginia  22902
Michael Weinstein

Barrons                                      Investors Business Daily
-------                                      ------------------------
Dow Jones & Savings Bank                     12655 Beatrice Street
Barrons Statistical Information              Post Office Box 661750
200 Burnett Road                             Los Angeles, California  90066
Chicopee, Massachusetts  01020

New York Times
--------------
229 West 43rd Street
New York, NY  10036


Local Media List

(To be provided)

Newspaper

Radio

D.       Press Release Examples
         PRESS RELEASE                             FOR IMMEDIATE RELEASE
                                                   ---------------------
                                                   For More Information Contact:
                                                   Melvin E. Plair, President
                                                   (912) 263-7538

QUITMAN FEDERAL SAVINGS BANK

CONVERSION TO STOCK FORM APPROVED

Quitman, Georgia (________, 1998) - Melvin E. Plair, President of Quitman Federal Savings Bank ("Quitman Federal" or the "Savings Bank"), Quitman, Georgia, announced that Quitman Federal has received approval from the Office of Thrift Supervision to convert from a federally-chartered mutual savings bank to a federally-chartered stock savings bank. In connection with the Conversion, Quitman Federal has formed a holding company, Quitman Bancorp, Inc., to hold all of the outstanding capital stock of Quitman Federal Savings Bank.

Quitman Bancorp, Inc. is offering up to 575,000 shares of its common stock, subject to adjustment, at a price of $10.00 per share. Certain account holders and borrowers of the Savings Bank will have an opportunity to subscribe for stock through a Subscription Offering that closes on ________, 1998. Shares that are not subscribed for during the Subscription Offering may be offered subsequently to the general public in a Direct Community Offering, with first preference given to natural persons residing in Brooks County, Georgia. The Subscription Offering and Community Offering, if conducted, will be managed by Trident Securities, Inc. of Raleigh, North Carolina. Copies of the Prospectus relating to the offerings and describing the Plan of Conversion will be mailed to customers on or about _________, 1998.

As a result of the Conversion, Quitman Federal will be structured in the stock form as are all commercial banks and an increasing number of savings institutions and will be a wholly-owned subsidiary of Quitman Bancorp, Inc. According to Mr. Plair, "Our day to day operations will not


change as a result of the Conversion and deposits will continue to be insured by the FDIC up to the applicable legal limits."

Customers with questions concerning the stock offering should call Quitman Federal's Stock Information Center at (912) 263-4243, or visit Quitman Federal's office.


PRESS RELEASE                                      FOR IMMEDIATE RELEASE
                                                   ---------------------
                                                   For More Information Contact:
                                                   Melvin E. Plair
                                                   (912) 263-7538

QUITMAN BANCORP, INC. COMPLETES INITIAL STOCK OFFERING

Quitman, Georgia - (__________, 1998) Melvin E. Plair, President of Quitman Federal Savings Bank ("Quitman Federal" or the "Savings Bank"), announced today that Quitman Bancorp, Inc., the proposed holding company for Quitman Federal, has completed its initial stock offering in connection with the Savings Bank's conversion from mutual to stock form. A total of __________ shares were sold at the price of $10.00 per share.

On __________, 1998, Quitman Federal's Plan of Conversion was approved by the Savings Bank's voting members at a special meeting of members.

Mr. Plair said that the officers and boards of directors of Quitman Bancorp, Inc. and the Savings Bank wished to express their thanks for the response to the stock offering and that Quitman Federal looks forward to serving the needs of its customers and new stockholders as a community-based stock institution. The stock is anticipated to commence trading on __________, 1998 on the OTC Electronic Bulletin Board under the symbol "QMAN". Trident Securities, Inc. of Raleigh, North Carolina managed the stock offering.


II. Advertisements

A. Explanation

The intended use of the attached advertisement "A" is to notify Quitman Federal's customers and members of the local community that the conversion offering is underway.

The intended use of advertisement "B" is to remind Quitman Federal's customers of the closing date of the Subscription Offering.

B. Media Schedule

1. Advertisement A - To be run immediately following OTS approval and possibly run weekly for the first three weeks.
2. Advertisement B - To be run during the last week of the subscription offering.

Trident may feel it is necessary to run more ads in order to remind customers of the close of the Subscription Offering and the Community Offering, if conducted.

Alternatively, Trident may, depending upon the response from the customer base, choose to run fewer ads or no ads at all.

These ads will run in the local newspapers.

The ad size will be as shown or smaller.


Advertisement (B)

QUITMAN FEDERAL

__________, 1998 IS THE DEADLINE TO
ORDER STOCK OF QUITMAN BANCORP, INC.

Customers of Quitman Federal Savings Bank
have the opportunity
to invest in Quitman Federal Savings Bank
by subscribing

for common stock in its proposed holding company

QUITMAN BANCORP, INC.

A Prospectus relating to these securities is available at our office or by calling our Stock Information Center at (912) 263-4243.

This announcement is neither an offer to sell nor a solicitation of an offer to buy the stock of Quitman Bancorp, Inc. The offer is made only by the Prospectus. The shares of common stock are not deposits or savings accounts and will not be insured by the Federal Deposit Insurance Corporation or any other government agency.

Copies of the Prospectus may be obtained in any State in which this announcement is circulated from Trident Securities, Inc. or such other brokers and dealers as may legally offer these securities in such state.



III. Question and Answer Brochure

A. Explanation

The Question and Answer brochure is an essential marketing piece in any conversion. It serves two purposes: a) to answer some of the most commonly asked questions in "plain, everyday language"; and b) to highlight in brochure form the purchase commitments of the Savings Bank's officers and directors shown in the Prospectus. Although most of the answers are taken verbatim from the Prospectus, it saves the individual from searching for the answer to a simple question.

B. Method of Distribution

There are four primary methods of distribution of the Question and Answer brochure. However, regardless of the method the brochures are always accompanied by a Prospectus.

1. A Question and Answer brochure is sent out in the initial mailing to all members of the Savings Bank.
2. Question and Answer brochures are available in Quitman Federal's office.
3. Question and Answer brochures are sent out in a standard information packet to all interested investors who phone the Stock Information Center requesting information.


PROPOSED OFFICER AND DIRECTOR PURCHASES

                                   Total Shares  Aggregate Price of  Percent of Shares
Name and Position                  Purchased      Shares Purchased       Purchased
-----------------                  ---------      ----------------   -----------------

Claude R. Butler                     10,000           $100,000             2.0%
   Chairman
Larry Cunningham                      5,000             50,000             1.0%
   Vice Chairman
Walter B. Holwell                     3,500             35,000             0.7%
   Director
John W. Romaine                       6,000             60,000             1.1%
   Director
Daniel M. Mitchell, Jr               10,000            100,000             2.0%
   Director
Melvin E. Plair                       1,500             15,000             0.4%
   Director, President and CEO
Peggy Forgione                        2,500             25,000             0.5%
   Vice President and Controller     ------           --------             ---

                                     38,500           $385,000             7.7%


QUESTIONS AND ANSWERS
REGARDING
THE PLAN OF CONVERSION

On October 14, 1997, the Board of Directors of Quitman Federal Savings Bank ("Quitman Federal" or the "Savings Bank") unanimously adopted the Plan of Conversion, pursuant to which Quitman Federal will convert from a federally-chartered mutual savings bank to a federally-chartered stock savings bank. In addition, all of Quitman Federal's outstanding capital stock will be issued to Quitman Bancorp, Inc. (the "Holding Company"), which was organized by Quitman Federal Savings Bank to own Quitman Federal Savings Bank as a subsidiary.

This brochure is provided to answer general questions you might have about the Conversion. Following the Conversion, Quitman Federal Savings Bank will continue to provide financial services to its depositors, borrowers and other customers as it has in the past and will operate with its existing management and employees. The Conversion will not affect the terms, balances, interest rates or existing federal insurance coverage on Quitman Federal's deposits or the terms or conditions of any loans to existing borrowers under their individual contract arrangements with Quitman Federal Savings Bank.

For complete information regarding the Conversion, see the Prospectus and the Proxy Statement dated __________ __, 1998. Copies of each of the Prospectus and the Proxy Statement may be obtained by calling the Stock Information Center at
(912) 263-4243.

THIS INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY QUITMAN BANCORP, INC. COMMON STOCK. OFFERS TO BUY OR TO SELL MAY BE MADE ONLY BY THE PROSPECTUS. PLEASE READ THE PROSPECTUS PRIOR TO MAKING AN INVESTMENT DECISION. THE SHARES OF QUITMAN BANCORP, INC. COMMON STOCK BEING OFFERED IN THE SUBSCRIPTION AND COMMUNITY OFFERINGS ARE NOT SAVINGS OR DEPOSIT ACCOUNTS AND ARE NOT INSURED BY THE SAVINGS BANK INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.


QUESTIONS AND ANSWERS

Quitman Bancorp, Inc.
(the proposed holding company for
Quitman Federal Savings Bank)

Questions and Answers Regarding the Subscription and Community Offerings

MUTUAL TO STOCK CONVERSION

1. Q. What is a "Conversion"?
A. Conversion is a change in the legal form of organization. Quitman Federal Savings Bank currently operates as a federally-chartered mutual savings bank with no stockholders. Through the Conversion, Quitman Federal will become a federally-chartered stock savings bank, and the stock of its holding company, Quitman Bancorp, Inc. will be held by stockholders who purchase stock in the Subscription and Community Offerings or in the open market following the Offerings.

2. Q. Why is Quitman Federal Savings Bank converting?
A. Quitman Federal, as a mutual savings bank, does not have stockholders and has no authority to issue capital stock. By converting to the stock form of organization, the Savings Bank will be structured in the form used by commercial banks, most business entities and a growing number of savings institutions. The Conversion will be important to the future growth and performance of Quitman Federal by providing a larger capital base from which the Savings Bank may operate, the ability to attract and retain qualified management through stock-based employee benefit plans, enhanced ability to diversify into other financial services related activities and expanded ability to render services to the public.

The Board of Directors and management of Quitman Federal believe that the stock form of organization is preferable to the mutual form of organization for a financial institution. The Board and management recognize the decline in the number of mutual thrifts from over 12,500 mutual institutions in 1929 to under 800 mutual thrifts today.

Quitman Federal believes that converting to the stock form of organization will allow Quitman Federal to more effectively compete with local community banks, thrifts, and with statewide and regional banks, which are in stock form. Quitman


Federal believes that by combining its existing quality service and products with a local ownership base, the Savings Bank's customers and community members who become stockholders will be inclined to do more business with Quitman Federal.

Furthermore, because Quitman Federal competes with local and regional banks not only for customers, but also for employees, Quitman Federal Savings Bank believes that the stock form of organization will better afford Quitman Federal the opportunity to attract and retain employees, management and directors through various stock benefit plans which are not available to mutual savings institutions.

3. Q. Is Quitman Federal's mutual to stock conversion beneficial to the communities that the Savings Bank serves?
A. Management believes that the structure of the Subscription and Community Offerings is in the best interest of the communities that Quitman Federal serves because following the Conversion it is anticipated that a significant portion of the Common Stock will be owned by local residents desiring to share in the ownership of a local community financial institution. Management desires that a significant portion of the shares of common stock sold in the Offerings will be sold to residents of the Savings Bank's Local Community (Brooks County, Georgia).

4. Q. What effect will the Conversion have on deposit accounts and loans?
A. Terms and balances of accounts in Quitman Federal and interest rates paid on such accounts will not be affected by the Conversion. Insurable accounts will continue to be insured by the Federal Deposit Insurance Corporation ("FDIC") up to the maximum amount permitted by law. The Conversion also will not affect the terms or conditions of any loans to existing borrowers or the rights and obligations of these borrowers under their individual contractual arrangements with Quitman Federal.

5. Q. Will the Conversion cause any changes in Quitman Federal's personnel?
A. No. Both before and after the Conversion, Quitman Federal's business of accepting deposits, making loans and providing financial services will continue without interruption with the same board of directors, management and staff.

6. Q. What approvals must be received before the Conversion becomes effective?
A. First, the Board of Directors of Quitman Federal must adopt the Plan of Conversion, which occurred on October 14, 1997. The Plan of Conversion was then amended on _______________. Second, the Office of Thrift Supervision must approve the applications required to effect the Conversion. These approvals have been obtained. Third, the Plan of Conversion must be approved by a majority of all votes eligible to be cast by Quitman Federal's voting members. A Special Meeting of voting members will be held on __________ __, 1998, to consider and vote upon the Plan of Conversion.


THE HOLDING COMPANY

7. Q. What is a holding company?
A. A holding company is a Savings Bank that owns another entity. Concurrent with the Conversion, Quitman Federal Savings Bank will become a subsidiary of Quitman Bancorp, Inc., a holding company organized by Quitman Federal to acquire all of the capital stock of Quitman Federal Savings Bank to be outstanding after the Conversion.

8. Q. If I decide to buy stock in this offering, will I own stock in the Holding Company or Quitman Federal Savings Bank?
A. You will own stock in Quitman Bancorp, Inc. However, Quitman Bancorp, Inc., as a holding company, will own all of the outstanding capital stock of Quitman Federal Savings Bank.

9. Q. Why did the Board of Directors form the Holding Company?
A. The Board of Directors believes that the Conversion of Quitman Federal Savings Bank and the formation of the Holding Company will result in a stronger financial institution with the ability to provide additional flexibility to diversify the Savings Bank's business activities. The Holding Company will also be able to use stock-based incentive programs to attract and retain executive and other personnel.

ABOUT BECOMING A STOCKHOLDER

10. Q. What are the Subscription and Community Offerings?
A. Under the Plan of Conversion adopted by Quitman Federal Savings Bank, the Holding Company is offering shares of stock in the Subscription Offering, to certain current and former customers of the Savings Bank and to the Savings Bank's Employee Stock Ownership Plan ("ESOP"). Shares which are not subscribed for in the Subscription Offering, if any, may be offered to the general public in a Community Offering with preference given to natural persons who are permanent residents of the Savings Bank's Local Community (Brooks County). These Offerings are consistent with the board's objective of Quitman Bancorp, Inc. being a locally owned financial institution. The Subscription Offering and Community Offering, if conducted, are being managed by Trident Securities, Inc. It is anticipated that any shares not subscribed for in either the Subscription or Community Offerings may be offered for sale in a Syndicated Community Offering, which is an offering on a best efforts basis by a selling group of broker-dealers.


11. Q. Must I pay a commission to buy stock in conjunction with the Subscription, Community or Syndicated Community Offerings?
A. No. You will not pay a commission to buy the stock if the stock is purchased in the Subscription Offering or Community Offering, if conducted.

12. Q. How many shares of Quitman Bancorp, Inc. stock will be issued in the Conversion?
A. It is currently expected that between 425,000 shares and 575,000 shares of common stock will be sold at a price of $10.00 per share. Under certain circumstances the number of shares may be increased to 661,250.

13. Q. How was the price determined?
A. The aggregate price of the common stock was determined by FinPro, Inc., an independent appraisal firm specializing in the thrift industry, and was approved by the Office of Thrift Supervision. The price is based on the pro forma market value of Quitman Federal Savings Bank and the Holding Company as determined by the independent evaluation.

14. Q. Who is entitled to buy stock in the Conversion?
A. The shares of Quitman Bancorp, Inc. to be issued in the Conversion are being offered in the Subscription Offering in the following order of priority to: (i) The term "Eligible Account Holders" shall hereinafter mean depositors whose accounts in the Savings Bank total $50.00 or more as of December 31, 1995, (ii) the Savings Bank's ESOP, (iii) depositors with $50.00 or more on deposit at the Savings Bank as of December 31, 1997, other than Eligible Account Holders, ("Supplemental Eligible Account Holders"), (iv) depositors and borrowers of the Savings Bank as of _____________, 1998, other than Eligible Account Holders and Supplemental Eligible Account Holders ("Other Members"), subject to the priorities and purchase limitations set forth in the Plan of Conversion. Subject to the prior rights of holders of subscription rights, Common Stock not subscribed for in the Subscription Offering may be offered in the Community Offering to certain members of the general public, with preference given to natural persons and trusts of natural persons residing in the Savings Bank's Local Community (Brooks County). Shares, if any, not subscribed for in the Subscription or Community Offerings may be offered to the general public in a Syndicated Community Offering.

15. Q. Are the subscription rights transferable?
A. No. Subscription rights granted to Quitman Federal's Eligible Account Holders, Supplemental Eligible Account Holders and Other Members in the Conversion are not transferable. Persons violating such prohibition, directly or indirectly, may lose their right to purchase stock in the Conversion and be subject to other possible sanctions. It is the responsibility of each subscriber qualifying as an Eligible Account Holder, Supplemental Eligible Account Holder or Other Member to list completely all account numbers for qualifying savings accounts or loans as of the qualifying date on the stock order form.


16. Q. What are the minimum and maximum numbers of shares that I can purchase in the Conversion?
A. The minimum number of shares is 25. The maximum number of shares that may be purchased in aggregate in the Conversion by any person or person exercising rights through one account other than the ESOP, is 6,000 shares. The maximum purchase for any person or entity, together with associates and those acting in concert is 10,000 shares.

17. Q. Are the Board of Directors and management of Quitman Federal Savings Bank buying a significant amount of the stock of the Holding Company?
A. Directors and executive officers of the Savings Bank are expected to subscribe for 38,500 shares. The purchase price paid by directors and executive officers will be the same $10.00 per share price as that paid by all other persons who order stock in the Subscription or Community Offerings.

18. Q. How do I subscribe for shares of stock?
A. To subscribe for shares of stock in the Subscription Offering, you should send or deliver an original stock order form together with full payment (or appropriate instructions for withdrawal from permitted deposit accounts as described below) to Quitman Federal Savings Bank in the postage-paid envelope provided. The stock order form and payment or withdrawal authorization instructions must be received prior to the close of the Subscription Offering, which will terminate at 12:00
p.m., Local Time, on __________ __, 1998, unless extended. Payment for shares may be made in cash (if made in person) or by check or money order. Subscribers who have deposit accounts with Quitman Federal may include instructions on the stock order form requesting withdrawal from such deposit account(s) to purchase shares of Quitman Bancorp, Inc. Withdrawals from certificates of deposit may be made without incurring an early withdrawal penalty.

If shares remain available for sale after the expiration of the Subscription Offering, they may be offered in the Community Offering, which may commence at any time after the commencement of the Subscription Offering and may terminate at any time without notice, but may not terminate later than , 1998. Persons who wish to order stock in the Community Offering should return their stock order form as soon as possible after the Community Offering begins. Members of the general public should contact the Stock Information Center at
(912)263-4243 for additional information.

19. Q. May I use funds in a retirement account to purchase stock?
A. Yes. If you are interested in using funds held in your retirement account at Quitman Federal Savings Bank, the Stock Information Center can assist you in transferring those funds to a self-directed IRA, if necessary, and directing the trustee to purchase the stock. This process may be done without an early withdrawal penalty and generally without a negative tax consequence to your retirement account. Due to


the additional paperwork involved, IRA transfers must be completed by _________. For additional information, call the Stock Information Center at (912) 263-4243.

20. Q. Will I receive interest on funds I submit for a stock purchase?
A. Yes. Quitman Federal will pay interest at its passbook savings account rate from the date the funds are received until completion of the stock offering or termination of the Conversion. All funds authorized for withdrawal from deposit accounts with Quitman Federal will continue to earn interest at the contractual rate until the date of the completion of the Conversion.

21. Q. May I obtain a loan from Quitman Federal Savings Bank to pay for shares purchased in the Conversion?
A. No. Federal regulations prohibit Quitman Federal Savings Bank from making loans for this purpose. However, federal regulations do not prohibit you from obtaining a loan from another source for the purpose of purchasing stock in the Conversion.

22. Q. If I buy stock in the Conversion, how would I go about buying additional shares or selling shares in the aftermarket?
A. Quitman Bancorp, Inc., as a newly organized Savings Bank, has never issued capital stock, and consequently there is no established market for its Common Stock at this time. Quitman Bancorp, Inc. has requested that Trident Securities, Inc. make a market for the Common Stock through the OTC Bulletin Board. However, it is unlikely that an active trading market for the Common Stock will develop, and there can be no assurance that the shares of Common Stock being offered in the Conversion can be resold at or above the $10.00 purchase price.

23. Q. What is the Holding company's dividend policy?
A. The Board of Directors of the Holding company intends to adopt a policy of paying regular semi-annual cash dividends. Upon Conversion, Quitman Bancorp's Board of Directors will have the authority to declare dividends on the shares, subject to statutory and regulatory requirements. Quitman Bancorp expects initially to pay semi-annual cash dividends on the shares at a rate of 2.0% per annum ($.20 per share per annum based on the $10.00 per share offering price) commencing after the first quarter of 1999. However, declarations of dividends by the board of directors will depend upon a number of factors, including: (i) the amount of the net proceeds retained by Bancorp in the Conversion, (ii) investment opportunities available, (iii) capital requirements, (iv) regulatory limitations, (v) results of operations and financial condition, (vi) tax considerations, and (vii) general economic conditions. Upon review of such considerations, the board may authorize future dividends if it deems such payment appropriate and in compliance with applicable law and regulation. No assurance can be given, however, that the payment of dividends, once commenced, will continue. In addition, from time to time in an effort to manage capital at a reasonable level, the board may determine that it is prudent to pay special cash dividends. Special cash dividends may be paid in addition to, or in lieu of, regular cash dividends. There can be no assurance that special dividends


will be paid, or, if paid, will continue to be paid. See "Historical and Pro Forma Capital Compliance," "The Conversion--Effects of Conversion to Stock Form on Savers and Borrowers of Quitman Federal--Liquidation Account" and "Regulation--Dividend and Other Capital Distribution Limitations."

24. Q. Will the FDIC insure the shares of the holding company?
A. No. The shares of Quitman Bancorp, Inc. are not savings deposits or savings accounts and are not insured by the FDIC or any other government agency.

25. Q. If I subscribe for shares and later change my mind, will I be able to get a refund or modify my order?
A. No. Your order cannot be canceled, withdrawn or modified once it has been received by Quitman Federal without the consent of Quitman Federal.

ABOUT VOTING "FOR" THE PLAN OF CONVERSION

26. Q. Am I eligible to vote at the Special Meeting of Members to be held to consider the Plan of Conversion?
A. You are eligible to vote at the Special Meeting of Members to be held on __________ __, 1998 if you were a depositor or borrower of Quitman Federal Savings Bank at the close of business on the Voting Record Date (_______, 1998) and continue as such until the Special Meeting. If you were a member on the Voting Record Date, you should have received a proxy statement and a proxy card with which to vote.

27. Q. How many votes do I have?
A. Each account holder is entitled to one vote for each $100, or fraction thereof, on deposit in such account(s). Each borrower member is entitled to cast one vote in addition to the number of votes, if any, he or she is entitled to cast as an account holder. No member may cast more than 1,000 votes.

28. Q. If I vote "against" the Plan of Conversion and it is approved, will I be prohibited from buying stock during the Subscription Offering?
A. No. Voting against the Plan of Conversion in no way restricts you from purchasing Quitman Bancorp, Inc. stock in the Subscription Offering.

29. Q. Did the Board of Directors of Quitman Federal Savings Bank unanimously adopt the Plan of Conversion?
A Yes. Quitman Federal's Board of Directors unanimously adopted the Plan of Conversion and urges that all members vote "FOR" approval of such Plan.

30. Q. What happens if Quitman Federal Savings Bank does not get enough votes to approve the Plan of Conversion?
A. The Conversion would not take place, and Quitman Federal would remain a mutual savings institution.


31. Q. As a qualifying depositor or borrower of Quitman Federal Savings Bank, am I required to vote?
A. No. However, failure to return your proxy card or otherwise vote will have the same effect as a vote AGAINST the Plan of Conversion.

32. Q. What is a Proxy Card?
A. A proxy card gives you the ability to vote without attending the Special Meeting in person. If you received more than one informational packet, then you should vote the proxy cards in all packets. Your proxy card(s) is (are) located in the window sleeve of your informational packet(s).

You may attend the meeting and vote, even if you have returned your proxy card, if you choose to do so. However, if you are unable to attend, you still are represented by proxy. Previously executed proxies, other than those proxies sent pursuant to the Conversion, will not be used to vote for approval of the Plan of Conversion, even if the respective members do not execute another proxy or attend the Special Meeting and vote in person.

33. Q. How can I get further information concerning the stock offering?
A. You may call the Stock Information Center at (912) 263-4243 for further information or to request a copy of the Prospectus, a stock order form, a proxy statement or a proxy card.

THIS INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY QUITMAN BANCORP, INC. COMMON STOCK. SUCH OFFERS AND SOLICITATIONS MAY BE MADE ONLY BY MEANS OF THE PROSPECTUS. COPIES OF THE PROSPECTUS MAY BE OBTAINED BY CALLING THE STOCK INFORMATION CENTER AT (912) 263-4243.
THE SHARES OF QUITMAN BANCORP, INC. COMMON STOCK BEING OFFERED ARE NOT SAVINGS OR DEPOSIT ACCOUNTS AND ARE NOT INSURED BY THE SAVINGS BANK INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.


IV. Individual Letters and Community Meeting Invitations

A. Explanation

In order to educate the public about the stock offering, Trident suggests holding community meetings in various locations. In an effort to target a group of interested investors, Trident requests that each Director of the Savings Bank submit a list of acquaintances that he or she would like to invite to a community meeting.

B. Method of Distribution of Invitations and Prospect Letters

Each Director submits his list of prospects. Invitations are sent to each Director's prospects through the mail. All invitations are preceded by a Prospectus and all attendees are given a Prospectus at the meeting. Letters will be sent to prospects to thank them for their attendance and to remind them of closing dates.

C. Examples enclosed.


(Quitman Federal Savings Bank Letterhead)

____________, 1998

Dear Valued Customer:

Quitman Federal Savings Bank ("Quitman Federal" or the "Savings Bank") is pleased to announce that it has received regulatory approval to proceed with its plan to convert to a federally-chartered stock savings bank. This stock conversion is the most significant event in the history of Quitman Federal in that it allows customers, community members, directors and employees an opportunity to own stock in Quitman Bancorp, Inc., the proposed holding company for the Savings Bank.
For over 61 years, Quitman Federal has successfully operated as a mutual savings bank. We want to assure you that the Conversion will not affect the terms, balances, interest rates or existing FDIC insurance coverage deposits at the Savings Bank, or the terms or conditions of any loans to existing borrowers under their individual contract arrangements with the Savings Bank. Let us also assure you that the Conversion will not result in any changes in the management, personnel or the Board of Directors of the Savings Bank.
As one of our valued members, you have the opportunity to invest in the Savings Bank's future by purchasing stock in Quitman Bancorp, Inc. during the Subscription Offering, without paying a sales commission.
If you decide to exercise your subscription rights to purchase shares, you must return the properly completed stock order form together with full payment for the subscribed shares so that it is received by the Savings Bank not later than 12:00 p.m. Local Time on __________, 1998.
Enclosed is a proxy card. Your Board of Directors solicits your vote "FOR" the Savings Bank's Plan of Conversion. A vote in favor of the Plan does not obligate you to purchase stock. Please sign and return your proxy card promptly; your vote is important to us.
We have also enclosed a Prospectus and Proxy Statement which fully describes Quitman Federal, its management, board and financial strength and the Plan of Conversion. Please review it carefully before you vote or invest. For your convenience we have established a Stock Information Center. If you have any questions, please call the Stock Information Center collect at (912)263-4243.
We look forward to continuing to provide quality financial services to you in the future.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and Proxy Statement. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.


(Quitman Federal Savings Bank Letterhead)

____________, 1998

Dear Interested Investor:

Quitman Federal Savings Bank ("Quitman Federal " or the "Savings Bank") is pleased to announce that it has received regulatory approval to proceed with its plan to convert to a federally-chartered stock savings bank. This stock conversion is the most significant event in the history of the Savings Bank in that it allows customers, community members, directors and employees an opportunity to own stock in Quitman Bancorp, Inc., the proposed holding company for the Savings Bank.

For over 61 years, Quitman Federal has successfully operated as a mutual savings bank. We want to assure you that the Conversion will not affect the terms, balances, interest rates or existing FDIC insurance coverage on the Savings Bank deposits, or the terms or conditions of any loans to existing borrowers under their individual contract arrangements with the Savings Bank.

Let us also assure you that the Conversion will not result in any changes in the management, personnel or the Board of Directors of the Savings Bank.

Enclosed is a Prospectus which fully describes Quitman Federal, its management, board and financial strength. Please review it carefully before you make an investment decision. If you decide to invest, please return to Quitman Federal a properly completed stock order form together with full payment for shares at your earliest convenience but not later than 12:00 p.m. Local Time on _________, 1998. For your convenience we have established a Stock Information Center. If you have any questions, please call the Stock Information Center collect at (912) 263-4243.

We look forward to continuing to provide quality financial services to you in the future.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and Proxy Statement. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.


(Quitman Federal Savings Bank Letterhead)

____________, 1998

Dear Friend:

Quitman Federal Savings Bank ("Quitman Federal " or the "Savings Bank") is pleased to announce that it has received regulatory approval to proceed with its plan to convert to a federally-chartered stock savings bank. This stock conversion is the most significant event in the history of Quitman Federal in that it allows customers, community members, directors and employees an opportunity to own stock in Quitman Bancorp, Inc., the proposed holding company for the Savings Bank.
For over 61 years, Quitman Federal has successfully operated as a mutual savings bank. We want to assure you that the Conversion will not affect the terms, balances, interest rates or existing FDIC insurance coverage on the Savings Bank deposits, or the terms or conditions of any loans to existing borrowers under their individual contract arrangements with Quitman Federal.
Let us also assure you that the Conversion will not result in any changes in the management, personnel or the Board of Directors of Quitman Federal.
Our records indicate that you were a depositor of Quitman Federal on December 31, 1995 but that you were not a member on _____________, 1998. Therefore, under applicable law, you are entitled to subscribe for Common Stock in Quitman Bancorp, Inc.'s Subscription Offering. Orders submitted by you and others in the Subscription Offering are contingent upon the current members' approval of the Plan of Conversion at a special meeting of members to be held on _________, 1998 and upon receipt of all required regulatory approvals.
If you decide to exercise your subscription rights to purchase shares, you must return the properly completed stock order form together with full payment for the subscribed shares so that it is received by Quitman Federal not later than 12:00 p.m. Local Time on _________, 1998.
Enclosed is a Prospectus which fully describes the Savings Bank, its management, board and financial strength. Please review it carefully before you invest. For your convenience we have established a Stock Information Center. If you have any questions, please call the Stock Information Center collect at (912)263-4243.
We look forward to continuing to provide quality financial services to you in the future.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and Proxy Statement. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.


(Quitman Federal Savings Bank Letterhead)

___________, 1998

Dear Member:

As a qualified member of Quitman Federal Savings Bank ("Quitman Federal" or the "Savings Bank"), you have the right to vote upon the Savings Bank's proposed Plan of Holding Company Conversion and also generally have the right to subscribe for shares of common stock of Quitman Bancorp, Inc., the proposed holding company for Quitman Federal through the mutual to stock conversion of Quitman Federal Savings Bank. However, the proposed plan of Holding Company Conversion provides that Quitman Bancorp, Inc. will not offer stock in any state in which compliance with the securities laws would be impracticable for reasons of cost or otherwise. Unfortunately, the securities laws of your state would require Quitman Bancorp, Inc. to register its common stock and /or its employees in order to sell the common stock to you. Such registration would be prohibitively expensive or otherwise impracticable in light of the few members residing in your state.

You may vote on the proposed Plan of Holding Company Conversion and we urge you to read the enclosed Summary Proxy Statement and execute the enclosed Revocable Proxy. Questions regarding the execution of the Revocable Proxy should be directed to Quitman Federal Savings Bank's Stock Information Center at (912)263-4243.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and Proxy Statement. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.


Sent to prospects who are customers*

_______________, 1998

&salutation& &firstname& &last name&
&address&
&city&, &state& &zip&

Dear &prefername&

Recently you may have read in the newspaper that Quitman Federal Savings Bank (the "Savings Bank") will convert from a federally-chartered mutual savings bank to a federally-chartered stock savings bank. This is the most significant event in the history of Quitman Federal in that it allows customers, employees and directors the opportunity to share in Quitman Federal Savings Bank's future by becoming charter stockholders of the Savings Bank's newly-formed holding company, Quitman Bancorp, Inc.

As a customer of Quitman Federal, you should have received a packet of information regarding the conversion, including a Prospectus and a Proxy Statement. In addition, we are holding several presentations for friends of the officers and directors to discuss the stock offering in more detail. You will receive an invitation in the near future.

Please feel free to call me or Quitman Federal's Stock Information Center at (912) 263-4243 if you have any questions. I look forward to seeing you at one of our informational presentations.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Summary Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.


*Sent to prospects who are not customers*

____________, 1998

&salutation& &firstname& &lastname&
&address&
&city&, &state& &zip&

Dear &prefername&:

Recently you may have read in the newspaper that Quitman Federal Savings Bank (the "Savings Bank") will be converting from a federally-chartered mutual savings bank to a federally-chartered stock savings bank. This is the most significant event in the history of Quitman Federal in that it allows customers, employees and directors the opportunity to share in Quitman Federal's future by becoming charter stockholders of the Savings Bank's holding company, Quitman Bancorp, Inc.

[Director] has asked that you be sent a Prospectus and stock order form which will allow you to become a charter stockholder, should you desire. In addition, we are holding several presentations for friends of the officers and directors of Quitman Federal Savings Bank to discuss the stock offering in more detail. You will receive an invitation in the near future.

Please feel free to call me or Quitman Federal's Stock Information Center at (912) 263-4243 if you have any questions. I look forward to seeing you at one of our information presentations.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Summary Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.


*Sent to those attending a community meeting*

____________, 1998

&salutation& &firstname& &lastname&
&address&
&City&, &state& &zip&

Dear &prefername&:

Thank you for attending our informational presentation relating to Quitman Federal Savings Bank 's conversion to a stock savings bank. The information presented at the meeting and the Prospectus you recently received should assist you in making an informed investment decision.

Obviously, we are excited about this stock offering and the opportunity to share in the future of Quitman Federal. This conversion is the most important event in our history and it gives the Savings Bank the strength to compete in the future and will provide the Savings Bank additional corporate flexibility.

We may contact you in the near future to get an indication of your interest in our offering. If you make a decision to invest, please return your properly completed stock order form no later than ___________, 1998. If you have any questions, please call the Stock Information Center at (912)263-4243.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Summary Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.


* Sent to those not attending a community meeting *

_________, 1998

&salutation& &firstname& &lastname&
&address&
&city&, &state& &zip&

Dear &prefername&:

I am sorry you were unable to attend our recent presentation regarding Quitman Federal Savings Bank's mutual to stock conversion. The Board of Directors and management team of Quitman Federal are committed to contributing to long term shareholder value and as a group we are personally investing approximately $385,000 of our own funds. We are enthusiastic about the stock offering and the opportunity to share in the future of Quitman Federal Savings Bank.

We have established a Stock Information Center to assist you with any questions regarding the stock offering. Should you require any assistance between now and ___________, 1998, I encourage you to either stop by our Stock Information Center or call (912) 263-4243.

I hope you will join me as a charter stockholder in Quitman Bancorp, Inc.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Summary Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.


* Final Reminder Letter *

_________, 1998

&salutation&firstname&lastname&
&address&
&city&, &state& &zip&

Dear &prefername&:

I am writing to remind you that the deadline for purchasing stock in Quitman Bancorp, Inc. is quickly approaching. I hope you will join me in becoming a charter stockholder in one of Georgia's newest publicly owned financial institutions.

The deadline for becoming a charter stockholder is ____________, 1998. If you have any questions, please call our Stock Information Center at (912) 263-4243.

Once again, I look forward to having you join me as a charter stockholder in Quitman Bancorp, Inc.

Sincerely,

Melvin E. Plair President

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Summary Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.



The Directors and Officers

of

Quitman Federal Savings Bank

cordially invite you to attend a brief

presentation regarding the stock offering of

Quitman Bancorp, Inc., our proposed holding company

Please join us at the






for refreshments

YOU MUST RESPOND BY ____________ TO RESERVE A SEAT
R.S.V.P. (912) 263-4243



V. IRA Mailing

A. Explanation

A special IRA mailing is proposed to be sent to all IRA customers of the Savings Bank in order to alert the customers that funds held in an IRA can be used to purchase stock. Since this transaction is not as simple as designating funds from a certificate of deposit like a normal stock purchase, this letter informs the customer that this process is slightly more detailed and involves a personal visit to the Savings Bank.

B. Quantity

One IRA letter is proposed to be mailed to each IRA customer of the Savings Bank. These letters would be mailed following OTS approval for the conversion and after each customer has received the initial mailing containing a Proxy Statement and a Prospectus.

C. Example - See following page.


(Quitman Federal Savings Bank Letterhead)

__________ __, 1998

Dear Individual Retirement Account Participant:

As you know, Quitman Federal Savings Bank is in the process of converting from a federally-chartered mutual savings bank to a federally-chartered stock savings bank and has formed Quitman Bancorp, Inc. to hold all of the stock of Quitman Federal Savings Bank (the "Conversion"). Through the Conversion, certain current and former depositors and borrowers of Quitman Federal have the opportunity to purchase shares of common stock of Quitman Bancorp, Inc. in a Subscription Offering. Quitman Bancorp, Inc. currently is offering up to 575,000 shares, subject to adjustment, of Quitman Bancorp, Inc. at a price of $10.00 per share.

As the holder of an individual retirement account ("IRA") at Quitman Federal Savings Bank, you have an opportunity to become a shareholder in Quitman Bancorp, Inc. using funds being held in your IRA. If you desire to purchase shares of common stock of Quitman Bancorp, Inc. through your IRA, Quitman Federal can assist you in self-directing those funds. This process can be done without an early withdrawal penalty and generally without a negative tax consequence to your retirement account.

If you are interested in ordering Quitman Bancorp, Inc. common stock utilizing IRA funds, you must contact our Conversion Center at (912) 263-4243 by ___________.

Sincerely,

Melvin E. Plair President

This letter is neither an offer to sell nor a solicitation of an offer to buy Quitman Bancorp, Inc. common stock. The offer is made only by the Prospectus, which was recently mailed to you.

THE SHARES OF QUITMAN BANCORP, INC. COMMON STOCK ARE NOT DEPOSITS AND WILL NOT BE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.


VI. Counter Cards and Lobby Posters

A. Explanation

Counter cards and lobby posters serve two purposes: (1) As a notice to Quitman Federal Savings Bank's customers and members of the local community that the stock sale is underway and (2) to remind the customers of the end of the Subscription Offering. Trident has learned in the past that many people forget the deadline for subscribing and therefore we suggest the use of these simple reminders.

B. Quantity

Approximately 2 - 3 Counter cards will be used at teller windows and on customer service representatives' desk.
Approximately 1 - 2 Lobby posters will be used at Quitman Federal Savings Bank's office.

C. Example

D. Size

The counter card will be approximately 8 1/2" x 11". The lobby poster will be approximately 16" x 20".


C.

POSTER OR COUNTER CARD


"TAKE STOCK IN OUR FUTURE"

"QUITMAN BANCORP, INC.

STOCK OFFERING MATERIALS

AVAILABLE HERE"

QUITMAN FEDERAL SAVINGS BANK



VII. Proxy Reminder

A. Explanation

A proxy reminder is used when the majority of votes needed to adopt the Plan of Conversion is still outstanding. The proxy reminder is mailed to those "target vote" depositors who have not previously returned their signed proxy.

The target vote depositors are determined by the conversion agent.

B. Example

C. Size

Proxy reminder is approximately 8 1/2" x 11".


B. Example

P R O X Y R E M I N D E R

Quitman Federal Savings Bank

YOUR VOTE ON OUR STOCK CONVERSION PLAN HAS NOT BEEN RECEIVED.
YOUR VOTE IS VERY IMPORTANT, PARTICULARLY SINCE FAILURE TO VOTE IS EQUIVALENT TO VOTING AGAINST THE PLAN.

VOTING FOR THE CONVERSION WILL NOT AFFECT THE INSURANCE OF YOUR ACCOUNTS. DEPOSIT ACCOUNTS WILL CONTINUE TO BE FEDERALLY INSURED UP TO THE APPLICABLE LIMITS.

YOU MAY PURCHASE STOCK IF YOU WISH, BUT VOTING DOES NOT OBLIGATE YOU TO BUY STOCK.

PLEASE ACT PROMPTLY! SIGN THE ENCLOSED PROXY CARD AND MAIL, OR DELIVER, THE PROXY CARD TO QUITMAN FEDERAL SAVINGS BANK TODAY.

PLEASE VOTE ALL PROXY CARDS RECEIVED.

WE RECOMMEND THAT YOU VOTE TO APPROVE THE PLAN OF CONVERSION. THANK YOU.

THE BOARD OF DIRECTORS AND MANAGEMENT OF
QUITMAN FEDERAL SAVINGS BANK

IF YOU RECENTLY MAILED THE PROXY,
PLEASE ACCEPT OUR THANKS AND DISREGARD THIS REQUEST.
FOR FURTHER INFORMATION CALL (912) 263-4243.

This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Quitman Bancorp, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Summary Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY GOVERNMENTAL AGENCY.



This announcement is neither an offer to sell nor a solicitation of an offer to buy these securities. The offer is made only by the prospectus. These shares have not been approved or disapproved by the Securities and Exchange Commission, the Office of Thrift Supervision or the Federal Deposit Insurance Corporation, nor has such commission, office or corporation passed upon the accuracy or adequacy of the prospectus. Any representation to the contrary is unlawful.

New Issue                                                     ____________, 1998

                                 575,000 Shares

                     These shares are being offered pursuant
                         to a Plan of Conversion whereby

                          Quitman Federal Savings Bank

Quitman, Georgia, will convert from a federal mutual savings bank to a federal capital stock savings bank and become a wholly owned subsidiary of

Quitman Bancorp, Inc.

Common Stock


Price $10.00 Per Share


Trident Securities, Inc.

For a copy of the prospectus call (912) 263-4243.

Copies of the prospectus may be obtained in any State in which this announcement is circulated from Trident Securities, Inc. or such other brokers and dealers as may legally offer these securities in such state.

The stock will not be insured by the FDIC or any other government agency.