UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For the Fiscal Year Ended December 31, 2000__________

For the Transition Period from to __________________________

Commission File Number 000-23261

State or Other Jurisdiction of (I.R.S. Employer

Incorporation or Organization Identification No.)

(Address of Principal Executive Offices) (Zip Code)

Securities Registered Under Section 12(b) of the Exchange Act: NONE

Securities Registered Under Section 12(g) of the Exchange Act:

(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No

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

State the aggregate market value of the voting stock held by nonaffiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. $50,594,535 Based on Prices as of March 16, 2001.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

3,372,969 shares of $1.00 par value common stock as of March 16, 2001.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Annual Proxy Statement for the annual meeting of stockholders on April 26, 2001 are incorporated by reference into Part III.

BUSINESS

SNB Bancshares, Inc. (SNB) is a Georgia corporation formed to act as a bank holding company for Security Bank of Bibb County ("SB-Bibb") under the Federal Bank Holding Company Act of 1956, as amended, and the bank holding company laws of Georgia. SNB was incorporated on February 10, 1994 at the instruction of management of SB-Bibb. At a special meeting of the shareholders of SB-Bibb on August 2, 1994, the shareholders of SB-Bibb voted in favor of a plan of reorganization and agreement of merger pursuant to which SB-Bibb became a wholly-owned subsidiary of SNB. The reorganization was effective on September 30, 1994, as a result of which the shares of common stock of SB-Bibb then issued and outstanding were converted into shares of the common stock of SNB. SB-Bibb has operated as a wholly-owned subsidiary of SNB since that time, although the functions and business of SB-Bibb, its Board of Directors, staff and physical office locations underwent no changes as a result of the reorganization.

On August 8, 1998, SNB acquired a 100 percent interest in Crossroads Bancshares, Inc., the parent holding company of Security Bank of Houston County (formerly Crossroads Bank of Georgia) ("SB-Houston") in Perry and Warner Robins, Georgia. The two companies merged in a pooling of interests stock swap transaction and, accordingly, all prior financial information shown below has been restated as if this business combination had always existed. The parent company of SB-Houston was subsequently dissolved. SB-Houston now operates as a wholly-owned subsidiary of SNB.

On July 31, 2000, SB-Bibb purchased the assets of Group Financial Southeast (dba Fairfield Financial) in a business combination accounted for as a purchase. The assets were placed in a newly formed subsidiary of SB-Bibb incorporated as Fairfield Financial Services, Inc. ("Fairfield"). The purchase transaction involved a combination of SNB stock and cash consideration. Fairfield is a well-established real estate mortgage lending company with ten Georgia locations, including offices in Macon (3), Columbus, Warner Robins, Savannah, Richmond Hill, Rincon, Fayetteville and St. Simons Island. The Company functions as a subsidiary of SB-Bibb.

Substantially all of the business of SNB is conducted through its two subsidiary banks. A brief description of each Bank's history and business operations is discussed below.

SB-Bibb is a state-chartered bank which engages in the commercial banking business primarily in Bibb County, Georgia. SB-Bibb commenced operations on November 4, 1988. The Bank now operates six full-service offices in Macon, Georgia. On March 1, 1999, the Bank converted its banking charter from a national to a state charter and changed its name from Security National Bank to Security Bank of Bibb County.

Item 1 (Continued)

The Bank offers a full range of deposit products, lending services (including a specialized mortgage division), internet banking, automated teller machines, safe deposit boxes, credit cards, night depositories and other services for the convenience of its customers. No trust services are currently offered. The Bank provides its own data processing services.

With its purchase of Fairfield during 2000, SB-Bibb expanded its mortgage division to include ten additional offices throughout the state of Georgia.

As of December 31, 2000, SB-Bibb had total assets of $297.8 million, total deposits of $219.9 million and total stockholders' equity of $23.0 million. Net income amounted to $2.3 million for the year ended December 31, 2000.

SB-Houston commenced operation in 1987 as a state-chartered bank in Perry, Houston County, Georgia. The Bank currently operates four full-service facilities in Houston County, having added two full-service branches in Warner Robins, Georgia. SB-Houston's main office remains at 1208 Washington Street, Perry, Georgia. The Bank established its fourth full-service office during the first quarter of 2000. This office is located on Houston Lake Road in Warner Robins.

SB-Houston operates a full-service commercial banking business and provides a wide range of banking services, including checking and savings accounts, a broad range of certificates of deposit, agricultural, consumer, commercial and real estate loans, internet banking, safe deposit boxes, credit cards, night depositories and 24-hour automated teller machines. SB-Houston's customers reside mainly in the Houston County area. No trust services are currently offered. Data services are provided by SB-Bibb.

As of December 31, 2000, SB-Houston had total assets of $116.4 million, total deposits of $97.1 million, and stockholders' equity of $8.9 million. Net income for the year ended December 31, 2000 totaled $1.4 million.

SNB primarily serves the residents of Bibb and Houston counties, with estimated populations of 154,000 and 111,000, respectively, as of 2000. SNB also conducts business to a lesser extent in the surrounding counties of Jones, Monroe, Twiggs, Crawford, Peach and Wilkinson. The loan portfolio is concentrated in various commercial, real estate and consumer loans to individuals and entities located in middle Georgia, and the ultimate collectiblity of the loans and future growth of the Company are largely dependent upon economic conditions in the middle Georgia area. The Company's agricultural loans are negligible. The economy of the middle Georgia area has been generally favorable in recent years, although population growth has been moderate at best. Robins Air Force Base, located in Houston County, is a major employer in the area, which has survived national base closure mandates and expanded in size in recent years.

The acquisition of Fairfield during 2000 brings ten well established mortgage offices to SB-Bibb. Fairfield is primarily engaged in residential real estate mortgage lending in the state of Georgia.

Item 1 (Continued)

The financial services industry in the middle Georgia area is highly competitive. SNB's subsidiary banks compete actively with national and state chartered banks, savings and loan associations and credit unions for loans and deposits. In addition, the Banks compete with other financial service institutions, including brokers and dealers, insurance companies and finance companies, all of which actively engage in marketing various types of loans, deposits and other services. Management believes that competitive pricing and personalized service will provide it with a method to compete effectively in the middle Georgia area.

As of December 31, 2000, the Company had 207 employees on a full-time equivalent basis. SNB considers its relationship with its employees to be excellent.

Bank holding companies and banks are regulated under both federal and state law. The following is a brief summary of certain statutes and rules and regulations affecting the Company, the Bank, and, to a more limited extent, the Company's subsidiaries.

This summary is qualified in its entirety by reference to the particular statute and regulatory provision referred to and is not intended to be an exhaustive description of the statutes or regulations applicable to the business of the Company and its subsidiaries. The scope of regulation and permissible activities of the Company and its subsidiaries is subject to change by future federal and state legislation. Supervision, regulation and examination of the Company and the Bank by the bank regulatory agencies are intended primarily for the protection of depositors rather than shareholders of the Company.

In addition, the Federal Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve before: (1) acquiring direct or indirect ownership or control of more than 5 percent of the voting shares of any bank; (2) acquiring all or substantially all of the assets of a bank; and (3) before merging or consolidating with another bank holding company.

Item 1 (Continued)

The Georgia Department requires similar approval prior to the acquisition of any additional banks from every Georgia bank holding company. A Georgia bank holding company is generally prohibited from acquiring ownership or control of 5 percent or more of the voting shares of a bank unless the bank being acquired is either a bank for purposes of the Federal Bank Holding Company Act, or a federal or state savings and loan association or savings bank or federal savings bank whose deposits are insured by the Federal Savings and Loan Insurance Corporation and such bank has been in existence and continuously operating as a bank for a period of five years or more prior to the date of application to the Department for approval of such acquisition .

The Federal Reserve (pursuant to regulation and published statements) has maintained that a bank holding company must serve as a source of financial strength to its subsidiary banks. In adhering to the Federal Reserve policy, the Company may be required to provide financial support to the Bank at a time when, absent such Federal Reserve policy, the Company may not deem it advisable to provide such assistance. Similarly, the Federal Reserve also monitors the financial performance and prospects of nonbank subsidiaries with an inspection process to ascertain whether such nonbanking subsidiaries enhance or detract from the Company's ability to serve as a source of strength for the Bank.

The holding company is subject to regulatory capital requirements imposed by the Federal Reserve applied on a consolidated basis with the banks owned by the holding company. Bank holding companies must have capital (as defined in the rules) equal to eight (8) percent of risk-weighted assets. The risk weights assigned to assets are based primarily on credit risk. For example, securities with an unconditional guarantee by the United States government are assigned the least risk category. A risk weight of 50 percent is assigned to loans secured by owner-occupied one-to-four family residential mortgages. The aggregate amount of assets assigned to each risk category is multiplied by the risk weight assigned to that category to determine the weighted values, which are added together to determine total risk-weighted assets.

The Federal Reserve also requires the maintenance of minimum capital leverage ratios to be used in tandem with the risk-based guidelines in assessing the overall capital adequacy of bank holding companies. The guidelines define capital as either Tier 1 (primarily shareholder equity) or Tier 2 (certain debt instruments and a portion of the allowance for loan losses). Tier 1 capital for banking organizations includes common equity, minority interest in the equity accounts of consolidated subsidiaries, qualifying noncumulative perpetual preferred stock and qualifying cumulative perpetual preferred stock. (Cumulative perpetual preferred stock is limited to 25 percent of Tier 1 capital.) Tier 1 capital excludes goodwill; amounts of mortgage servicing assets, nonmortgage servicing assets, and purchased credit card relationships that, in the aggregate, exceed 100 percent of Tier 1 capital; nonmortgage servicing assets and purchased credit card relationships that in the aggregate, exceed 25 percent of Tier 1 capital; all other identifiable intangible assets; and deferred tax assets that are dependent upon future taxable income, net of their valuation allowance, in excess of certain limitations.

Item 1 (Continued)

At December 31, 2000, SNB exceeded the minimum Tier 1, risk-based and leverage ratios. The table which follows sets forth certain capital information for SNB as of December 31, 2000.

Item 1 (Continued)

Prior to the enactment of the Interstate Banking and Branching Efficiency Act of 1994 (the "Riegle-Neal Act"), interstate expansion of bank holding companies was prohibited, unless such acquisition was specifically authorized by a statute of the state in which the target bank was located. Pursuant to the Riegle-Neal Act, effective September 29, 1995, an adequately capitalized and adequately managed holding company may acquire a bank across state lines, without regard to whether such acquisition is permissible under state law. A bank holding company is considered to be "adequately capitalized" if it meets all applicable federal regulatory capital standards.

While the Riegle-Neal Act precludes a state from entirely insulating its banks from acquisition by an out-of-state holding company, a state may still provide that a bank may not be acquired by an out-of-state company unless the bank has been in existence for a specified number of years, not to exceed five years. Additionally, the Federal Reserve is directed not to approve an application for the acquisition of a bank across state lines if: (i) the applicant bank holding company, including all affiliated insured depository institutions, controls, or after the acquisition would control, more than ten (10) percent of the total amount of deposits of all insured depository institutions in the United States (the "ten percent concentration limit") or (ii) the acquisition would result in the holding company controlling thirty (30) percent or more of the total deposits of insured depository institutions in any state in which the holding company controlled a bank or branch immediately prior to the acquisition (the "thirty percent concentration limit"). States may waive the thirty percent concentration limit, or may make the limits more or less restrictive, so long as they do not discriminate against out-of-state bank holding companies.

The Riegle-Neal Act also provides that, beginning on June 1, 1997, banks located in different states may merge and operate the resulting institution as a bank with interstate branches. However, a state may (i) prevent interstate branching through mergers by passing a law prior to June 1, 1997 that expressly prohibits mergers involving out-of-state banks, or (ii) permit such merger transactions prior to June 1, 1997. Under the Riegle-Neal Act, an interstate merger transaction may involve the acquisition of a branch of an insured bank without the acquisition of the bank itself, but only if the law of the state in which the branch is located permits this type of transaction.

Under the Riegle-Neal Act, a state may impose certain conditions on a branch of an out-of-state bank resulting from an interstate merger so long as such conditions do not have the effect of discriminating against out-of-state banks or bank holding companies, other than on the basis of a requirement of nationwide reciprocal treatment. The ten (10) percent concentration limit and the thirty (30) percent concentration limit described above, as well as the rights of the states to modify or waive the thirty (30) percent concentration limit, apply to interstate bank mergers in the same manner as they apply to the acquisition of out-of-state banks.

A bank resulting from an interstate merger transaction may retain and operate any office that any bank involved in the transaction was operating immediately before the transaction. After completion of the transaction, the resulting bank may establish or acquire additional branches at any location where any bank involved in the transaction could have established or acquired a branch. The Riegle-Neal Act also provides that the appropriate federal banking agency may approve an application by a bank to establish and operate an interstate branch in any state that has in effect a law that expressly permits all out-of-state banks to establish and operate such a branch.

Item 1 (Continued)

In response to the Riegle-Neal Act, effective June 1, 1997, Georgia permitted interstate branching, although only through merger and acquisition. In addition, Georgia law provides that a bank may not be acquired by an out-of-state company unless the bank has been in existence for five years. Georgia has also adopted the thirty percent concentration limit, but permits state regulators to waive it on a case-by-case basis.

The Gramm-Leach-Bliley Act (the "GLB Act") dramatically increases the ability of eligible banking organizations to affiliate with insurance, securities and other financial firms and insured depository institutions. The GLB Act permits eligible banking organizations to engage in activities and to affiliate with nonbank firms engaged in activities that are financial in nature or incidental to such financial activities and also includes some additional activities that are complementary to such financial activities.

The definition of activities that are financial in nature is handled by the GLB Act in two ways. First, there is a laundry list of activities that are designated as financial in nature. Second, the authorization of new activities as financial in nature or incidental to a financial activity requires a consultative process between the Federal Reserve Board and the Secretary of the Treasury with each having the authority to veto proposals of the other. The Federal Reserve Board has the discretion to determine what activities are complementary to financial activities.

The precise scope of the authority to engage in these new financial activities, however, depends on the type of banking organization, whether it is a holding company, a subsidiary of a national bank, or a national bank's direct conduct. The GLB Act repealed two sections of the Glass-Stegall Act, Sections 20 and 32, which restricted affiliations between securities firms and banks. The GLB Act authorizes two types of banking organizations to engage in expanded securities activities. The GLB Act authorizes a new type of bank holding company called a financial holding company to have a subsidiary company that engages in securities underwriting and dealing without limitation as to the types of securities involved. The GLB Act also permits a national bank to control a financial subsidiary that can engage in many of the expanded securities activities permitted for financial holding companies. However, additional restrictions apply to national bank financial subsidiaries.

Since the Bank Holding Company Act of 1956, and subsequent amendments, federal law has limited the types of activities that are permitted for a bank holding company, and it has also limited the types of companies that a bank holding company can control. The GLB Act retains the bank holding company regulatory framework, but adds a new provision that authorizes enlarged authority for the new financial holding company form of organization to engage in any activity of a financial nature or incidental thereto. A new Section 4(k) of the Bank Holding Company Act provides that a financial holding company may engage in any activity, and may acquire and retain shares of any company engaged in any activity, that the Federal Reserve Board, in coordination with the Secretary of the Treasury, determines by regulation or order to be financial in nature or incidental to such financial activities, or is complementary to financial activities.

Item 1 (Continued)

The GLB Act also amends the Bank Holding Company Act to prescribe eligibility criteria for financial holding companies, defines the scope of activities permitted for bank holding companies that do not become financial holding companies, and establishes consequences for financial holding companies that cease to maintain the status needed to qualify as a financial holding company.

There are three special criteria to qualify for the enlarged activities and affiliation. First, all the depository institutions in the bank holding company organization must be well-capitalized. Second, all of the depository institutions of the bank holding company must be well managed. Third, the bank holding company must have filed a declaration of intent with the Federal Reserve Board stating that it intends to exercise the expanded authority under the GLB Act and certify to the Federal Reserve Board that the bank holding company's depository institutions meet the well-capitalized and well managed criteria. The GLB Act also requires the bank to achieve a rating of satisfactory or better in meeting community credit needs at the most recent examination of such institution under the Community Reinvestment Act.

Once a bank holding company has filed a declaration of its intent to be a financial holding company, as long as there is no action by the Federal Reserve Board giving notice that it is not eligible, the company may proceed to engage in the activities and enter into the affiliations under the large authority conferred by the GLB Act's amendments to the Bank Holding Company Act. The holding company does not need prior approval from the Federal Reserve Board to engage in activities that the GLB Act identifies as financial in nature or that the Federal Reserve Board has determined to be financial in nature or incidental thereto by order or regulation.

The GLB Act retains the basic structure of the Bank Holding Company Act. Thus, a bank holding company that is not eligible for the expanded powers of a financial holding company is now subject to the amended Section 4(c)(8) of the Bank Holding Company Act which freezes the activities that are authorized and defined as closely related to banking activities. Under this Section a bank holding company is not eligible for the expanded activities permitted under new Section 4(k) and is limited to those specific activities previously approved by the Federal Reserve Board.

The GLB Act also addresses the consequences when a financial holding company that has exercised the expanded authority fails to maintain its eligibility to be a financial holding company. The Federal Reserve Board may impose such limitations on the conduct or activities of a noncompliant financial holding company or any affiliate of that company as the Board determines to be appropriate under the circumstances and consistent with the purpose of the Act.

The GLB Act is essentially a dramatic liberalization of the restrictions placed on banks, especially bank holding companies, regarding the areas of financial businesses in which they are allowed to compete.

Item 1 (Continued)

As state-chartered banks, the Banks are examined and regulated by the Federal Deposit Insurance Corporation ("FDIC") and the Georgia Department.

The major functions of the FDIC with respect to insured banks include paying depositors to the extent provided by law in the event an insured bank is closed without adequately providing for payment of the claim of depositors, acting as a receiver of state banks placed in receivership when so appointed by state authorities, and preventing the continuance or development of unsound and unsafe banking practices. In addition, the FDIC also approves conversions, mergers, consolidations, and assumption of deposit liability transactions between insured banks and noninsured banks or institutions to prevent capital or surplus diminution in such transactions where the resulting, continued or assumed bank is an insured nonmember state bank.

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

The Georgia Department regulates all areas of the banks' banking operations, including mergers, establishment of branches, loans, interest rates and reserves. The Bank must have the approval of the Commissioner to pay cash dividends, unless at the time of such payment:

(i) the total classified assets at the most recent examination of such banks do not exceed 80 percent of Tier 1 capital plus Allowance for Loan Losses as reflected at such examination;

(ii) the aggregate amount of dividends declared or anticipated to be declared in the calendar year does not exceed 50 percent of the net profits, after taxes but before dividends, for the previous calendar year; and

(iii) the ratio of Tier 1 Capital to Adjusted Total Assets shall not be less than six (6) percent.

The Banks are also subject to State of Georgia banking and usury laws restricting the amount of interest which it may charge in making loans or other extensions of credit.

With respect to expansion, the Banks were previously prohibited from establishing branch offices or facilities outside of the county in which their main office was located, except:

a. in adjacent counties in certain situations, or

b. by means of merger or consolidation with a bank which has been in existence for at least five years.

Item 1 (Continued)

In addition, in the case of a merger or consolidation, the acquiring bank must have been in existence for at least 24 months prior to the merger. However, effective July 1, 1996, Georgia permits the subsidiary bank(s) of any bank holding company then engaged in the banking business in the state of Georgia to establish, de novo, upon receipt of required regulatory approval, an aggregate of up to three additional branch banks in any county within the state of Georgia. Effective July 1, 1998, this same Georgia law permits, with required regulatory approval, the establishment of de novo branches in an unlimited number of counties within the state of Georgia by the subsidiary bank(s) of bank holding companies then engaged in the banking business in the state of Georgia. This law may result in increased competition in the Banks' market area.

The FDIC adopted risk-based capital guidelines that went into effect on December 31, 1990 for all FDIC insured state chartered banks that are not members of the Federal Reserve System. Beginning December 31, 1992, all banks were required to maintain a minimum ratio of total capital to risk weighted assets of eight (8) percent of which at least four (4) percent must consist of Tier 1 capital. Tier 1 capital of state chartered banks (as defined by the regulation) generally consists of: (i) common stockholders' equity; (ii) qualifying noncumulative perpetual preferred stock and related surplus; and (iii) minority interests in the equity accounts of consolidated subsidiaries. In addition, the FDIC adopted a minimum ratio of Tier 1 capital to total assets of banks, referred to as the leverage capital ratio of three (3) percent if the FDIC determines that the institution is not anticipating or experiencing significant growth and has well-diversified risk, including no undue interest rate exposure, excellent asset quality, high liquidity, good earnings and, in general, is considered a strong banking organization, rated Composite "1" under the Uniform Financial Institutions Rating System (the CAMEL rating system) established by the Federal Financial Institutions Examination Council. All other financial institutions are required to maintain a leverage ratio of four (4) percent.

Effective October 1, 1998, the FDIC amended its risk-based and leverage capital rules as follows: (1) all servicing assets and purchase credit card relationships ("PCCRs") that are included in capital are each subject to a ninety (90) percent of fair value limitation (also known as a "ten (10) percent haircut"); (2) the aggregate amount of all servicing assets and PCCRs included in capital cannot excess 100 percent of Tier I capital; (3) the aggregate amount of nonmortgage servicing assets ("NMSAs") and PCCRS included in capital cannot exceed 25 percent of Tier 1 capital; and (4) all other intangible assets (other than qualifying PCCRS) must be deducted from Tier 1 capital.

Amounts of servicing assets and PCCRs in excess of the amounts allowable must be deducted in determining Tier 1 capital. Interest-only strips receivable, whether or not in security form, are not subject to any regulatory capital limitation under the amended rule.

Item 1 (Continued)

The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), enacted in December, 1991, provided for a number of reforms relating to the safety and soundness of the deposit insurance system, supervision of domestic and foreign depository institutions and improvement of accounting standards. One aspect of the Act is the requirement that banks will have to meet certain safety and soundness standards. In order to comply with the Act, the Federal Reserve and the FDIC implemented regulations defining operational and managerial standards relating to internal controls, loan documentation, credit underwriting, interest rate exposure, asset growth, director and officer compensation, fees and benefits, asset quality, earnings and stock valuation.

The regulations provide for a risk-based premium system which requires higher assessment rates for banks which the FDIC determines pose greater risks to the Bank Insurance Fund ("BIF"). Under the regulations, banks pay an assessment depending upon risk classification.

To arrive at risk-based assessments, the FDIC places each bank in one of nine risk categories using a two-step process based on capital ratios and on other relevant information. Each bank is assigned to one of three groups: (i) well capitalized, (ii) adequately capitalized, or (iii) under capitalized, based on its capital ratios. The FDIC also assigned each bank to one of three subgroups based upon an evaluation of the risk posed by the bank. The three subgroups include (i) banks that are financially sound with only a few minor weaknesses, (ii) banks with weaknesses which, if not corrected, could result in significant deterioration of the bank and increased risk to the BIF, and (iii) those banks that pose a substantial probability of loss to the BIF unless corrective action is taken. FDICIA imposes progressively more restrictive constraints on operations management and capital distributions depending on the category in which an institution is classified. As of December 31, 1998, the Bank met the definition of a "well capitalized" institution and will be assessed accordingly for 1998.

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

Item 1 (Continued)

The Company and the Banks are subject to the provisions of the Community Reinvestment Act of 1977, as amended (the "CRA") and the federal banking agencies' regulations issued thereunder. Under the CRA, all banks and thrifts have a continuing and affirmative obligation, consistent with its safe and sound operation to help meet the credit needs for their entire communities, including low- and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA.

The CRA requires a depository institution's primary federal regulator, in connection with its examination of the institution, to assess the institution's record of assessing and meeting the credit needs of the community served by that institution, including low- and moderate-income neighborhoods. The regulatory agency's assessment of the institution's record is made available to the public. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, the Federal Reserve will assess the records of each subsidiary depository institution of the applicant bank holding company, and such records may be the basis for denying the application.

The evaluation system used to judge an institution's CRA performance consists of three tests: (1) a lending test; (2) an investment test; and (3) a service test. Each of these tests will be applied by the institution's primary federal regulator taking into account such factors as: (i) demographic data about the community; (ii) the institution's capacity and constraints; (iii) the institution's product offerings and business strategy; and (iv) data on the prior performance of the institution and similarly-situated lenders.

In addition, a financial institution will have the option of having its CRA performance evaluated based on a strategic plan of up to five years in length that it had developed in cooperation with local community groups. In order to be rated under a strategic plan, the institution will be required to obtain the prior approval of its federal regulator.

The interagency CRA regulations provide that an institution evaluated under a given test will receive one of five ratings for the test: (1) outstanding; (2) high satisfactory; (3) low satisfactory; (4) needs to improve; and (5) substantial noncompliance. An institution will receive a certain number of points for its rating on each test, and the points are combined to produce an overall composite rating. Evidence of discriminatory or other illegal credit practices would adversely affect an institution's overall rating. Each of SNB's subsidiary banks received a "high satisfactory" CRA rating as a result of their last CRA examination.

Legislation is regularly considered and adopted by both the United States Congress and the Georgia General Assembly. Such legislation could result in regulatory changes and changes in competitive relationships for banks and bank holding companies. The effect of such legislation on the business of the Company and the Banks cannot be predicted.

Item 1 (Continued)

The results of operations of the Company and the Banks are affected by credit policies of monetary authorities, particularly the Federal Reserve. The instruments of monetary policy employed by the Federal Reserve include open market operations in U.S. Government securities, changes in the discount rate on member bank borrowings, changes in reserve requirements against member bank deposits and limitations on interest rates which member banks may pay on time and savings deposits. In view of the changing conditions in the foreign and national economy, as well as the effect of policies and actions taken by monetary and fiscal authorities, including the Federal Reserve, no prediction can be made as to possible future changes in interest rates, deposit levels, loan demand or the business and earnings of the Company.

Item 2

PROPERTIES

SNB's subsidiaries, SB-Bibb and SB-Houston, owned ten full-service banking locations as of December 31, 2000. Leased properties include one stand alone ATM machine and night depository and SB-Bibb's operations center, which houses its in-house data processing facility and operational support functions. Fairfield Financial Services, Inc., a subsidiary of SB-Bibb, leases ten mortgage offices throughout the state of Georgia. The net book value of all facilities including furniture, fixtures and equipment totaled $8,932,000 as of December 31, 2000. Management considers that its properties are well maintained.

Item 3

LEGAL PROCEEDINGS

The Company and its subsidiaries may become parties to various legal proceedings arising from the normal course of business. As of December 31, 2000, there are no material pending legal proceedings to which SNB or its subsidiaries are a party or of which any of its property is the subject.

Item 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

Item 5

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

SNB common stock is quoted on the NASDAQ Stock Market under the symbol "SNBJ." Prior to December 1, 1997, SNB common stock was not traded on any public market or exchange, although certain brokerage firms made a market for its common stock. The following table sets forth the high, low and close sale prices per share of the common stock as reported on the NASDAQ Stock Market, and the dividends declared per share for the periods indicated.

Part II (Continued)

Item 5 (Continued)

As of March 14, 2001 the Company had approximately 1,172 shareholders of record.

For a discussion on dividend restrictions, refer to Item 1, Business-Regulation of the Banks.

Item 6

SELECTED FINANCIAL DATA

Refer to page 16 of the Management's Discussion and Analysis for the table of selected financial data for each of the past five years.

Item 7

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

The following discussion reviews the results of operations and assesses the financial condition of SNB Bancshares, Inc. ("SNB", or the "Company") in Macon, Georgia for each of the five most recent years ended December 31, 2000. This discussion should be read in conjunction with the Company's consolidated financial statements and accompanying notes.

Item 7 (Continued)

SNB is a Georgia corporation formed to act as a bank holding company for Security Bank of Bibb County (formerly Security National Bank) ("SB-Bibb") under the federal Bank Holding Company Act of 1956, as amended, and the bank holding company laws of Georgia. SNB was incorporated on February 10, 1994 at the instruction of management of SB-Bibb. At a special meeting of the shareholders of SB-Bibb on August 2, 1994, the shareholders of SB-Bibb voted in favor of a plan of reorganization and agreement of merger pursuant to which SB-Bibb became a wholly-owned subsidiary of SNB. The reorganization was effective on September 30, 1994, as a result of which the shares of common stock of SB-Bibb then issued and outstanding were converted into shares of the common stock of SNB. SB-Bibb has operated as a wholly-owned subsidiary of SNB since that time, although the functions and business of SB-Bibb, its Board of Directors, staff and physical office locations underwent no changes as a result of the reorganization.

SB-Bibb is a state-chartered bank that engages in the commercial banking business primarily in Bibb County, Georgia. SB-Bibb commenced operations on November 4, 1988. The bank operates six full service banking offices in Macon, Georgia. On March 1, 1999, the bank converted its banking charter from a national to a state charter, and changed its name from Security National Bank to Security Bank of Bibb County.

On August 8, 1998, SNB acquired a 100 percent interest in Crossroads Bancshares, Inc., the parent holding company of Crossroads Bank of Georgia in Perry and Warner Robins, Georgia. The two companies merged in a pooling of interests stock swap transaction and, accordingly, all prior financial information shown below has been restated as if this business combination had always existed. The parent company of Crossroads Bank was subsequently dissolved. On June 3, 1999, Crossroads Bank changed its name to Security Bank of Houston County ("SB-Houston") and now operates as a wholly-owned subsidiary of SNB, with four full service banking offices in Perry and Warner Robins.

On July 31, 2000, SB-Bibb purchased the assets of Group Financial Southeast (dba Fairfield Financial) in a business combination accounted for as a purchase. The assets were placed in a newly formed subsidiary of SB-Bibb incorporated as Fairfield Financial Services, Inc. ("Fairfield"). The purchase transaction involved a combination of SNB stock and cash consideration. Fairfield is a well-established real estate mortgage lending company with ten Georgia locations, including offices in Macon (3), Columbus, Warner Robins, Savannah, Richmond Hill, Rincon, Fayetteville and St. Simons Island. The Company functions as a subsidiary of SB-Bibb.

Substantially all of the business of SNB is conducted through its two subsidiary banks. Both banks offer a full range of lending services including the specialized Fairfield mortgage subsidiary, deposit products, internet banking, automated teller machines, safe deposit boxes, credit cards, night depositories, and other services for the convenience of its customers, who mainly reside in Bibb and Houston Counties. As of December 31, 2000, SNB had 207 employees on a full-time equivalent basis.

The following table illustrates selected key financial data of SNB for each of the past five years.

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Consolidated total assets of $410.2 million at December 31, 2000 were up by $126.7 million, or 44.7 percent, over total assets at December 31, 1999. Total assets of $283.5 million at December 31, 1999 were up by $30.5 million, or 12.0 percent, over total consolidated assets at December 31, 1998. On average the balance sheet grew by 25.2 percent during 2000 and 14.2 percent during 1999. These growth rates are generally higher than the economic growth statistics for the Company's middle Georgia market area. Assets of the newly acquired mortgage lending unit stood at $48.3 million at December 31, 2000. In addition to the growth spurred by the Fairfield transaction in 2000, SNB's above average growth trends are attributed to recent industry consolidations and restructuring efforts of the larger super regional banks in the area, SNB's broader coverage of the geographic area through its expanded branch network and the synergies among the bank subsidiaries and the mortgage unit.

The following tables present condensed average balance sheets for the periods indicated, and the percentages of each of these categories to total average assets for each period.

Loans and loans held for sale, net of unearned income, of $318.5 million and $207.4 million at December 31, 2000 and 1999 totaled 77.6 percent and 73.2 percent of total assets, and 102.2 percent and 87.4 percent of deposits. Loans amounted to 84.8 percent of all funding sources at December 31, 2000 and 81.9 percent at December 31, 1999. The average yields generated by interest and fees from the entire loan portfolio amounted to 9.75 percent during 2000, compared to 9.38 percent during 1999, and 10.02 percent during 1998. SNB's reserve for loan losses as a percentage of outstanding loans amounted to 0.94 percent at December 31, 2000, compared to 1.12 percent and 1.16 percent at December 31, 1999 and 1998.

The following table presents the amount of loans outstanding by category, both in dollars and in percentages of the total portfolio, at the end of each of the past five years.

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The following table provides information on the maturity distribution of selected categories of the loan portfolio and certain interest sensitivity data as of December 31, 2000.

The investment securities portfolio is another major interest-earning asset and consists of debt and equity securities categorized as either available for sale or held to maturity. These securities provide SNB with a source of liquidity and a stable source of income. The investment portfolio provides a resource to help balance interest rate risk and credit risk related to the loan portfolio.

As of December 31, 2000, the securities portfolio totaled 1.5 million, or 12.6 percent of total assets, compared to $45.1 million, or 15.9 percent of assets at December 31, 1999. Over recent years, the shrinkage in the size of the securities portfolio relative to total assets indicates that a higher proportion of earning assets have been deployed into the loan portfolio rather than in investment securities to produce greater yields.

The average tax equivalent yield on the portfolio, excluding the impact of SFAS No. 115 market value adjustments for unrealized gains and losses on available for sale securities, was 6.66 percent for the year 2000 versus 6.36 percent in 1999 and 6.31 percent in 1998. During the year 2000, the investment securities portfolio, excluding unrealized gains and losses, represented 14.3 percent of average earning assets and 13.3 percent of average total assets. During 1999, the portfolio averaged 16.1 percent of earning assets and 14.7 percent of total assets. This decrease is attributable to increased mortgage and commercial loan activity from the Fairfield merger and general growth in overall earning assets at the two subsidiary banks.

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The following table summarizes the available for sale and held to maturity investment securities portfolios as of December 31, 2000, 1999 and 1998. Available for sale securities are shown at fair value, while held to maturity securities are shown at amortized or accreted cost.

The following tables illustrate the contractual maturities and weighted average yields of investment securities held at December 31, 2000. Expected maturities will differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without call or prepayment penalties. No prepayment assumptions have been estimated in the table. The weighted average yields are calculated on the basis of the amortized cost and effective yields of each security weighted for the scheduled maturity of each security. The yield on state, county and municipal securities is computed on a taxable equivalent basis using a statutory federal income tax rate of 34 percent.

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As of December 31, 2000 and 1999, SNB had no holdings of securities of a single issuer in which the aggregate book value and aggregate market value of the securities exceeded ten percent of stockholders' equity, with the exception of U. S. Treasury and U. S. Government Agencies securities.

SNB holds additional earning assets in overnight Federal Funds Sold. These balances totaled $4.4 million and $6.1 million as of December 31, 2000 and 1999, respectively. Balances in nonearning assets are comprised of cash and correspondent bank balances, premises and equipment, foreclosed real estate, income receivable on loans and investments and other miscellaneous assets. Management works to minimize nonearning asset balances in order to maximize profit potential. Nonearning assets represented 9.5 percent of the balance sheet as of December 31, 2000, and 9.6 percent as of December 31, 1999.

Deposits are SNB's primary liability and funding source. Total deposits as of December 31, 2000 were $311.6 million, up 31.2 percent from $237.4 million at December 31, 1999. Average deposits in 2000 were $256.7 million, up 18.2 percent from $217.2 million during 1999. The average cost of deposits, with noninterest checking accounts factored in, was 4.26 percent during 2000, up from 3.69 percent during 1999 and 3.96 percent in 1998. The increases are attributed to increases in rates paid on money market accounts and certificates of deposit to keep up with market competition and to attract additional funding for use in the new mortgage unit.

During 2000, 17.8 percent of average deposits were held in noninterest-bearing checking accounts, 23.7 percent were in lower yielding interest-bearing transaction and savings accounts, and 58.5 percent were in time certificates with higher yields. Comparable average deposit mix percentages during 1999 were 18.1 percent, 26.7 percent and 55.2 percent, respectively. The Banks' total interest expense on deposits and borrowed funds as a percentage of average earning assets was 4.43 percent during 2000, up from 3.61 percent during 1999 and 3.84 percent during 1998.

The following tables reflect average balances of deposit categories for the years 2000, 1999 and 1998.

The following table summarizes the maturities of time deposits of $100,000 or more as of December 31, 2000, 1999 and 1998. The majority of SNB's large denomination time deposits are from customers within the local market area, therefore providing a greater degree of stability than is typically associated with this source of funds. SNB holds no foreign deposits and has only minor balances of brokered deposits.

Demand notes to the U. S. Treasury of $0.9 million at December 31, 2000 represented accumulated federal tax deposit payments through the Treasury Department's note option program. These Treasury deposit balances averaged $0.8 million during 2000, with an average interest cost of 4.84 percent. Federal funds purchased and securities sold under agreements to repurchase totaled $8.6 million at December 31, 2000, and a capital lease obligation totaled $0.1 million. Reliance on other borrowed money as a funding source increased on average from $8.7 million during 1999 to $33.4 million during 2000 due to an increase in the use of FHLB notes to match against the Company's growing mortgage volumes. The cost of all nondeposit borrowed money components averaged 6.48 percent in 2000, up from 4.77 percent in 1999.

Other interest-bearing sources of funds at December 31, 1999 totaled $15.8 million, up from $6.4 million at December 31, 1998. Of the 1999 year-end balance, $6.1 million consisted of FHLB notes, $0.4 million was in treasury, tax and loan note balances, $9.2 million was in federal funds purchased and securities sold under agreements to repurchase, and $0.1 million was in capital lease obligations.

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Other liabilities of $3.5 million at December 31, 2000 and $2.8 million at December 31, 1999 consist of interest payable on deposits and borrowed funds, federal income taxes payable and other accrued but unpaid expenses.

SNB, primarily through the actions of its subsidiary banks, engages in liquidity management to ensure adequate cash flow for deposit withdrawals and credit commitments. Needs are met through loan repayments, net interest and fee income, and the sale or maturity of existing assets. In addition, liquidity is continuously provided through the acquisition of new deposits or the renewal of maturing deposits. Management monitors deposit flow and evaluates alternate pricing structures to retain and grow deposits as needed. Through various asset / liability management strategies, a balance is maintained among goals of liquidity, safety and earnings potential. Balances held in cash and correspondent banks are reviewed daily to maximize the federal funds investment position. Internal policies that are consistent with regulatory liquidity guidelines are monitored and enforced by the Banks.

The investment portfolio provides a ready means to raise cash without loss if liquidity needs arise. As of December 31, 2000, SNB held $49.2 million in bonds, at amortized or accreted cost, in the Available for Sale portfolio, and $9.1 million of these bonds mature, or are callable, within a one-year period. At December 31, 1999, the Available for Sale portfolio totaled $42.9 million, with $8.0 million maturing or callable within one year. Only marketable investment grade bonds are purchased. The Banks from time to time invest in short-term CDs at other banks, and generally maintain a net sold position in overnight federal funds.

Management continually monitors the relationship of loans to deposits as it relates to SNB's liquidity posture. SNB had ratios of loans to deposits of 102.2 percent as of December 31, 2000 and 87.4 percent at December 31, 1999. The purchase of the Fairfield mortgage company has increased management's emphasis on maintaining adequate resources for liquidity. Management employs alternative funding sources when deposit balances will not meet loan demands. The ratio of loans to all funding sources at December 31, 2000 and 1999 was 84.8 percent and 81.9 percent, respectively. Management continues to emphasize programs to generate local core deposits as the Company's primary funding source. The stability of the Banks' core deposit base is an important factor in the SNB's liquidity position. A heavy percentage of the deposit base is comprised of accounts of individuals and small businesses with comprehensive banking relationships and limited volatility.

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At December 31, 2000 and 1999, the Banks had $37.0 million and $31.9 million in certificates of deposit of $100,000 or more. Although these deposits represented 11.9 percent and 13.4 percent of respective total deposits, the majority of these large CDs are stable deposits of local individuals and small businesses. Management works to avoid reliance on volatile deposits that might lead to liquidity pressures. The parent company has an unsecured line of credit and the Banks have established borrowing lines for federal funds through correspondent banks. Borrowing capacity also exists through the membership of the Banks in the Federal Home Loan Bank program, and both Banks have established access to national CD markets for deposit gathering through a bulletin board service if needed. Management believes that the various funding sources discussed above are adequate to meet the Company's liquidity needs in the future without any material adverse impact on operating results.

SNB has always placed emphasis on maintaining a strong capital base and continues to exceed all minimum regulatory capital requirements. SNB's equity capital of $31.1 million at December 31, 2000 totals 7.6 percent of total assets, compared to 9.7 percent at December 31, 1999, and 10.2 percent at December 31, 1998. On average, the equity capital was 9.1 percent of assets during 2000, compared to 10.5 percent for 1999 and 11.1 percent for 1998. The downward trend in the capital ratio reflects the Company's strong balance sheet growth pattern, which has been most pronounced during the year 2000.

Information discussed below has been adjusted for stock splits. In July 2000, 32,345 new shares of SNB stock were issued in connection with the purchase acquisition of Fairfield Financial Services, Inc., producing $0.4 million in additional capital. In August 1998, 846,743 new shares of the Company's common stock were issued for the pooling of interests stock swap merger with Crossroads Bancshares, Inc. Additionally, 1998 marked the expiration of the outstanding stock warrants held by the Company's organizing directors and executive officers. During 1997 and 1998, the holders completed the exercise of 449,700 warrants, generating a total of $1.5 million in new capital. There are no remaining founders' warrants outstanding.

Capital levels in 1996 and 1997 reflect an influx of $5.4 million in proceeds from the issuance of new stock in two different events. In September 1996, SNB issued a stock offering for the sale of 340,700 new shares of the Company's common stock. The issue, which generated $3.6 million in new capital, was fully subscribed and successfully completed by February 1997. At the beginning of 1996, SNB issued an additional 203,500 shares of its common stock, primarily to newly elected directors and executive officers of the Company. This action produced $1.8 million in new capital.

Principal uses of the Company's capital base in recent years have been (a) sustaining the capital adequacy of the Banks as they continue to grow at a steady pace, (b) expanding the Company's presence in Macon and middle Georgia with more physical locations and improved delivery systems, (c) expanding into contiguous Houston County through the merger with SB-Houston and development of a mortgage loan division, (d) acquiring Fairfield to broaden the Company's mortgage services markets, and (e) enhancing corporate infrastructure support systems to manage SNB's multi-bank environment. Additional acquisitions may occur in the future.

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Regulators use a risk-adjusted calculation to aid them in their determination of capital adequacy by weighting assets based on the degree of risk associated with on- and off-balance sheet assets. The majority of these risk-weighted assets for the Company are on-balance sheet assets in the form of loans. Small portions of risk-weighted assets are considered off-balance sheet assets comprised of letters of credit and loan commitments. Capital is categorized as either core (Tier 1) capital or supplementary (Tier 2) capital. Tier 1 capital consists primarily of stockholders' equity minus any intangible assets, while Tier 2 capital can consist of the reserve for loan losses up to certain limits, certain short-term and other preferred stock and certain debt instruments.

Current regulatory standards require bank holding companies to maintain a minimum risk based capital ratio of qualifying total capital to risk weighted assets of 8.0 percent, with at least 4.0 percent of the capital consisting of Tier 1 capital, and a Tier 1 leverage ratio of at least 4.0 percent. Additionally, the regulatory agencies define a well-capitalized bank as one that has a Tier 1 leverage ratio of at least 5 percent, a Tier 1 capital ratio of at least 6 percent, and a total risk based capital ratio of at least 10 percent. As of December 31, 2000, SNB had a Tier 1 leverage ratio of 9.39 percent, a Tier 1 capital ratio of 8.86 percent, and a total risk based capital ratio of 9.75 percent. The Company's total risk based capital ratio had fallen slightly below the well-capitalized status at year-end 2000. Due to continuing strong growth trends in the balance sheet, management is currently assessing strategies to assure future capital adequacy. The following table demonstrates capital ratio calculations as of December 31, 2000 and 1999.

Cash dividends of $923,200, or $.28 per weighted average common share, were declared and paid during 2000, up from $851,862, or $.26 per share during 1999, and $704,126, or $.22 per share in 1998. The ratios of cash dividends paid to net income for these years were 26.5 percent, 26.3 percent and 30.3 percent, respectively. Since the commencement of cash dividend payments in 1992, the SNB Board of Directors has consistently declared and paid dividends on a quarterly basis.

On June 1, 1996, a 100 percent stock split was issued and effected in the form of a dividend, and on September 25, 1997, a 25 percent stock split was issued and effected in the form of a dividend. Per share data for all periods presented have been retroactively restated to reflect the additional shares resulting from these stock splits.

Management is not aware of any trends, events, or uncertainties that will have, or that are reasonably likely to have a material impact on SNB's liquidity, capital resources, or operations. Further, management is aware of no current recommendations by regulatory authorities that, if they were to be implemented, would have such an effect.

On January 29, 1998, SNB entered into an Agreement and Plan of Merger with Crossroads Bancshares, Inc. in Perry, Georgia, pursuant to which Crossroads would be merged with and become a wholly owned subsidiary of SNB. On August 8, 1998, the merger was completed in a 100 percent stock pooling of interests transaction, and 846,743 shares of SNB common stock were issued to effect the merger. On June 3, 1999, the Bank name was changed from Crossroads Bank to Security Bank of Houston County. SB-Houston operates four offices in Houston County - one in Perry, Georgia and three in Warner Robins, Georgia. The merger allowed SNB to establish an immediate presence in its primary targeted market for expansion. Houston County is included in the same Macon-Warner Robins metropolitan statistical area as SNB's principal Bibb County market. The Warner Robins Air Force Base is the largest employer in the middle Georgia area and helps to make the two counties a common market.

On July 31, 2000, SB-Bibb acquired Fairfield Financial Services, Inc. ("Fairfield"), a well-established mortgage loan company based in Macon, Georgia. The purchase transaction involved a combination of SNB stock and cash consideration. Fairfield has ten Georgia locations, including offices in Macon (3), Columbus, Warner Robins, Savannah, Richmond Hill, Rincon, Fayetteville and St. Simons Island. The company now functions as a subsidiary of SB-Bibb.

The Company's 44.7 percent growth rate in total assets from December 31, 1999 to December 31, 2000 is largely attributed to (a) the success of these two acquisitions in developing synergies and market cohesiveness in middle Georgia, and (b) the community banking philosophies of the two subsidiary banks during a period of merger shake-ups in the local markets.

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As the Company grows, it continues to add physical office locations and delivery channels to serve its existing middle Georgia market. Due to continuing growth trends, SB-Bibb has outgrown its current executive offices in Macon and expects to build a new corporate center and banking office by mid-2002. Additional space is also needed for operations and data processing functions, and the Company expects to lease a larger facility by late 2001. SNB is adequately capitalized to meet all anticipated capital expenditure needs. During 1999, the Company introduced an internet banking product for its customers. In 1998, the Hartley Bridge Road branch was constructed and opened in southwest Bibb County by the lead bank. This is SB-Bibb's sixth full service location in Macon. SB-Bibb purchased an existing facility and opened its fifth full service office at 3945 Pio Nono Avenue in south Macon in August 1997. SB-Bibb's existing Shurling Drive branch was relocated in 1997 to a larger and more convenient major intersection at 614 Shurling Drive. In February 1997, the Bank relocated its in-house data processing facility and operational functions to a leased operations center on Riverside Drive near the bank's main office. Platformation and other improvements to the Company's internal information technology were made in 1997. During 1996, a remote ATM/night depository facility was established on Forsyth Road in northwest Macon. These additional fixed asset purchases were financed through the equity base and retained earnings of the Company with no external borrowing.

During the first quarter of 2000, SB-Houston's fourth full service office in Houston County was established on Houston Lake Road in Warner Robins. The mortgage division in Houston County has now been merged into the Fairfield administration and relocated from leased space into the new branch office on Houston Lake Road.

The acquisition of Fairfield during 2000 brings ten Georgia mortgage offices to SB-Bibb. These offices, located in Macon, Columbus, Warner Robins, Savannah, Richmond Hill, Rincon, Fayetteville, and St. Simons Island, are well established and provide only mortgage services at this time. SNB management may consider converting one or more of the Fairfield offices into full service banking offices in the future. Alternatively, management may consider additional expansion moves into the markets where Fairfield offices are now located.

Item 7 (Continued)

Information for all prior periods in the following discussion has been retroactively adjusted for the pooling of interests combination with Crossroads Bancshares, Inc., which occurred on August 8, 1998. SNB's net income was $3,479,247, $3,245,174, and $2,326,967 for the years 2000, 1999 and 1998, respectively. Diluted earnings per share totaled $1.03 in 2000, $0.96 in 1999, and $0.69 in 1998. The Company's return on average assets amounted to 1.09 percent for 2000, 1.27 percent for 1999, and 1.04 percent for 1998. The return on average equity was 12.01 percent, 12.08 percent, and 9.41 percent, respectively. During 2000, the Company incurred approximately $150,000 in merger costs on the Fairfield acquisition, and expensed an additional $350,000 to increase the loan loss reserve due to the Fairfield merger. During 1998, $532,484 in one-time pre-tax expense was incurred for the 1998 acquisition in Houston County and associated name changes for the banks. Additional overhead costs have been incurred for the periods shown for the establishment of a more extensive branch network and increased technological costs associated with setting up a multi-bank data processing center.

Net interest income (the difference between the interest earned on assets and the interest paid on deposits and liabilities) is the principal source of earnings for the Company. SNB's average net interest rate margin, on a taxable equivalent basis, was 4.79 percent in 2000, 5.21 percent in 1999 and 5.34 percent in 1998. Although the margin yield has exhibited a trend of decline, the Company has been able to maintain reasonable margins per industry standards. Net interest income before tax equivalency adjustments in 2000 totaled $13,928,611, up 16.3 percent from $11,975,079 in 1999. The 1999 net interest income was up 11.6 percent from $10,734,768 posted in 1998.

The following table presents interest income, adjusted to a tax equivalent basis, interest expense and the resulting average net interest rate margins for the past three years.

Tax equivalent net interest income increased by $1,989,000 from 1999 to 2000. This increase in absolute dollars of margin in 2000 was driven by strong balance sheet growth. The average margin yield declined by 42 basis points, from 5.21 percent in 1999 to 4.79 percent in 2000. Over the course of 2000, the prime borrowing rate increased by 100 basis points, from 8.50 percent to 9.50 percent by year-end. Management was able to improve average loan yields by 38 basis points in spite of intense local competition on loan pricing. Yields on the investment portfolio were also improved by 30 basis points through repricing and purchases at current market rates. The margin was also aided by a shift in balance sheet mix from the bond portfolio to the loan portfolio as the year proceeded. However, the margin was negatively impacted by an increase in the overall cost of funds of 84 basis points for the year. Management resorted to higher balances in more costly borrowed funds to support strong loan growth, and deposits repriced rapidly at higher market rates during the year.

Balances in average interest-earning assets rose by 26.8 percent in 2000 over 1999. Growth in higher yielding loan balances accounted for most of this increase. Average loan balances increased 28.6 percent and represented 77.1 percent of the average balance sheet in 2000, up from 75.1 percent of the average balance sheet in 1999. Investment securities, on the other hand, declined from 14.7 percent to 13.3 percent of the average balance sheet. The overall yield on average interest earning assets, on a taxable equivalent basis, increased by 40 basis points from 8.82 percent in 1999 to 9.22 percent in 2000.

At the same time, the overall average cost of interest-bearing liabilities has increased by 84 basis points, from 4.52 percent in 1999 to 5.36 percent in 2000. Most deposit rates increased in 2000 over 1999, due to increases in general market rates and strong competition for deposits. Average deposit balances also grew, increasing 18.8 percent in 2000 over 1999. This growth is attributed to aggressive marketing in a period of flux for area super regional competition, growing consumer business due to the convenience of a larger branch network, increases in business deposit relationships from larger commercial credit lines, and Fairfield cross-selling synergies. With the increased liquidity needs brought on by strong loan demand and the increased mortgage activity, average balances in other borrowing sources increased from $8.7 million in 1999 to $33.4 million in 2000. Rates paid on these borrowings increased as well, from 4.77 percent in 1999 to 6.48 percent in 2000.

Tax equivalent net interest income increased by $1,211,000 from 1998 to 1999. The increase is attributed to significant balance sheet growth and improvements in balance sheet mix. The average margin yield declined by 12 basis points, from 5.34 percent in 1998 to 5.21 percent in 1999. Yields on average earnings assets declined by 36 basis points, from 9.18 percent in 1998 to 8.82 percent in 1999. Average interest-earning asset balances increased by 13.6 percent in 1999 over 1998. Loans became a more dominant asset, representing 75.1 percent of the average balance sheet in 1999, up from 71.8 percent in 1998. Lower yielding investment securities and federal funds sold dropped to 16.3 percent of average 1999 assets, down from 20.2 percent during 1998. Rates paid on deposits and other funding sources trended downward over the periods due to the declining rate environment at that time. The cost of average interest-bearing liabilities fell 35 basis points, from 4.87 percent in 1999 to 4.52 percent in 1998.

Item 7 (Continued)

The table on this and the following page summarizes average balance sheets, interest and yield information on a taxable equivalent basis for the years ended December 31, 2000, 1999, and 1998.