TheTable average cost of funds increased 40 basis points to 5.11% for the three months ended September 30, 2007 compared to the same period in 2006, primarily due to increases in volume and the interest rates paid on certificates of deposits. Average time deposits for the third quarter of 2007 were $397.9 million, compared to $310.6 million for the three months ended September 30, 2006, an increase of 28%. The average rate paid on time deposits increased from 4.97% for the third quarter of 2006 to 5.45% for the third quarter of 2007. While the Federal Reserve reduced its discount rate during the third quarter of 2007, average rates paid on these deposits typically lag these rate reductions due to the longer term of the accounts. Contents

AtTable December 31, 2006, we had arrangements with a correspondent and commercial banks for short term unsecured advances up to $20.5 million. As of September 30, 2007, we had no outstanding balance under these arrangements. Contents

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AtTable December 31, 2006, we had arrangements with a correspondent and commercial banks for short term unsecured advances up to $20.5 million. As of September 30, 2007, we had no outstanding balance under these arrangements. Contents

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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2007~~2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: ~~333~~000-~~144138~~ 53197

BUCKHEAD COMMUNITY BANCORP, INC.

(Exact name of small business issuer as specified in its charter)

Georgia

58-2265980

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

415 East Paces Ferry Road

Atlanta, Georgia 30305

(Address of principal executive offices)

(404) 504-~~2548~~2557

(Issuer’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) has 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. Yes x No ¨

Indicate by check mark whether the registrant ishas asubmitted ~~large~~electronically ~~accelerated~~and ~~filer,~~posted anon ~~accelerated~~its ~~filer~~corporate orWeb asite, ~~non-accelerated~~if ~~filer.~~any, ~~See~~every ~~definition~~Interactive ofData ~~“accelerated~~File ~~filer~~required to be submitted and ~~large~~posted ~~accelerated filer”~~pursuant into Rule ~~12b-2~~405 of Regulation S-T during the ~~Exchange~~preceding ~~Act~~12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

~~Large~~Indicate ~~Accelerated~~by ~~Filer ¨ Accelerated~~check ~~Filer ¨ Non~~mark whether the registrant is a large accelerated filer, an accelerated filer or a non-~~Accelerated~~accelerated ~~Filer x~~filer, or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of ~~November~~May 308, ~~2007~~2009: Common Stock, $0.01 par value, 46,~~575~~314,~~166~~213 shares outstanding.

BUCKHEAD COMMUNITY BANCORP, INC.

AND SUBSIDIARY

INDEX

			Page
Part I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)
		Consolidated Balance Sheets	13
		Consolidated Statements of Income	2
		Consolidated Statements of Operations	4
		Consolidated Statements of Comprehensive Income	3
		Consolidated Statements of Comprehensive Income (Loss)	5
		Consolidated Statement of Changes in Shareholders’ Equity	46
		Consolidated Statements of Cash Flows	57
		Notes to Condensed Consolidated Financial Statements	6
		Notes to Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1013
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2532
	Item 4.	Controls and Procedures	27
	Item 4T.	Controls and Procedures	35
Part II.	OTHER INFORMATION		27
	Item 1.	Legal Proceedings	2736
	Item 1A.	Risk factors.	2736
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3136
	Item 3.	Defaults Upon Senior Securities	3136
	Item 4.	Submission of Matters to a Vote of Security Holders	3136
	Item 5.	Other Information	3136
	Item 6.	Exhibits	3236
Signatures			3337

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)	September 302007			December 312006			September 302006
(Dollars in thousands)	March 312009			December 312008			March 312008
	(Unaudited)			~~(Audited)~~			(Unaudited)
ASSETS
Cash and due from banks	$	623,~~137~~570		$	75,~~869~~042		$	68,~~796~~511
Interest-bearing deposits in other banks		~~341~~313			~~387~~1,138			~~437~~317
Federal funds sold		3275,~~050~~086			4023,~~585~~674			4732,~~927~~774
Investment Securities:
Securities available for sale, at fair value		112,255			104,015			146,496
Securities available for sale, at fair value		100,805			97,794			98,600
Restricted equity securities, at cost		3,276			3,408			2,508
Restricted equity securities, at cost		1,419			1,247			1,405
Total investment securities		115,531			107,423			149,004
Total investment securities		102,224			99,041			100,005
Loans held for sale		3,500			5,349			3,406
Loans held for sale		4,332			3,574			1,971
Loans, net of unearned income		696,592			712,961			689,922
Loans, net of unearned income		455,553			378,326			360,122
Allowance for loan losses		(14,765	)		(12,114	)		(11,167	)
Allowance for loan losses		(5,299	)		(4,518	)		(4,749	)
Net loans		681,827			700,847			678,755
Net loans		450,254			373,808			355,373
Bank premises and equipment		10,044			10,286			10,809
Bank premises and equipment		6,539			6,272			6,037
Accrued interest receivable		4,101			4,572			4,696
Accrued interest receivable		3,670			3,235			2,918
Goodwill		17,320			17,320			32,660
Other real estate owned		7,937			1,703			1,875
Other intangible assets		—			—			2,297
Other assets		3,689			4,752			2,745
Other real estate owned		36,656			29,549			14,051
Total assets	$	617,173		$	541,226		$	526,084
Other assets		5,877			4,757			7,202
Total assets	$	973,825		$	909,957		$	944,482
LIABILITIES
Noninterest-bearing demand deposits	$	3441,~~506~~453		$	3436,~~639~~605		$	3277,~~713~~346
Interest-bearing deposits		~~507~~816,~~874~~868			~~437~~730,~~450~~268			~~430~~713,~~951~~052
Total deposits		~~542~~858,~~380~~321			~~472~~766,~~089~~873			~~463~~790,~~664~~398
Other Borrowings		11,585			10,035			8,345
Short-term borrowings		34,549			55,035			25,159
Junior Subordinated Debt		15,465			15,465			15,465
Long-term debt		16,000			16,000			19,000
Accrued interest payable		3,093			2,349			2,616
Junior subordinated debt		15,465			15,465			15,465
Accrued expenses and other liabilities		909			1,497			1,318
Accrued interest payable		2,918			2,930			3,760
Total liabilities		573,432			501,435			491,408
Accrued expenses and other liabilities		642			596			1,470
Total liabilities		927,895			856,899			855,252
SHAREHOLDERS’ EQUITY
Special stock, par value $0.01; 1,000,000 shares authorized; none issued		-			-			-
Special stock, no par value; 2,000,000 shares authorized; none issued		—			—			—
Common stock, par value $0.01; 10,000,000 shares authorized; 4,575,166, 4,567,344, and 4,408,944 shares, respectively		46			46			44
Common stock, par value $0.01; 20,000,000 shares authorized; 6,314,213, 6,314,213 and 6,313,813 shares issued and outstanding, respectively		63			63			63
Capital surplus		2772,~~593~~552			2772,~~403~~550			2372,~~467~~536
Retained earnings		17,042			13,257			11,973
Retained earnings (deficit)		(25,728	)		(19,155	)		16,366
Accumulated other comprehensive loss		(744	)		(874	)		(764	)
Accumulated other comprehensive income (loss)		(875	)		(307	)		393
Deferred compensation		(~~196~~82	)		(4193	)		(44128	)
Total shareholders’ equity		4345,~~741~~930			3953,~~791~~058			3489,~~676~~230
Total liabilities and shareholders’ equity	$	~~617~~973,~~173~~825		$	~~541~~909,~~226~~957		$	~~526~~944,~~084~~482

The accompanying notes are an integral part of these financial statements.

BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

	Three Months EndedSeptember 30						Nine Months EndedSeptember 30
	Three Months Ended March 31
(dollars in thousands, except share and per share data)	2007			2006			2007		2006
(Dollars in thousands, except share and per share data)(Unaudited)	2009				2008
	(Unaudited)						(Unaudited)
INTEREST INCOME
INTEREST INCOME
Loans, including fees	$	8,172			$	12,673
Loans, including fees	$	10,407		$	8,885		$	29,829	$	23,086
Securities:
Securities:
Taxable		824				1,048
Taxable		976			870			3,024		2,249
Tax-exempt		57				235
Tax-exempt		215			236			668		630
Federal funds sold and short-term investments		13				284
Federal funds sold and short-term investments		489			423			1,653		1,104
Dividends		(14	)			30
Dividends		57			46			66		56
Total interest income		9,052				14,270
Total interest income		12,144			10,460			35,240		27,125
INTEREST EXPENSE
INTEREST EXPENSE
Deposits		6,577				8,246
Deposits		6,308			4,732			17,877		11,887
Short-term borrowings		184				207
Short-term and other borrowings		411			387			1,190		786
Junior subordinated debt		135				250
Total interest expense		6,719			5,119			19,067		12,673
Long-term debt		150				28
NET INTEREST INCOME		5,425			5,341			16,173		14,452
Total interest expense		7,046				8,731
Provision for loan losses		400			525			1,150		1,525
NET INTEREST INCOME		2,006				5,539
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		5,025			4,816			15,023		12,927
Provision for loan losses		5,064				2,122
NONINTEREST INCOME
NET INTEREST INCOME/(LOSS) AFTER PROVISION FOR LOAN LOSSES		(3,058	)			3,417
Gain on sale of loans held for sale		349			263			869		1,026
NONINTEREST INCOME
Gain on sale of securities available for sale		-			35			-		37
Gain (loss) on sale of loans held for sale		41				(34	)
Other noninterest income		120			171			417		368
Gain/(loss) on securities available for sale, net		830				1
Total noninterest income		469			469			1,286		1,431
Other noninterest income		150				248
NONINTEREST EXPENSE
Total noninterest income		1,021				215
Salaries and employee benefits		2,215			1,768			6,402		5,029
NONINTEREST EXPENSE
Occupancy expenses		492			397			1,331		1,089
Salaries and employee benefits		1,921				2,899
Advertising and marketing		194			251			467		473
Occupancy expenses		592				583
Legal and other professional services		165			37			410		284
Advertising and marketing		93				156
Other operating expenses		813			457			1,923		1,346
Legal and other professional services		388				228
Total noninterest expense		3,879			2,910			10,533		8,221
Provision for OREO losses		301				248
INCOME BEFORE INCOME TAXES		1,615			2,375			5,776		6,137
Other operating expenses		1,241				1,105
Provision for income taxes		550			842			1,991		2,159
Total noninterest expense		4,536				5,219
NET INCOME	$	1,065		$	1,533		$	3,785	$	3,978
LOSS BEFORE INCOME TAXES		(6,573	)			(1,587	)
EARNINGS PER SHARE
Income tax benefit		—				(668	)
Basic	$	0.23		$	0.35		$	0.83	$	0.97
NET LOSS	$	(6,573	)		$	(919	)
Diluted	$	0.23		$	0.33		$	0.82	$	0.93
LOSS PER SHARE
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic	$	(1.04	)		$	(0.15	)
Basic		4,575,166			4,408,944			4,572,306		4,119,452
Diluted 1	$	(1.04	)		$	(0.15	)
Diluted		4,625,224			4,581,169			4,622,364		4,291,677
WEIGHTED-AVERAGE SHARES OUTSTANDING
CASH DIVIDENDS PER SHARE	$	-		$	-		$	-	$	-
Basic		6,317,091				6,305,751
Diluted		6,398,487				6,421,209
CASH DIVIDENDS PER SHARE	$	—			$	—

1	Calculated using average basic common shares for the three months ended March 31, 2009 and 2008

The accompanying notes are an integral part of these financial statements.

BUCKHEAD COMMUNITY BANCORP, INC., AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months EndedSeptember 30							Nine Months EndedSeptember 30
	Three Months EndedMarch 31
(dollars in thousands)	2007			2006				2007		2006
(Dollars in thousands)(Unaudited)	2009				2008
	(Unaudited)							(Unaudited)
Net loss	$	(6,573	)		$	(919	)
Net income	$	1,065		$	1,533			$	3,785	$	3,978
Other comprehensive income (loss):
Other comprehensive income (loss):
Unrealized holding gains arising during period on securities available for sale, net of tax of $0, and $351, respectively		262				673
Unrealized holding gains (losses) arising during period on securities available for sale, net of tax (benefits) of $777 and $707, $67 and $127, respectively		1,508			1,372				130		246
Reclassification adjustment for gains realized in net loss		(830	)			(1	)
Reclassification adjustment for (gains) losses realized in net income, net of tax (benefits) of $0 and $12, $0 and $13, respectively		-			(23	)			-		(24	)
Other comprehensive income (loss)		(568	)			672
Other comprehensive income (loss)		1,508			1,349				130		222
Comprehensive loss	$	(7,141	)		$	(247	)
Comprehensive income	$	2,573		$	2,882			$	3,915	$	4,200

The accompanying notes are an integral part of these financial statements.

BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

						Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)				Deferred Compensation				Total Shareholders’ Equity
															Accumulated
	Common Stock
											Retained				Other							Total
(dollars in thousands, except per share data)	Shares		Par Value
	Common Stock						Capital				Earnings				Comprehensive				Deferred			Shareholders’
Balance, December 31, 2005	3,244,912		$	32		$	21,914		$	7,995		$	(986	)		$	-			$	28,955
(Dollars in thousands, except share data)	Shares			Par Value			Surplus				(Deficit)				Income (Loss)				Compensation			Equity
Net income										3,978											3,978
Balance, December 31, 2007	6,315,813			$	63		$	72,584			$	17,285			$	(279	)		$	(181	)		89,472
20% Stock split	657,482			7																	7
Net loss	—				—			—				(919	)			—				—			(919	)
Exercise of stock options	503,550			5			1,503														1,508
Restricted stock forfeiture	(2,000	)			—			(50	)			—				—				50			—
Restricted stock award	3,000						50										(50	)			-
Stock-based compensation	—				—			2				—				—				3			5
Stock-based compensation																	6				6
Other comprehensive income (loss)	—				—			—				—				672				—			672
Other comprehensive income (loss)													222								222
Balance, March 31, 2008 (Unaudited)	6,313,813			$	63		$	72,536			$	16,366			$	393			$	(128	)	$	89,230
Balance, September 30, 2006 (unaudited)	4,408,944		$	44		$	23,467		$	11,973		$	(764	)		$	(44	)		$	34,676
Balance, December 31, 2008	6,314,213			$	63		$	72,550			$	(19,155	)		$	(307	)		$	(93	)		53,058
Balance, December 31, 2006	4,567,344		$	46		$	27,403		$	13,257		$	(874	)		$	(41	)			39,791
Net loss	—				—			—				(6,573	)			—				—			(6,573	)
Net income										3,785											3,785
Stock-based compensation	—				—			2				—				—				11			13
Stock-based compensation							4										31				35
Other comprehensive income (loss)	—				—			—				—				(568	)			—			(568	)
Restricted stock award	7,822						186										(186	)			-
Balance, March 31, 2009 (Unaudited)	6,314,213			$	63		$	72,552			$	(25,728	)		$	(875	)		$	(82	)	$	45,930
Other comprehensive income (loss)													130								130
Balance, September 30, 2007 (unaudited)	4,575,166		$	46		$	27,593		$	17,042		$	(744	)		$	(196	)		$	43,741

The accompanying notes are an integral part of these financial statements.

BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months EndedSeptember 30
	Three Months EndedMarch 31
(dollars in thousands)	2007			2006
(Dollars in thousands)(Unaudited)	2009			2008
OPERATING ACTIVITIES		~~(unaudited)~~
Net income	$	3,785		$	3,978
Net loss	$	(6,573	)	$	(919	)
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and accretion		~~460~~253			~~424~~266
Provision for loan losses		1,150			1,525
Amortization of intangible assets		—			70
Provision for foreclosed property losses		241			-
Provision for loan losses		5,064			2,122
Net (gains) losses on sales of securities		-			(37	)
Provision for OREO losses		301			248
Gains on sales of loans		(869	)		(1,026	)
Net gains on securities		(830	)		(1	)
Stock-based compensation		35			6
Net (gains) losses on sales of loans		(41	)		34
(Increase) decrease in loans held for sale		111			3,664
Losses on sales of other real estate		39			2
(Increase) decrease in interest receivable		(435	)		(749	)
Stock-based compensation		13			5
Increase (decrease) in interest payable		744			1,517
Decrease (increase) in loans held for sale		1,890			(2,208	)
Net other operating activities		(443	)		715
Decrease in interest receivable		471			—
Net cash provided by operating activities		4,779			10,017
Decrease in interest payable		(12	)		(125	)
Net other operating activities		(1,280	)		(1,329	)
Net cash used in operating activities		(705	)		(1,835	)
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits in banks		46			(99	)
Net decrease in interest-bearing deposits in banks		825			1,947
Purchases of securities available for sale		(697,~~640~~397	)		(4553,~~090~~060	)
Proceeds from sales of securities available for sale		-84,491			~~8,832~~—
Proceeds from calls and maturities of securities available for sale		34,~~874~~823			217,~~631~~214
Net (purchases) sales of restricted equity securities		(172	)		(253	)
Net redemptions (purchases) of restricted equity securities		132			(747	)
Net decrease (increase) in federal funds sold		8,535			(1,883	)
Net increase in federal funds sold		(51,412	)		(9,346	)
Net increase in loans		(85,070	)		(98,968	)
Net decrease (increase) in loans		4,026			(19,691	)
Proceeds from sale of other real estate		1,849			-
Proceeds from sales of other real estate		2,781			4,431
Purchases of premises and equipment		(774	)		(682	)
Net purchases of bank premises and equipment		2			(98	)
Net cash (used in) investing activities		(78,352	)		(135,512	)
Cash used for business combination		—			(13,375	)
Net cash used in investing activities		(51,729	)		(72,725	)
FINANCING ACTIVITIES
Net increase in deposits		7091,~~291~~448			~~115~~34,~~405~~650
Net proceeds from other borrowings		1,550			756
Net change in short-term borrowings		(20,486	)		5,589
Proceeds from junior subordinated debt		-			10,000
Net proceeds from long-term debt		—			19,000
Tax benefit from exercise of stock options		-			1,516
Net proceeds from issuance of common stock		—			4,675
Net cash provided by financing activities		7170,~~841~~962			~~127~~63,~~677~~914
(Decrease)/increase) in cash and due from banks		(1,732	)		2,182
Change in cash and due from banks		18,528			(10,646	)
Cash and due from banks at beginning of period		75,~~869~~042			419,~~614~~157
Cash and due from banks at end of period	$	623,~~137~~570		$	68,~~796~~511
Supplemental Disclosures:
Cash paid during the period for:
Interest	$	187,~~323~~058		$	118,~~156~~856
Income taxes	$	~~1,330~~—		$	~~1,399~~—
Noncash investing activities:
Non-cash investing activities:
Transfer of loans to other real estate owned	$	79,~~474~~930		$	15,~~875~~146

The accompanying notes are an integral part of these financial statements.

Buckhead Community Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Accounting ~~Polices~~Policies and Recent Accounting Pronouncements

The accompanying unaudited consolidated financial statements of Buckhead Community Bancorp, Inc. (“Buckhead” or “the Company”) and its subsidiary, The Buckhead Community Bank (“the Bank”) have been prepared in accordance with generally accepted accounting principles for interim information and with the instructions to Article 10 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations are not necessarily indicative of the results of operations for the full year or any other interim periods.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements,” which clarifies how companies should use fair value measurements in accordance with US GAAP for recognition and disclosure. SFAS No. 157 establishes a common definition of fair value and a framework for measuring fair value under US GAAP, along with expanding disclosures about fair value measurements to eliminate differences in current practice that exist in measuring fair value under the existing accounting standards. SFAS No. 157 establishes a three-level fair value hierarchy to prioritize the inputs used in valuation techniques. SFAS No. 157 requires disclosures detailing the extent to which companies measure assets and liabilities at fair value, the methods and assumptions used to measure fair value, and the effect of fair value measurements on earnings. This statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company expects to adopt this standard beginning January 1, 2008. The financial statement impact of this adoption is being evaluated; however, it is not expected to be material to the Company’s financial position or results of operations.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (SFAS No. 159), The Fair Value for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This statement is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objective for accounting for financial instruments. This statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply SFAS No. 157, Fair Value Measurements. The Company expects to adopt this standard beginning January 1, 2008. The financial statement impact of this adoption is being evaluated; however, it is not expected to be material to the Company’s financial position or results of operations.

The Company adopted Financial Interpretation No. (“FIN”) 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109, on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in enterprises’ financial statements in accordance with SFAS No. 109. FIN 48 prescribes a recognition threshold and measurement attributable for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions. The adoption of FIN 48 had no effect on the Company’s financial statements.

For further information regarding accounting policies and recently issued accounting pronouncements, refer to the consolidated financial statements and footnotes for the fiscal year ended December 31, 2006, included as part of the Registration Statement on Form S-4 filed by the Company on October 5, 2007.

Note 2 – Earnings Per Share (“EPS”)

The following table reflects the reconciliation of the numerator and denominator of the basic EPS computation to the diluted EPS computation for the three and nine months ended September 30, 2007 and 2006.

	Three Months EndedSeptember 30				Nine Months EndedSeptember 30
(In thousands, except per share data)(Unaudited)	2007		2006		2007		2006
Diluted
Net income available to common shareholders	$	1,065	$	1,533	$	3,785	$	3,978
Average basic common shares		4,575		4,409		4,572		4,119
Effect of dilutive securities:
Stock options		50		172		50		173
Average diluted common shares		4,625		4,581		4,622		4,292
Earnings per average common share - diluted	$	0.23	$	0.33	$	0.82	$	0.93
Basic
Net income available to common shareholders		1,065		1,533		3,785		3,978
Average basic common shares		4,575		4,409		4,572		4,119
Earnings per average common share - basic	$	0.23	$	0.35	$	0.83	$	0.97

Note 3 – Stock Based Compensation

The Company has a stock incentive plan under which we may grant options to our employees, directors and other key persons to purchase shares of common stock. Options are granted at prices equal to the fair market value of the shares at the date of grant and are exercisable as determined by the plan’s administrative committee. The options expire ten years from the date of grant. The general terms of the plan also include a vesting period which is usually four years for options granted since January of 2007. Options granted prior to that date generally vested immediately. Through September 30, 2007, only incentive stock options, nonqualified stock options and restricted stock awards and units had been granted under the plan.

Effective January 1, 2006, the Company adopted SFAS No. 123 (revised), “Share Based Payment” (“SFAS No. 123(R)”) utilizing the modified prospective method of accounting. Grant date fair value is measured on the date of grant using an option pricing model with market assumptions. The grant date fair value is amortized into expense on a straight-line basis over the vesting period. Option pricing models require the use of highly subjective assumptions, including but not limited to, expected stock price volatility, forfeiture rates, and interest rates, which if changed could materially affect our fair value estimates. Accordingly, the model does not necessarily provide a reliable single measure of the fair value of our stock options.

Stock Options

The following is a summary of the Company’s weighted average assumptions used to estimate the weighted average per share fair value of options granted during the three and nine months ended September 30, 2007 and 2006, on the date of grant using the Black- Scholes option pricing model. No stock options were granted during the three months ended September 30, 2007 or during 2006.

	Three Months EndedSeptember 30		Nine Months EndedSeptember 30
(Dollars in Thousands)(Unaudited)	2007	2006	2007			2006
Expected volatility	N/A	N/A		18	%	N/A
Expected dividend yield	N/A	N/A		2	%	N/A
Expected life (in years)	N/A	N/A		6.5		N/A
Risk-free rate	N/A	N/A		4.6	%	N/A
Annual forfeiture rate	N/A	N/A		3	%	N/A
Weighted average fair value of options	N/A	N/A	$	5.04		N/A

The Company expensed approximately $4,000 in the first three quarters of 2007 and $0 in the first three quarters of 2006, respectively, related to stock options. The total compensation cost related to nonvested awards not yet recognized was $14,000 as of September 30, 2007 and the weighted average period over which it is to be recognized is 2 years.

The following table presents a summary of stock option activity:

	Nine months ended September 30, 2007
(Dollars in thousands)(Unaudited)	Shares		Weighted-AverageExercise Price		Weighted-AverageRemaining ContractualLife (years)
Options outstanding, January 1, 2007	65,197		$	5.95
Granted	3,779			22.50
Exercised	-			-
Options outstanding, September 30, 2007	68,976		$	6.86	5.6
Exercisable, September 30, 2007	65,197		$	5.95	5.4
	Nine months ended September 30, 2006
(Dollars in thousands)(Unaudited)	Shares		Weighted-AverageExercise Price		Weighted-AverageRemaining ContractualLife (years)
Options outstanding, January 1, 2006	735,697		$	3.22
Granted	-			-
Exercised	(512,100	)		2.96
Options outstanding, September 30, 2006	223,597		$	3.83	3.8

At the Company’s annual shareholders’ meeting, the stock option plan was replenished with an additional 800,000 shares. All 800,000 are available for future stock option grants to employees and directors under the existing plan at September 30, 2007. At September 30, 2007, the aggregate intrinsic value of options outstanding was $1,245,888 and the aggregate intrinsic value of options exercisable was $1,236,440.

~~Restricted~~Buckhead ~~Stock~~Community Bancorp, Inc. and Subsidiary

OnNotes ~~April 1,~~to ~~2006,~~Consolidated ~~the~~Financial ~~Company’s~~Statements ~~President~~(Unaudited) and Chief Executive Officer was awarded 3,000 shares of restricted common stock, with an aggregate fair market value of $16.67 per share. The restricted stock will vest in four equal increments on April 1, 2007, 2008, 2009, and 2010. The total expense associated with this grant of approximately $49,000 will be recognized over the four year period on a straight-line basis.

OnNote ~~March 27,~~2 ~~2007~~– ~~and~~Loss ~~April 25,~~Per ~~2007,~~Share employees were awarded 3,822 and 4,000 shares of restricted common stock, respectively, with an aggregate per share fair market values of $22.50 and $25.00, respectively. The restricted stock will vest annually in four equal increments, beginning on the first anniversary of its grant date. The total expense associated with this grant of approximately $186,000 will be recognized over the vesting period on a straight-line basis. For the nine months ended September 30, 2007 and 2006, respectively, approximately $31,000 and $6,000 was charged as compensation cost against income related to this grant. The unamortized balance of the fair value of the restricted stock grant has been recorded as deferred compensation in the equity section of the consolidated balance sheets.

The following ~~tables~~table ~~present~~reflects ~~restricted~~the ~~stock~~reconciliation ~~activity:~~of the numerator and denominator of the basic EPS computation to the diluted EPS computation for the three months ended March 31, 2009 and 2008. There is no dilution from dilutive securities due to the antidilutive effect of the net loss for the three months ended March 31, 2009 and 2008.

(Dollars in thousands)(Unaudited)	Shares			Weighted-AverageGrant Date Fair Value
	Three Months EndedMarch 31
Outstanding, January 1, 2007	3,000			$	16.67
(Amounts in thousands, except per share data)(Unaudited)	2009				2008
Granted	7,822				23.78
Basic
Vested	(750	)			16.67
Net loss available to common shareholders		(6,573	)			(919	)
Outstanding, September 30, 2007	10,072			$	22.19
Average basic common shares		6,317				6,306
(Dollars in thousands)(Unaudited)	Shares			Weighted-AverageGrant Date Fair Value
Loss per average common share - basic	$	(1.04	)		$	(0.15	)
Outstanding, January 1, 2006	-			$	-
Diluted
Granted	3,000				16.67
Net loss available to common shareholders	$	(6,573	)		$	(919	)
Vested	-				-
Average basic common shares		6,317				6,306
Outstanding, September 30, 2006	3,000			$	16.67
Effect of dilutive securities:
Stock options and restricted stock		81				115
Average diluted common shares		6,398				6,421
Loss per average common share - diluted 1	$	(1.04	)		$	(0.15	)

~~Note~~1 4Calculated –using ~~Acquisitions~~average basic common shares for the three months ended March 31, 2009 and 2008

OnNote ~~December 4,~~3 ~~2007,~~– ~~Allied~~Fair ~~Bancshares,~~Value Inc. and its subsidiary, First National Bank of Forsyth County, is scheduled to merge with and into the Company for a total purchase price of approximately $54.5 million. The merger enhances our geographic position in counties with high growth potential. Under the terms of the agreement, Allied’s shareholders will elect to receive either 1.2 shares of the Company’s common stock for each share of common stock they own or $30.00 per share in cash for each Allied share. The maximum amount of cash consideration to be paid is $13.4 million. The merger will be accounted for as a purchase as prescribed by SFAS No. 141, “Business Combinations,” and the results of operations of Allied will be included in our consolidated financial results beginning December 4, 2007.

As defined in SFAS No. 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

On April 9, 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” This FSP reaffirmed SFAS No. 157’s statement that the objective of fair value measurement is to reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. It emphasizes the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. This FSP is effective for interim and annual periods ending after June 15, 2009, but entities may early adopt this FSP for the interim and annual periods ending after March 15, 2009. We did not elect to early adopt this FSP, and are evaluating its impact on our financial position and results of operations.

On April 9, 2009, the FASB issued FSP FAS 107-1 and APB 29-1, “Interim Disclosures about Fair Value of Financial Instruments.” This FSP increased the frequency of disclosures related to financial instruments that are not currently reflected on the balance sheet at fair value. This FSP is effective for interim and annual periods ending after June 15, 2009, but entities may early adopt this FSP for the interim and annual periods ending after March 15, 2009. We did not elect to early adopt this FSP, and do not expect it to have a material impact on our financial position or results of operations.

On April 9, 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” This FSP requires an entity to assess whether it intends to sell a security or is more likely than not to be required to sell a security prior to recovery when determining other-than-temporary impairment. For debt securities, this guidance separates impairment into a component related to credit loss, (which is recognized in earnings) and a component related to other factors, (which is recognized in other comprehensive income). This FSP is effective for interim and annual periods ending after June 15, 2009, but entities may early adopt this FSP for the interim and annual periods ending after March 15, 2009. We did not elect to early adopt this FSP, and are evaluating its impact on our financial position and results of operations.

Buckhead Community Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Based on the observability of the inputs used in the valuation techniques the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

•

Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities that are traded in an active exchange market, as well as U.S. Treasury securities that are highly liquid and are actively traded in over-the-counter markets

•

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments, as well as U.S. Government and agency mortgage backed debt securities whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

•

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Assets Measured at Fair Value on a Recurring Basis

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying balance sheet, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-Sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Broker quotes are not necessarily determinative of fair value if an active market does not exist for the security. Currently, all of the Company’s available-for-sale securities are considered to be Level 2 securities.

Loans held for sale

Loans held for sale are those loans the Company has the intent to sell in the foreseeable future and they are carried at the lower of cost or fair value. The fair value of loans held for sale is based on what secondary markets are offering for loans with similar characteristics, therefore the Company classifies those assets as Level 2.

Buckhead Community Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

The following table presents financial assets measured at fair value on a recurring basis:


			Fair Value Measurements at March 31, 2009, Using
(Dollars in thousands)(Unaudited)	Assets/Liabilities Measured at Fair Value March 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available for sale	$	112,255	$	—	$	112,255	$	—
Loans held for sale	$	3,500	$	—	$	3,500	$	—


			Fair Value Measurements at March 31, 2008, Using
(Dollars in thousands)(Unaudited)	Assets/Liabilities Measured at Fair Value March 31, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Securities available for sale	$	146,496	$	—	$	146,496	$	—
Loans held for sale	$	5,349	$	—	$	5,349	$	—

Assets Measured at Fair Value on a Non-recurring Basis

Following is a description of the valuation methodologies used for instruments measured at fair value on a non-recurring basis and recognized in the accompanying balance sheet, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Impaired Loans

Loan impairment is reported when full payment under the loan terms is not expected. Impaired loans are carried at the present value of estimated future cash flows using the loan’s existing rate, or the fair value of collateral if the loan is collateral dependent. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to require increase, such increase is reported as a component of the provision for loan losses. Loan losses are charged against the allowance when management believes the uncollectability of a loan is confirmed. During the first three months of 2009, certain impaired loans were partially charged-off or re-evaluated for impairment resulting in a remaining balance for these loans, net of specific allowances, of $105.9 million as of March 31, 2009. This valuation would be considered Level 3, consisting of appraisals of underlying collateral and discounted cash flow analysis.

Other Real Estate Owned

Other real estate assets acquired through or in lieu of foreclosure are held for sale and are initially recorded at fair value. Any write-downs to fair value at the time of transfer to foreclosed assets are charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less costs to sell. This valuation would be considered Level 3, consisting of appraisals of real estate collateral, along with other factors known to management.

The following table presents financial assets measured at fair value on a non-recurring basis, for which impairment was recognized in the current period.

Buckhead Community Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)


			Fair Value Measurements at March 31, 2009, Using
(Dollars in thousands)(Unaudited)	Carrying Value as of March 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Allowances as of March 31, 2009
Impaired loans	$	105,915	$	—	$	—	$	105,915	$	(9,105	)
Other real estate owned		36,656		—		—		36,656		(1,907	)


			Fair Value Measurements at March 31, 2008, Using
(Dollars in thousands)(Unaudited)	Carrying Value as of March 31, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Allowances as of March 31, 2008
Impaired loans	$	18,719	$	—	$	—	$	18,719	$	(3,150	)
Other real estate owned		14,051		—		—		14,051		(495	)

In February, 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115. SFAS No. 159 allows companies to report selected financial assets and liabilities at fair value. The changes in fair value are recognized in earnings and the assets and liabilities measured under this methodology are required to be displayed separately on the balance sheet. While SFAS No. 159 became effective for the Company beginning January 1, 2008, the Company has not elected the fair value option that is offered by this statement.

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following is management’s discussion and analysis of certain significant factors which have affected the financial position and operating results of the Company and the Bank, during the period included in the accompanying consolidated financial statements. The purpose of this discussion is to focus on information about our financial condition and results of operations that are not otherwise apparent from our consolidated financial statements. Reference should be made to those statements and the selected financial data presented elsewhere in this report for an understanding of the following discussion and analysis.

Throughout this Item, the terms “we,” “us” and “our” refer to the Company and the Bank together on a consolidated basis.

The Company is a corporation which was organized under the laws of the state of Georgia to be a holding company for the Bank. Like most community bank holding companies, the Company derives substantially all of its income from the earnings of its subsidiary Bank. The Bank is a bank chartered under the laws of the State of Georgia that opened for business on February 16, 1998. The Bank is a full service commercial bank located in Atlanta, Georgia, with a primary service area consisting of the community of Atlanta and the surrounding areas within Fulton, Cobb, Forsyth and ~~Cobb~~Hall Counties. The principal business of the Bank is to accept deposits from the public and to make loans and other investments.

Forward Looking Statements

Some of the statements in this Report, including, without limitation, matters discussed under the caption “Management’s Discussion and Analysis ~~of Financial Condition and Results of Operation~~,” ~~of Buckhead Community Bancorp, Inc.~~ are “forward-looking statements” within the meaning of the ~~federal~~Private ~~securities~~Securities ~~laws~~Litigation Reform Act of 1995. Forward-looking statements relate to future events or our future financial performance, and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, integration of recently acquired banks, pending or proposed acquisitions, our other business strategies, our expectations with respect to our allowance for loan losses and impaired loans, ~~anticipated capital expenditures for our operations center~~, and other statements that are not historical facts. When we use words like “may,” “plan,” “contemplate,” “project,” “predict,” “anticipate,” “believe,” “intend,” “expect,” “estimate,” “could,” “should,” “will,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared. ~~Factors~~ ~~that~~These ~~may~~forward ~~cause~~looking ~~actual~~statements ~~results~~include torisks ~~differ~~and ~~materially~~uncertainties ~~from~~and ~~those~~may ~~expressed~~not orbe ~~implied~~realized bydue ~~such~~to ~~forward-looking statements~~a ~~include,~~variety ~~among~~of ~~others~~factors, including, but not limited to the following ~~possibilities~~: (1) competitive pressures among depository and other financial institutions ~~may increase significantly~~; (2) changes in the interest rate environment ~~may reduce margins~~; (3) ~~general~~the ~~economic~~effects ~~conditions~~of ~~may~~future beeconomic ~~less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduction in demand for credit~~conditions; (4) legislative or regulatory changes, including changes in accounting standards ~~may adversely affect the businesses in which we are engaged~~; (5) costs or difficulties related to the integration of our businesses~~, may be greater than expected~~; (6) deposit attrition, customer loss or revenue loss ~~following acquisitions may be greater than expected~~; (7) ~~competitors~~the ~~may~~failure ~~have~~of ~~greater~~assumptions ~~financial~~underlying ~~resources~~the ~~and~~establishment ~~develop~~of ~~products~~reserves ~~that~~for ~~enable~~possible ~~such~~loan ~~competitors to compete more successfully than us~~losses; and (8) ~~adverse~~ changes ~~may occur~~ in the equity markets.

Many of such factors are beyond our ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements contained in this Report, whether as a result of new information, future events or otherwise.

Executive Summary

During the first quarter of 2009, our financial performance was under continued pressure, and we recorded a net loss of $6.6 million. Interest reversals on non-performing loans and related provisions to valuation allowances continued to have a negative impact on earnings. However, management’s efforts to improve our liquidity position were successful during the first quarter of 2009. Total deposits increased approximately $91.4 million, or 11.9% from December 31, 2008. In addition, management continues to evaluate and consider various strategic alternatives to improve our capital position.

Critical Accounting Estimates

We have adopted various accounting policies that govern the application of accounting principles generally accepted in the United States in the preparation of our financial statements. Certain accounting policies involve significant judgments and assumptions by us that have a material impact on the carrying value of certain assets and liabilities. We consider these accounting judgments and assumptions to be our critical accounting estimates. The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates which could have a material impact on our carrying values of assets and liabilities and our results of operations.

Allowance for Loan Losses

We believe the allowance for loan losses is a critical accounting estimate that requires the most significant judgments and assumptions used in preparation of our consolidated financial statements. Because the allowance for loan losses is replenished through a provision for loan losses that is charged against earnings, our subjective determinations regarding the allowance affect our earnings directly. Refer to the portion of this discussion that addresses our allowance for loan losses for a description of our processes and methodology for determining our allowance for loan losses.

our earnings directly. Refer to the portion of this discussion that addresses our allowance for loan losses for a description of our processes and methodology for determining our allowance for loan losses.

A loan is considered impaired, based on current information and events, if it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Uncollateralized loans are measured for impairment based on the present value of expected future cash flows discounted at the historical effective interest rate, while all collateral-dependent loans are measured for impairment based on the fair value of the collateral.

We use several factors in determining if a loan is impaired. The internal asset classification procedures include a thorough review of significant loans and lending relationships and include the accumulation of related data. This data includes loan payment status, borrowers’ financial data, and borrowers’ operating factors such as cash flows, operating income or loss, etc.

The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. Increases and decreases in the allowance due to changes in the measurement of the impaired loans are included in the provision for loan losses. Loans continue to be classified as impaired unless they are brought fully current and the collection of scheduled interest and principal is considered probable. When a loan or portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance and subsequent recoveries, if any, are credited to the allowance.

Management’s periodic evaluation of the adequacy of the allowance also considers non-impaired loans and takes into consideration our past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay, estimated value of any underlying collateral, and current economic conditions. While management believes that it has established the allowance in accordance with generally accepted accounting principles and has taken into account the views of its regulators and the current economic environment, there can be no assurance that in the future our regulators or the economic environment will not require further increases in the allowance.

Goodwill Impairment Analysis

Goodwill represents the excess of the cost of the acquisition over the fair value of the net assets acquired. The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment. The Company has elected to perform its annual testing as of September 30 each year. The goodwill impairment test is a two-step process, which requires management to make judgments in determining the assumptions used in the calculations. The first step involves estimating the fair value of each reporting unit and comparing it to the reporting unit’s carrying value,

which includes the allocated goodwill. If the estimated fair value is less than the carrying value, then a second step is performed to measure the actual amount of goodwill impairment. The second step first involves determining the implied fair value of goodwill. This requires the Company to allocate the estimated fair value to all the assets and liabilities of the reporting unit. Any unallocated fair value represents the implied fair value of goodwill which is compared to its corresponding carrying value. If the carrying value exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

Fair values of reporting units were estimated using discounted cash flow models derived from internal earnings forecasts. The key assumptions used to estimate the fair value of each reporting unit included earnings forecasts for 5 years, terminal values based on future growth rates and discount interest rates. Changes in market interest rates, depending on the magnitude and duration, could impact the discount interest rates used in the impairment analysis. Generally, and with all other assumptions remaining the same, increasing the discount interest rate used in the analysis would tend to lower the fair value estimates, while lowering the discount interest rate would tend to increase the fair value estimates. The Company performed its goodwill impairment analysis according to the aforementioned method as of September 30, 2008. This analysis indicated that no goodwill impairment was present; therefore no impairment loss was recognized. Due to the decline in market valuations for financial institutions and increased levels of nonperforming assets and reserves, during the fourth quarter of 2008, an interim impairment test was performed by an outside party as of December 31, 2008. As a result of the interim impairment test, the Company recorded a $15.3 million goodwill impairment loss in the fourth quarter of 2008, reducing the balance of goodwill to the implied fair value from the second step of the impairment test. In addition, we recorded an impairment charge of $2.1 million during the fourth quarter of 2008, related to our core deposit intangible assets. No events have occurred since December 31, 2008 that would indicate the need for an updated impairment analysis.

Estimates of Fair Value

The estimation of fair value is significant to a number of the Company’s assets and liabilities, including, but not limited to, investment securities, impaired loans, other real estate owned (“OREO”), and other intangible assets. Investment securities are recorded at fair value while impaired loans, other real estate owned, and other intangible assets are recorded at either cost or fair value, whichever is lower.

Fair values for investment securities are based on quoted market prices, and if not available, quoted prices on similar instruments. The fair values of impaired loans and other real estate owned are typically determined based on third-party appraisals less estimated costs to sell. At the time of foreclosure, it is our policy to obtain current appraisals from a list of approved appraisers to assist in the valuation of OREO. We reassess the value of OREO properties at least every 60 days with any updated information obtained by management, and establish reserves when deemed appropriate. Other intangible assets are periodically evaluated to determine if any impairment might exist. The estimation of fair value and subsequent changes of fair value of investment securities, impaired loans, other real estate owned, and other intangible assets can have a significant impact on the value of the Company, as well as have an impact on the recorded values and subsequently results of operations.

Income taxes

The determination of our overall income tax provision is complex and requires careful analysis. As part of the overall business strategy, we may enter into business transactions that require management to consider tax laws and regulations that apply to the specific facts and circumstances under consideration. This analysis includes evaluating the amount and timing of the realization of income tax liabilities or benefits. Management continually monitors tax developments as they affect our overall tax position. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates ~~are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.~~

~~Balance~~15 ~~Sheet Review~~

At September 30, 2007, we had total assets of $617.2 million as compared to $526.1 million as of September 30, 2006. For the same periods, total liabilities increased to $573.4 million from $491.4 million, respectively. During this time frame, we have continued to accomplish above average loan and deposit growth. Shareholder’s equity totaled $43.7 million at September 30, 2007, an increase of $9.1 million, or 26.1% when compared to September 30, 2006. The increase was primarily driven by net income and capital infusions.

are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. If management believes that it is more-likely-than-not that all net deferred tax assets will not be realized, a valuation allowance is established against such assets. As of March 31, 2009 and December 31, 2008, the Company carried a valuation allowance related to its deferred tax assets.

Balance Sheet Review

At March 31, 2009, we had total assets of $973.8 million compared to $910.0 million as of December 31, 2008. The increase in assets was primarily attributable to a $69.9 million increase in cash and due from banks and federal funds sold. Total liabilities at March 31, 2009 increased to $927.9 million from $856.9 million at December 31, 2008, primarily due to an $86.6 million increase in interest-bearing deposits, offset by a $20.5 million decrease in short-term borrowings. Shareholder’s equity totaled $45.9 million at March 31, 2009, a decrease of $7.1 million, or 13.4% when compared to December 31, 2008. The decrease was primarily driven by a net loss of $6.6 million for the first three months of 2009.

Investment Portfolio

The fair value of the ~~investment~~ securities available ~~portfolio~~for ~~outstanding~~sale portfolio as of ~~September~~March 3031, ~~2007~~2009 ~~and 2006~~ was $~~100~~112.83 million ~~and~~compared to $98104.60 million as of December 31, ~~respectively~~2008. ~~After~~In aan ~~period~~effort to improve our capital ratios and increase liquidity, we repositioned our investment portfolio during the first quarter of ~~steady~~2009. ~~increases~~We sold approximately $16.6 million in municipal securities, which were not able to ~~accommodate~~ be pledged as collateral, ~~requirements~~and replaced them with securities that had a lower risk weighting for ~~public~~capital ~~funds~~ratio purposes. Also, wedue ~~slowed~~to ~~the~~our deposit growth ofduring the ~~investment~~first ~~portfolio~~quarter ~~while~~of 2009, we ~~determined~~invested ~~the~~in ~~proper~~additional ~~size~~U.S. ~~for~~Treasury and agency securities, as well as replaced several mortgage-backed securities, in order to improve yield and increase our capital ratios, where possible. We realized a net gain of $830 thousand on the ~~investment~~sale ~~portfolio~~of ~~considering~~available for sale securities during the ~~Bank’s~~first ~~asset~~quarter ~~size~~of 2009.

	September 30, 2007				December 31, 2006				September 30, 2006
(Dollars in thousands) (Unaudited)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. Treasury government sponsored securities, agencies and corporations	$	61,268	$	60,785	$	58,112	$	57,054	$	57,893	$	57,031
Trust Preferred Securities		1,450		1,457		1,450		1,450		1,450		1,450
Corporate bonds		250		252		250		250		250		250
State and municipal securities		23,914		23,692		23,891		24,087		24,066		24,272
Mortgage-backed securities		15,021		14,619		15,417		14,953		16,099		15,597
Total securities available for sale	$	101,903	$	100,805	$	99,120	$	97,794	$	99,758	$	98,600

Management evaluates securities for other-than-temporary impairment on a quarterly basis, and more frequently when conditions warrant such evaluation. During the first quarter of 2009, we recorded $250 thousand in other-than-temporary impairment within gain/(loss) on securities available for sale, net. This impairment charge was related to one security held in a financial institution that was taken into receivership by the FDIC on May 1, 2009.

The carrying value of investment securities at September 30, 2007, by contractual maturity, is shown below. All of our securities are classified as “available-for-sale”, which means that we carry them at estimated fair value with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity until realized. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations without call or prepayment penalties.


	March 31, 2009				December 31, 2008				March 31, 2008
(Dollars in thousands)(Unaudited)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. Treasury government sponsored securities, agencies and corporations	$	54,958	$	55,057	$	29,030	$	29,677	$	85,830	$	86,655
Trust Preferred Securities		1,450		805		1,450		1,120		450		444
Corporate bonds		—		—		250		167		250		251
State and municipal securities		2,736		2,593		19,458		17,948		24,540		24,204
Mortgage-backed securities		53,986		53,800		54,042		55,103		34,826		34,942


Total securities available for sale	$	113,130	$	112,255	$	104,230	$	104,015	$	145,896	$	146,496

12The carrying value of investment securities at March 31, 2009, by contractual maturity, is shown below. All of our debt securities are classified as “available-for-sale”, which means that we carry them at estimated fair value with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity until realized. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations without call or prepayment penalties.

Maturity Distribution and Weighted Average Yield on Investments

					After One Year					After 5 Years
	One Year or Less				After One YearThrough 5 Years						After 5 YearsThrough 10 Years					After 10 Years					Totals
	One Year or Less				Through 5 Years					Through 10 Years					After 10 Years			Totals
(Dollars in thousands)(Unaudited)	Amount		Yield		Amount			Yield			Amount			Yield		Amount		Yield			Amount		Yield
(Dollars in Thousands) (Unaudited)	Amount		Yield		Amount		Yield			Amount		Yield			Amount	Yield		Amount		Yield
Carrying value:
Carrying value:
March 31, 2009
September 30, 2007
U.S. Government sponsored securities, agencies and corporations	$	14,964	0.34	%	$	21,450		2.68	%		$	9,047		4.30	%	$	9,596	4.42	%		$	55,057	2.61	%
U.S. Government sponsored securities,agencies and corporations	$	4,676	4.72	%	6,949		5.05	%		29,029		5.32	%		20,131	5.62	%	60,785		5.34	%
Trust preferred securities		—	—			—		—				—		—			805	6.33	%			805	6.33	%
Trust preferred securities		-	-		-		-			-		-			1,457	8.25	%	1,457		8.25	%
State and municipal securities		—	—			—		—				837		4.23	%		1,756	4.21	%			2,593	4.22	%
Corporate bonds		-	-		-		-			-		-			252	8.25	%	252		8.25	%
Mortgage-backed securities		—	—			3,351		4.91	%			—		—			50,449	4.57	%			53,800	4.59	%
State and municipal securities1		-	-		170		4.94	%		3,596		4.66	%		19,926	5.55	%	23,692		5.41	%
Total securities available for sale	$	14,964			$	24,801					$	9,884				$	62,606				$	112,255
Mortgage-backed securities		-	-		3,152		4.05	%		1,251		4.18	%		10,216	4.75	%	14,619		4.55	%
Total securities	$	4,676			10,271					33,876					51,982			100,805

1 Yields are on a tax-equivalent basis

Loan Portfolio

Our intent is to derive a substantial percentage of our earnings from loans. The Company’s loan portfolio decreased $16.5 million, or 2.3% from December 31, 2008 to March 31, 2009. The following table presents various categories of loans contained in the loan portfolio of the ~~Bank~~Company as of ~~September~~ 30March 31, ~~2007~~2009, December 31, ~~2006~~2008, and ~~September~~March 3031, ~~2006~~2008:

	September 30					December 31					September 30
	March 312009					December 312008					March 312008
	2007					2006					2006
(Dollars in thousands)(Unaudited)	Amount			% ofLoans		Amount			% ofLoans		Amount			% ofLoans
(Dollars in Thousands)(Unaudited)	Amount			% of Loans		Amount			% of Loans		Amount			% of Loans
Breakdown of loan receivables:
Commercial	$	6784,~~648~~412		1412.8210	%	$	6988,~~931~~950		1812.4546	%	$	7174,~~818~~075		1910.9073	%
Real estate - mortgage		~~105~~265,~~829~~830		2338.1911	%		92268,~~001~~023		2437.2755	%		92229,~~542~~677		2533.6426	%
Real estate - construction		~~279~~336,~~027~~220		6148.1421	%		~~209~~345,~~604~~268		5548.3037	%		~~187~~373,~~428~~997		5154.9315	%
Consumer		310,~~901~~989		01.8558	%		711,~~519~~584		1.9862	%		912,~~155~~861		21.5486	%
Total loans	$	~~456~~697,~~405~~451		100.00	%	$	~~379~~713,~~055~~825		100.00	%	$	~~360~~690,~~943~~610		100.00	%
Less: Allowance for loan losses		514,~~299~~765					412,~~518~~114					411,~~749~~167
Less: Unearned Loan Fees		852					729					821
Less: Unearned loan fees		859					864					688
Net loans	$	~~450~~681,~~254~~827				$	~~373~~700,~~808~~847				$	~~355~~678,~~373~~755
Ratio of the allowance for loan losses to total loans		12.1612	%				1.1970	%				1.3262	%

The major components of the loan portfolio at ~~September~~March 3031, ~~2007~~2009 were real estate construction and mortgage and represented 8486.3% of the loan portfolio. In the context of this discussion, we define a “real estate mortgage loan” and a “real estate construction loan” as any loan, secured by real estate, regardless of the purpose of the loan. We follow the common practice of financial institutions in our market area of obtaining a security interest in real estate whenever possible, in addition to any other available ~~collateral. We take~~ this collateral to reinforce the likelihood of the ultimate repayment of the loan; however, this tends to increase the magnitude of our real estate loan portfolio component. Generally, we target our loan-to-value ratio to be consistent with the supervisory loan to value limit guidelines provided by the banking regulators. In order to reduce collateral risk, we attempt to maintain a relatively diversified portfolio.

collateral. We take this collateral to reinforce the likelihood of the ultimate repayment of the loan; however, this tends to increase the magnitude of our real estate loan portfolio component. Generally, we target our loan-to-value ratio to be consistent with the supervisory loan to value limit guidelines provided by the banking regulators. In order to reduce collateral risk, we attempt to maintain a relatively diversified portfolio. To moderate credit risk in our declining real estate environment, in the third quarter of 2007, management began requiring at least 20% cash equity on all new real estate development loans. As a further measure, during 2008, we ceased making speculative construction loans, we ceased making loans out of our market area, and we ceased our purchase of loan participations.

We have a large percentage of real estate construction loans in our portfolio for builders and developers. These loans are considered more risky than other types of loans. The primary credit risks associated with construction lending are underwriting, project risks, and market risks. Project risks include cost overruns, borrower credit risk, project completion risk, general contractor credit risk, and environmental and other hazard risks. Market risks are risks associated with the sale of the completed residential units. They include affordability risk, which means the risk that borrowers cannot obtain affordable financing, product design risk, and risks posed by competing projects. Given the current environment, the non-performing loans in our construction portfolio may continue to increase in 2009, and these non-performing loans could result in a material level of charge-offs, which will negatively impact our capital and earnings.

The homebuilding industry has experienced a significant and sustained decline in demand for new homes and an oversupply of new and existing homes and lots available for sale in various markets, including some of the markets in which we lend. Our customers who are builders and developers face greater difficulty in selling their homes in markets where these trends are more pronounced. Consequently, we are facing increased delinquencies and non-performing assets as these builders and developers are forced to default on their loans with us. We do not know when the housing market will improve, and accordingly, additional downgrades, provisions for loan losses, and charge-offs related to our loan portfolio may occur.

Maturities and sensitivity of loans to changes in interest rates

The information in the following table is based on the contractual maturities of individual loans, including loans that may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon their maturity. Actual repayments of loans may differ from maturities reflected below because borrowers have the right to prepay obligations with or without prepayment penalties.

The following table summarizes major classifications of portfolio loans by maturities as of ~~September~~ March 3031, ~~2007~~2009:


(Dollars in thousands)(Unaudited)	One Year or Less		After One, but within Five Years	After Five Years	Total
Commercial	$	57,227	22,003	5,182	$	84,412
Real estate – mortgage		149,896	96,100	19,834		265,830
Real estate – construction		322,910	12,828	482		336,220
Consumer		8,473	2,440	76		10,989

Total	$	538,506	133,371	25,574	$	697,451

(Dollars in thousands)(Unaudited)	One Year or Less		After One, but within Five Years		After Five Years		Total
Commercial	$	55,163	$	7,958	$	4,527	$	67,648
Real estate – mortgage		78,338		25,972		1,519		105,829
Real estate – construction		266,498		8,879		3,650		279,027
Consumer		3,303		588		10		3,901
Total	$	403,302	$	43,397	$	9,706	$	456,405

The following table represents the rate structure for loans as of March 31, 2009:

The following table represents the rate structure for loans as of September 30, 2007:


(Dollars in thousands)(Unaudited)	Variable Rate		Fixed Rate
Commercial	$	66,424	$	17,988
Real estate – mortgage		171,351		94,479
Real estate – construction		320,337		15,883
Consumer		5,401		5,588


Total	$	563,513	$	133,938

(Dollars in thousands)(Unaudited)	Variable Rate		Fixed Rate
Commercial	$	50,895	$	16,753
Real estate – mortgage		67,529		38,300
Real estate – construction		240,737		38,290
Consumer		1,991		1,910
Total	$	361,152	$	95,253

Provision and Allowance for Loan Losses

We have developed policies and procedures for evaluating the overall quality of the credit portfolio and the timely identification of potential credit problems. Additions to the allowance for loan losses are made to maintain the allowance at an appropriate level based on our analysis of the potential risk in the loan portfolio. Our judgment about the adequacy of the allowance is based upon a number of assumptions about future events which we believe to be reasonable, but which may or may not be accurate. Because of the inherent uncertainty of assumptions made during the evaluation process, there can be no assurance that loan losses in future periods will not exceed the allowance for loan losses or that additional allocations will not be required. ~~Our~~ actual losses will undoubtedly vary from our estimates to some degree, and there is a possibility that charge-offs in future periods will exceed the allowance for loan losses as estimated at any point in time.

As of ~~September~~March 3031, ~~2007~~2009 the ~~allowance~~ allowance for loan losses was $514.38 million or 12.1612% of outstanding loans, as compared to $412.71 million or 1.3270% at ~~September~~December 3031, ~~2006~~2008. The Company’s current economic environment is turbulent, and the real estate values of our loan collateral are rapidly shifting. We continually monitor the adequacy of our allowance and we have employed independent external loan review consultants to complement management’s evaluation of the allowance. The Company is committed to following generally accepted accounting principles, including the December 2006 Interagency Policy Statement on the Allowance for Loan and Lease Losses, as it determines the level of the allowance. ~~As of September 30, 2007, management believes the allowance for loan losses is adequate.~~

Our judgment in determining the adequacy of the allowance is based on evaluations of the collectability of loans. These evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, current economic conditions that may affect the borrower’s ability to pay, overall portfolio quality, and review of specific problem loans. In determining the adequacy of the allowance for loan losses, we use a two-part loan grading system ~~that~~– ~~rates~~one for performing loans and one for non-performing loans. Performing loans are categorized by type and assigned loss ranges based on a combination of management’s perception of environmental factors for each category and a loss history for each category, resulting in ~~different~~a ~~categories~~general reserve for each loan type. ~~Certain~~ For non-performing loans, certain grades representing criticized or classified loans are assigned a ~~allocations~~specific of loss based on management’s estimate of the potential loss, ~~that~~and isare generally based on ~~historical~~a ~~losses~~specific ~~and/or~~review ~~collateral~~of ~~deficiencies.~~the ~~Other~~circumstances ~~loans~~surrounding ~~are~~each ~~graded~~individual byloan, ~~type~~as ~~and~~well ~~allocated~~as ~~loss~~consideration ~~ranges~~of ~~based~~any ondeficiency ~~management’s~~in ~~perceived~~underlying collateral value. ~~inherent~~The ~~loss~~combination ~~for~~of the performing loan ~~type.~~general ~~The~~reserve ~~combination~~and ofthe ~~these~~non-performing ~~results~~specific reserve comprises our total reserve. This amount is compared monthly to the recorded allowance for loan losses and material differences are adjusted by increasing or decreasing the provision for loan losses.

1519

~~monthly~~The toprocess of reviewing the ~~recorded~~adequacy of the allowance for loan losses requires management to make numerous judgments and assumptions ~~material~~about ~~differences~~current ~~are~~events ~~adjusted~~and bysubjective ~~increasing~~judgments, orincluding ~~decreasing~~the likelihood of loan repayment, risk evaluation, extrapolation of historical losses of similar banks, and similar judgments and assumptions. If these assumptions prove to be incorrect, charge-offs in future periods could exceed the ~~provision~~allowance for loan losses.

~~The~~Management ~~following~~considers ~~table~~the ~~shows~~allowance anfor ~~analysis~~loan oflosses ~~allowance~~to ~~for~~be ~~loan~~adequate ~~loss~~and sufficient to absorb possible future losses; however, ~~including~~there can be no assurance that charge-~~off~~offs ~~activity,~~in future periods will not exceed the allowance for loan losses or that additional provisions to the ~~periods~~allowance ~~ended~~will ~~September 30,~~not ~~2007~~be ~~and 2006.~~required

~~Summary~~The following table shows an analysis of ~~Loan~~allowance ~~Loss~~for ~~Experience~~loan loss, including charge-off activity, for the three months ended March 31, 2009 and 2008:

	Three Months Ended September 30						Nine Months Ended September 30
	Three months ended March 31
(Dollars in Thousands)(Unaudited)	2007			2006			2007			2006
(Dollars in thousands)(Unaudited)	2009			2008
Balance at beginning of period	$	512,~~250~~114		$	49,~~276~~787		$	~~4,518~~		$	~~3,293~~
Loans charged off:
Commercial		-290			52326			-			69
Real estate - mortgage		-568			-—			-			-
Real estate - construction		~~371~~1,545			-416			~~396~~			-
Consumer		413			-—			25			-
Total loans charged off		~~375~~2,416			52742			~~421~~			69
Recoveries of losses previously charged off:
Commercial		20—			-—			48			-
Real estate - mortgage		-—			-—			-			-
Real estate - construction		-—			-—			-			-
Consumer		43			-—			4			-
Total recoveries		243			-—			52			-
Net loans charged off		~~351~~2,413			52742			~~369~~			69
Provision for loan losses		~~400~~5,064			~~525~~2,122			~~1,150~~			~~1,525~~
Allowance for loan losses at end of period	$	514,~~299~~765		$	411,~~749~~167		$	~~5,299~~		$	~~4,749~~
Net loans charged off, as a percent of average loans outstanding (annualized)		01.3237	%		0.0644	%		~~0.12~~	%		~~0.03~~	%

~~The~~Our ~~following~~provision ~~tables~~for ~~show~~loan losses for the ~~allocation~~three ofmonths ended March 31, 2009 and 2008 was $5.1 million and $2.1 million, respectively, which was $2.7 million more than net charge-offs for the ~~allowance~~three months ended March 31, 2009 and $1.4 million higher than net charge-offs for the ~~percentage~~three months ended March 31, 2008. The loan loss provision increased from 2008 to 2009, due to increases in non-performing loans and net charge-offs. Net charge-offs for the three months ended March 31, 2009 and 2008 represented 1.37% and 0.44% of average loans, respectively. As the ~~allowance~~real estate market and ~~allocated~~general economic conditions continued to ~~each~~decline ~~category~~in 2009, we took the majority of ~~total~~our losses on construction type loans:.

	September 30				December 31				September 30
	2007				2006				2006
(Dollars in thousands)(Unaudited)	Amount		Percent		Amount		Percent		Amount		Percent
Commercial	$	888	16.76	%	$	682	15.10	%	$	1,237	26.05	%
Real estate - mortgage		1,679	31.69	%		951	21.05	%		1,122	23.63	%
Real estate - construction		2,656	50.12	%		2,808	62.15	%		2,274	47.88	%
Consumer		76	1.43	%		77	1.70	%		116	2.44	%
Total	$	5,299	100.00	%	$	4,518	100.00	%	$	4,749	100.00	%

The following tables show the allocation of the allowance and the percentage of the allowance allocated to each category of total loans:


	March 31 2009				December 31 2008				March 31 2008
(Dollars in thousands)(Unaudited)	Amount		Percent		Amount		Percent		Amount		Percent
Commercial	$	414	2.80	%	$	986	8.14	%	$	1,561	13.98	%
Real estate – mortgage		2,061	13.96	%		1,637	13.51	%		3,540	31.70	%
Real estate – construction		12,175	82.46	%		9,379	77.42	%		5,930	53.10	%
Consumer		115	0.78	%		112	0.93	%		136	1.22	%

Total	$	14,765	100.00	%	$	12,114	100.00	%	$	11,167	100.00	%

Non-performing Assets

It is our policy to classify loans as non-accrual generally when they are past due in principal or interest payments for more than 90 days or if it is otherwise not reasonable to expect collection of principal and interest under the original terms. Exceptions are allowed for 90 days past due loans when such loans are well secured ~~by real estate or negotiable collateral~~ and in the process of collection. Generally, payments received on non-accrual loans are applied directly to principal. ~~We have adopted the principles of Financial Accounting Standards Board (FASB) SFAS No. 114 and No. 118 relating to accounting for impaired loans and as of September 30, 2007, our~~ ~~impaired loans totaled $11.7 million and had associated reserves of $1.6 million.~~

~~Non-performing~~We ~~assets,~~have ~~comprised~~adopted ofthe ~~non-accrual~~principles ~~loans, other~~of ~~real~~SFAS ~~estate~~No. 114 ~~owned,~~and ~~other~~No. 118 ~~repossessed~~relating ~~assets~~to ~~and~~accounting ~~loans~~ for ~~which~~impaired ~~payments~~loans ~~are~~and ~~more~~as ~~than~~of 90March 31, ~~days~~2009, ~~past~~our ~~due~~impaired loans, totaled $17115.50 million atand ~~September 30,~~had ~~2007~~associated ~~compared~~reserves toof approximately $49.61 million. atThis ~~September 30,~~is ~~2006.~~compared ~~Non-accrual~~to impaired loans ~~were~~and associated reserves of $894.7 million at ~~September 30~~and approximately $6.7 million, ~~2007~~respectively, anas ~~increase~~ of $6December 31, 2008.6 ~~million~~A ~~from~~loan is ~~non-accrual~~considered ~~loans~~impaired ofwhen ~~$2.1~~it ~~million~~is atprobable, ~~September 30~~based on current information and events, ~~2006.~~the ~~The~~Company ~~Buckhead~~will ~~Community~~be ~~Bank~~unable ~~had~~to ~~loans~~collect ~~ninety~~all ~~days~~principal ~~past~~and interest payments due ~~and~~in ~~still~~accordance ~~accruing~~with atthe ~~September 30,~~contractual ~~2007~~terms of $0the loan agreement.9 ~~million~~Impaired asloans are ~~compared~~measured toby ~~$0.7~~either ~~million~~the ~~for~~present value of expected future cash flows discounted at the ~~same~~loan’s ~~period~~effective ininterest ~~2006.~~rate, ~~Net~~the ~~other~~loan’s ~~real~~obtainable ~~estate~~market ~~owned~~price, ~~totaled~~or ~~$7.9~~the ~~million~~fair asvalue of ~~September 30~~the collateral if the loan is collateral dependent. The amount of impairment, ~~2007~~if any, ~~compared~~and toany $1subsequent changes are included in the allowance for loan losses.9 ~~million~~Interest aton ~~September 30,~~accruing ~~2006~~impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status.

~~The~~Non-performing ~~current~~assets, ~~credit~~comprised ~~deterioration~~of ~~has~~non-accrual ~~been~~loans, ~~driven~~other ~~by a~~ real estate ~~slowdown~~owned, ~~beginning~~other inrepossessed ~~late~~assets ~~2004,~~and loans for which ~~has~~payments ~~had~~are amore ~~greater~~than ~~impact~~90 ondays ~~community~~past ~~banks~~due totaled in$147.5 ~~the~~million ~~Company’s~~at ~~trade~~March 31, ~~area~~2009, ~~than~~compared ~~previous~~to $113.9 million at December 31, 2008. Non-accrual loans were $92.8 million at March 31, 2009, an increase of $24.6 million from non-accrual loans of $68.2 million at ~~downturns~~December 31, in2008. ~~the~~The ~~economic~~Company ~~cycle~~had loans ninety days past due and still accruing at March 31, 2009 of $18.0 Inmillion ~~anticipation~~as compared to $16.2 million as of ~~the~~December 31, ~~current~~2008. ~~market~~As ~~conditions~~mentioned above, ~~management~~our ~~began~~policy ~~following~~allows ~~new~~for ~~regulatory~~us ~~guidance~~to continue accruing interest on ~~provision~~loans ~~for~~that ~~loan~~are ~~losses~~90 ~~and~~days ~~accounting~~past ~~for~~due ~~impaired~~loans when such loans are well secured and in the process of collection. Net other real estate owned totaled $36.7 million as of March 31, 2009, compared to $29.5 million at December 31, 2008.

~~At September 30, 2007,~~ The ~~Buckhead~~current ~~Community~~credit ~~Bank~~deterioration ~~had~~has ~~non-performing~~been ~~loans,~~driven ~~defined~~by asa ~~non-accrual~~real ~~and~~estate ~~accruing~~slowdown ~~loans~~that ~~past~~accelerated ~~due~~in ~~more~~2008 ~~than~~and 90has ~~days, of~~continued ~~$9.6~~into ~~million or 2~~2009.~~10%~~ ofThis ~~total~~slowdown ~~loans.~~has had ~~Non-performing~~a ~~loans~~greater ~~for~~impact ~~September 30,~~on ~~2006~~community ~~were~~banks ~~$2.7~~in ~~million~~the orCompany’s ~~0.76%~~trade ofarea ~~total~~than ~~loans.~~previous ~~Interest~~downturns ~~that~~in ~~would~~the ~~have~~economic ~~been~~cycle. ~~recorded~~The onprolonged ~~non-accrual~~decline ~~loans had they performed~~ in ~~accordance with their original terms, amounted to approximately $81 thousand and $82 thousand for~~ the ~~three~~housing ~~months~~market ~~ended September 30, 2007~~ and ~~2006~~generally ~~respectively~~slowing ~~and~~economic ~~approximately~~conditions ~~$358~~continue ~~thousand~~to ~~and~~have ~~$164~~a ~~thousand~~negative ~~for~~impact ~~the~~on ~~nine~~our loan ~~months~~portfolio, ~~ended~~particularly ~~September 30,~~in ~~2007~~real ~~and~~estate ~~2006, respectively~~construction.

AAt ~~summary~~March 31, of2009, ~~nonperforming~~we ~~assets~~had non-performing loans, defined as ofnon-accrual ~~September 30,~~and ~~2007~~accruing loans past due more than 90 days, of $110.8 million or 15.9% of total loans. Non-performing loans for December 31, ~~2006~~2008 ~~and~~were ~~September 30,~~$84.3 ~~2006~~million ~~is presented~~or ~~below:~~11.8% of total loans. Interest that would have been recorded on non-accrual

~~Non-performing~~21 ~~Assets~~

	September 30			December 31			September 30
(Dollars in Thousands)(Unaudited)	2007			2006			2006
Non-accrual loans	$	8,706		$	3,617		$	2,062
Loans 90 days or more past due and still accruing		879			2,977			677
Total non-performing loans		9,585			6,594			2,739
All other real estate owned, net		7,937			1,703			1,875
All other repossessed assets		-			16			-
Total non-performing assets	$	17,522		$	8,313		$	4,614
As a percent of total loans at end of period:
Non-accrual loans		1.91	%		0.95	%		0.57	%
Loans 90 days or more past due and still accruing		0.19	%		0.78	%		0.19	%
Total non-performing assets		3.85	%		2.19	%		1.28	%

The increase to our non-accrual loans in the first nine months of 2007 is the net result of the following changes:

~~Nonaccrual~~ loans ~~Loans~~had they performed in accordance with their original terms, amounted to $1.4 million and $399.9 thousand, respectively, for the three months ended March 31, 2009 and March 31, 2008. Interest income on non-accrual loans, recorded on the cash basis, included in the results of operations for the three months ended March 31, 2009 and 2008, totaled approximately $60.5 thousand and $104 thousand, respectively.

	September 30
(Dollars in Thousands) (Unaudited)	2007
Balance at December 31, 2006	$	3,617
Loans reclassified to non-accrual status in 2007		10,723
Payments received on non-accrual loans during 2007		(4,866	)
Non-accrual loans charged-off during 2007		(370	)
Non-accrual loans reclassified to other real estate		(398	)
Non-accrual loans reclassified to accrual status in 2007		-
Balance at September 30, 2007	$	8,706

A summary of nonperforming assets as of March 31, 2009, December 31, 2008 and March 31, 2009 is presented below:

Additions to loans on nonaccrual status consisted of 13 real estate secured loans totaling $10.7 million. At September 30, 2007, non-accrual loans consisted of six loans for construction of 1-4 family residential housing, four commercial and industrial loans, three SBA real estate loans, and one nonresidential real estate loan totaling approximately $3.7 million, $0.8 million, $2.4 million and $1.8 million, respectively.


(Dollars in thousands)(Unaudited)	March 31 2009			December 31 2008			March 31 2008
(Dollars in thousands)(Unaudited)	March 31 2009			December 31 2008			March 31 2008
Non-accrual loans	$	92,825		$	68,166		$	21,869
Loans 90 days or more past due and still accruing		17,997			16,156			6,632

Total non-performing loans		110,822			84,322			28,501
All other real estate owned, net		36,656			29,549			14,051
All other repossessed assets		47			35			40

Total non-performing assets ^1,2	$	147,525		$	113,906		$	42,592


As a percent of total loans at end of period:
Non-accrual loans		13.31	%		9.55	%		3.17	%
Loans 90 days or more past due and still accruing		2.58	%		2.26	%		0.96	%

Total non-performing assets to total loans plus OREO and other repossessed assets		20.09	%		15.32	%		6.04	%

1 Total non-performing assets includes non-performing loans guaranteed by the Small Business Administration. At ~~September 30~~March 31, ~~2007~~2009, ~~Company’s~~December ~~Other Real~~31, ~~Estate~~2008, ~~Owned~~and ~~(“OREO”)~~March ~~consists~~31, 2008, the guaranteed portion of 11these ~~properties~~loans ~~totaling~~amounted to $75.9 million, $7.8 million, and $5.4 million, respectively

~~The~~2 ~~increase~~Loans inwhose ~~OREO~~terms ~~during~~were ~~the~~modified ~~first~~in ~~nine~~a ~~months~~troubled ~~of 2007~~debt ~~was~~restructuring ~~the~~not ~~result~~included ofin the ~~foreclosure~~table ofabove ~~eight~~totaled ~~residential~~$ ~~properties~~13.5 ~~and~~million ~~one~~as ~~commercial~~of ~~property~~March of31, ~~approximately~~2009, $6.07 million as of December 31, 2008 and ~~$343~~zero ~~thousand~~as of March 31, ~~respectively~~2008.

AtThe ~~September 30,~~increase ~~2007,~~to our non-accrual loans during the ~~Company’s~~first ~~OREO~~three ~~consisted~~months of 2009 is the net result of the following changes:

Other Real Estate


(Dollars in thousands)	March 31 2009
Balance at December 31, 2008	$	68,116
Loans reclassified to non-accrual status in 2009		38,878
Payments received on non-accrual loans during 2009		(2,659	)
Non-accrual loans charged-off during 2009		(2,345	)
Non-accrual loans reclassified to other real estate		(9,165	)

Balance at March 31, 2009	$	92,825

	September 30
(Dollars in Thousands)(Unaudited)	2007
Construction and land development	$	5,243
1-4 family residential properties		1,410
Rental residential properties		-
Commercial properties		1,284
Lots		-
Total other real estate owned	$	7,937

During 2009, additions to loans on nonaccrual status consisted of 59 real estate secured loans totaling $37.8 million, 10 commercial loans totaling $220 thousand, 3 consumer loans totaling $46 thousand and one commercial SBA loan totaling $825 thousand.

~~Our~~22 OREO procedures currently allocate disposition value, the valuation used to place the property into OREO, based upon the most recent appraisal of the property that we have at the time. Any difference between the disposition value and the loan balance is recommended for charge off. Once the property is in OREO, the property is listed with a realtor to begin sales efforts.

At March 31, 2009, non-accrual loans consisted of the following:


	Amount		Number of loans
Construction and land development	$	80,135	69
Secured by farmland		1,413	1
1-4 family residential properties		1,514	11
Nonfarm nonresidential properties		8,090	9
Commercial		1,102	13
Consumer		571	5

	$	92,825	108

At March 31, 2009, the Company’s Other Real Estate Owned consisted of 79 properties totaling $36.7 million, compared to 54 properties totaling $29.5 million as of December 31, 2008. The increase in OREO during the first three months of 2009 was the result of the foreclosure of 27 construction loan properties, 3 real estate mortgage loans, and one SBA real estate loan. Six properties were sold during the first three months of 2009.

At March 31, 2009, December 31, 2008 and March 31, 2008, the Company’s OREO consisted of the following:


(Dollars in thousands)(Unaudited)	March 31 2009		December 31 2008		March 31 2008
Construction and land development	$	33,555	$	28,111	$	11,116
1-4 family residential properties		1,429		260		1,500
Commercial properties		1,672		1,178		1,435

Total other real estate owned	$	36,656	$	29,549	$	14,051

The following is a summary of OREO activity for the first three months of 2009:


(Dollars in thousands)(Unaudited)
Balance at December 31, 2008	$	29,549
Transfers into OREO		9,930
Sales of OREO		(2,781	)
Loss on sale of OREO		(39	)
Capitalized improvements		44
Other		(47	)

Balance at March 31, 2009	$	36,656

Our OREO procedures currently determine disposition value, the valuation used to place the property into OREO, based primarily upon the most recent appraisal of the property that we have at the time, less estimated costs to sell the property. Any difference between the disposition value and the loan balance is recommended for charge off. Once the property is in OREO, the property is listed with a realtor to begin sales efforts. Listing prices are also considered when determining the fair value of OREO.

Management continually monitors the loan portfolio to ensure that all loans potentially having a material adverse impact on future operating results, liquidity or capital resources have been classified as non-performing. Should economic conditions deteriorate, the inability of distressed customers to service their existing debt could cause higher levels of non-performing loans.

It is our general policy to stop accruing interest income and place the recognition of interest on a cash basis when a loan is placed on non-accrual status and any interest previously accrued but not collected is reversed against current income. Generally, a loan is placed on non-accrual status when it is over 90 days past due and there is reasonable doubt that all principal will be collected.

In addition to loans formally classified as non-accrual or non-performing, management maintains a ~~watch~~ list of ~~loans~~monitored loans which may eventually become so classified. Individual loan officers are responsible for assessing business and credit risk for each loan in their respective portfolios. The monitored loan ~~watch~~list ~~lists~~ exists as a vehicle for measuring and monitoring identified assets with heightened risk characteristics. Heightened risk characteristics would include a history of poor payment performance, poor financial performance, as well as the potential for adverse earnings impact from deteriorating collateral values. Management meets monthly to re-assess the ongoing status of credits on ~~the~~this ~~watch~~ list. As of March 31, 2009, there were loans totaling $95.6 million on the ~~September~~monitored loan list, ~~2007~~$92.8 ~~meeting~~million on nonaccrual status and $18.0 million that were past due 90 days or more and still accruing. As of December 31, 2008, there were loans totaling $5102.25 million on the ~~watch~~monitored loan list, ~~and~~ $868.72 million on nonaccrual status, and $16.2 million that were past due 90 days or more and still accruing.

Deposits

~~Core~~Deposits ~~deposits, which exclude time deposits of $100,000 or more, CDARs deposits, and brokered time deposits,~~ provide athe primary ~~relatively stable~~ funding source for our loan portfolio and other earning assets. ~~Core deposits~~As ~~were~~of ~~approximately~~March ~~$210.1 million at September 30~~31, ~~2007~~2009 ~~compared~~and toDecember ~~$200.4~~31, ~~million at September 30~~2008, ~~2006.~~brokered ~~Although we view CDARs as core customers~~deposits, byincluding ~~banking regulations~~ CDARs balances, ~~are~~totaled ~~not~~$201.2 ~~considered~~million toand be$277.7 ~~core~~million, ~~deposits~~respectively. CDARs balances were $6963.0 3 million at ~~September~~March 3031, ~~2007~~2009, compared to $4390.5 million atas ~~September~~of December 3031, ~~2006~~2008. ~~CDARs~~Total ~~balances~~deposits ~~were~~increased $5691.94 million, asor of11.9%, from December 31, ~~2006~~2008. This increase was attributable to a successful deposit campaign and management’s efforts to increase liquidity.

The maturity distribution of time deposits of $100,000 or more as of ~~September~~March 3031, ~~2007~~2009 was as follows:

(Dollars in thousands)(Unaudited)
Three months or less	$	8840,~~027~~727
Over three through six months		5367,~~119~~833
Over six through twelve months		~~109~~118,~~767~~705
Over twelve months		3741,~~038~~150
Total	$	~~287~~268,~~951~~415

Borrowed Funds

~~We have access to various short~~Short-term borrowings, including the purchase of federal funds and borrowing arrangements from the FHLB and other financial institutions. There were no FHLB borrowings as of September 30, 2007 and December 31, 2006. FHLB borrowings totaled $1.5 million at September 30, 2006. There have been no FHLB borrowings from December 31, 2006 through September 30, 2007. :

We have access to various short-term borrowings, including the purchase of federal funds and borrowing arrangements from other financial institutions. The Company had no federal funds purchased as of ~~September~~March 3031, ~~2007~~2009 ~~and~~or ~~2006 nor at December~~March 31, ~~2006~~2008.

Overnight customer sweep agreements totaled $15.5 million at March 31, 2009 compared to $21.0 million as of December 31, 2008. These short-term borrowings are collateralized by securities and generally mature within one day from the transaction date. The agreements are reflected at the amount of

cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities.

As of March 31, 2009, other borrowings included in short-term borrowings totaled $19.0 million in Federal Home Loan bank advances maturing in the next twelve months, compared to $24.0 million of FHLB advances as of December 31, 2008.

Long-term:

We had $6.0 million in long-term FHLB borrowings as of March 31, 2009, and December 31, 2008. These 3.49% fixed rate advances mature in July of 2010.

At March 31, 2009, long-term debt also consisted of $10.0 million in subordinated capital notes. This borrowing has a variable rate and matures on March 31, 2020. Beginning in March 2010, quarterly principal payments of $250 thousand are required through maturity. For regulatory capital purposes, these notes are included in Tier 2 capital. The December 31, 2008 balance of long-term subordinated capital notes was also $10.0 million.

Junior Subordinated Debt

Buckhead Community Bancorp Statutory Trust I

In August, 2004 we formed a wholly-owned grantor trust to issue cumulative trust preferred securities. The grantor trust has invested the proceeds of the trust preferred securities in junior subordinated debentures of the Company. The junior subordinated debentures can be redeemed prior to maturity at the option of the Company on or after August 11, 2009. The sole assets of the guarantor trust are the junior subordinated deferrable interest debentures of the Company (the “first series of debentures”) held by the grantor trust. The first series of debentures have the same interest rate (three month LIBOR plus 2.90%, floating) as the trust preferred securities. We have the right to defer interest payments on the first series of debentures at any time or from time to time for a period not exceeding 20 consecutive quarters provided that no extension period may extend beyond the stated maturity of the related first series of debentures. During any such extension period, distributions on the trust preferred certificates would also be deferred.

Payment of periodic cash distributions and payment upon liquidation or redemption with respect to the trust preferred securities are guaranteed by the Company to the extent of funds held by the grantor trust (the “Preferred Securities Guarantee I”). The Preferred Securities Guarantee I, when taken together with the Company’s other obligations under the first series of debentures, constitute a full and unconditional guarantee, on a subordinated basis, by the Company of payments due on the trust preferred securities.

The trust preferred securities and the related first series of debentures were issued on August 11, 2004. Distributions on the trust preferred securities are paid quarterly on March 31, June 30, September 30 and December 31 of each year, beginning September 30, 2004. Interest on the first series of debentures is paid on the corresponding dates. The aggregate principal amount of the first series of debentures outstanding at ~~September~~March 3031, ~~2007~~2009 and December 31, ~~2006~~2008 was $5,155,000. Certain issue costs have been deferred and recorded in other assets in the accompanying consolidated balance sheets. The issue costs are ~~being~~ being amortized over the life of the first series of debentures, and the outstanding balance of the unamortized issue costs at ~~September~~March 3031, ~~2007~~2009 and December 31, ~~2006~~2008 was approximately $~~89,000~~84 and $9485 thousand,~~000~~ respectively.

~~Buckhead~~25 ~~Community Bancorp Statutory Trust II~~

In May 2006, we formed a second wholly-owned grantor trust to issue cumulative trust preferred securities. The grantor trust has invested the proceeds of the trust preferred securities in junior subordinated debentures of the Company. The junior subordinated debentures can be redeemed prior to maturity at the option of the Company on or after July 7, 2011. The sole assets of the guarantor trust are the junior subordinated deferrable interest debentures of the Company (the “second series of debentures”) held by the grantor trust. The second series of debentures have the same interest rate (LIBOR plus 1.55%, floating) as these trust preferred securities. We have the right to defer interest payments on the second series of debentures at any time or from time to

~~time~~Buckhead ~~for~~Community aBancorp ~~period~~Statutory ~~not~~Trust exceeding 20 consecutive quarters provided that no extension period may extend beyond the stated maturity of the related second series of debentures. During any such extension period, distributions on the trust preferred certificates would also be deferred. II

Payment of periodic cash distributions and payment upon liquidation or redemption with respect to the trust preferred securities are guaranteed by the Company to the extent of funds held by the grantor trust (the “Preferred Securities Guarantee II”). The Preferred Securities Guarantee II, when taken together with our other obligations under the second series of debentures, constitutes a full and unconditional guarantee, on a subordinated basis, by the Company of payments due on the trust preferred securities.

The trust preferred securities and the related second series of debentures were issued on May 24, 2006. Distributions on the trust preferred securities are paid quarterly on April 7, July 7, October 7 and January 7 of each year, beginning July 7, 2006. Interest on the second series of debentures is paid on the corresponding dates. The aggregate principal amount of the second series of debentures outstanding at ~~September~~March 3031, ~~2007~~2009 and December 31, ~~2006~~2008 was $10,310,000. There were no issue costs associated with the issuance of the second series of debentures.

Interest Payment Deferral

On March 6, 2009, the Company began exercising its right to defer quarterly interest payments for each of the debentures. For the first series of debentures, we have provided notice of our deferral of interest payments from March 31, 2009 to December 31, 2009, and for the second series of debentures, we have provided notice of our deferral of interest payments from April 7, 2009 to January 7, 2010. During this period of deferral, the Company is precluded from repurchasing shares of common stock and from paying dividends on outstanding common stock. We will continue to accrue for the interest payable during the deferral period in our statement of operations.

Income Statement Review

We reported a net ~~income~~loss of $16.16 million for the three months ended ~~September~~March 3031, ~~2007~~2009, a decrease ofin ~~$466~~earnings ~~thousand,~~of ~~or 30~~$5.~~4%,~~7 million compared to the same period of the prior year. Basic and diluted ~~earnings~~loss per share amounted to $0(1.2304) respectively, compared to ($0.3515) basic and ~~$0.33~~ diluted ~~earnings~~loss per share for the three months ended ~~September~~March 3031, ~~2006~~2008. ~~Net~~Increased ~~income~~costs ~~for~~to ~~the~~carry ~~first~~nonperforming ~~nine~~assets, ~~months~~including ofprovisions ~~2007~~to ~~was~~associated ~~$3.8~~valuation ~~million,~~allowances aand ~~decrease~~accrued ofinterest ~~$193~~reversals ~~thousand,~~continued ~~or 4.9%, compared~~ to ~~the same~~have ~~period~~a ofnegative ~~the~~impact ~~prior~~on ~~year. Basic and diluted~~ earnings ~~per share totaled $0.83 and $0.82~~ for the ~~nine~~first quarter ~~months ended September 30, 2007, compared to basic and diluted earnings per share~~ of $02009.97 ~~and~~Margin ~~$0.93~~compression ~~for~~also ~~the~~contributed ~~same~~to ~~period of~~ the ~~prior~~increased ~~year~~loss.

Net Interest Income/Margin

Net interest income for the three months ended ~~September~~March 3031, ~~2007~~2009 was $52.40 million, ana ~~increase~~decrease of $843.5 ~~thousand~~million or 163.68% ~~over~~from the same period of ~~2006~~2008. The ~~slight~~decrease ~~increase~~ in net interest income was ~~primarily~~ driven by ~~loan~~interest ~~growth~~reversals on non-performing loans and declining interest rates.

~~Average~~26 loans for the third quarter of 2007 were $441.1 million, compared to $359.8 million for the three months ended September 30, 2006. The average yield on loans decreased from 9.80% for the third quarter of 2006 to 9.36% for the third quarter of 2007. Interest reversals related to nonperforming loans contributed to the decline. For the three months ended September 30, 2007, average securities available for sale were $102.9 million compared to $96.6 million for the same period of 2006.

Average loans for the first quarter of 2009 were $716.7 million, compared to $684.0 million for the same period in 2008. The average yield on loans decreased from 7.45% for the three months ended March 31, 2008 to 4.62% for the three months ended March 31, 2009. Interest reversals related to non-performing loans contributed to the decline, along with interest rate cuts from the Federal Reserve. For the three months ended March 31, 2009, average securities available for sale were $85.9 million compared to $108.7 million for the same period of 2008.

The average cost of funds decreased 125 basis points to 3.40% for the first quarter of 2009 compared to the same period in 2008, primarily due to decreases in the interest rates paid on certificates of deposits. Average time deposits for the first quarter of 2009 were $652.0 million, compared to $577.6 million for the same period of 2008, an increase of 12.9%. The average rate paid on time deposits decreased from 5.08% for the three months ended March 31, 2008 to 3.73% for the same period of 2009. While the Federal Reserve continued to reduce the federal funds target rate during 2008, average rates paid on these deposits typically lag these rate reductions due to the longer terms of the accounts.

The banking industry uses two ratios to measure relative profitability of net interest income. The net interest rate spread measures the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities. The interest rate spread eliminates the impact of non-interest-bearing deposits and gives a direct perspective on the effect of market interest rate movements. The net interest margin is defined as net interest income as a percent of average total interest-earning assets and takes into account the positive impact of investing non interest-bearing deposits.

~~For~~The ~~the~~Company’s ~~three~~net ~~months~~interest ~~ended~~margin ~~September~~continues to experience compression compared to the prior year. ~~30,~~As ~~2007~~a ~~and~~loan ~~2006~~is identified as non-performing, it may result in the ~~net~~reversal of previously accrued interest ~~spread~~income ~~was~~on 3that loan.~~18%~~ Due ~~and~~to 3the current economic environment, we are experiencing a significant level of loans classified as non-performing, resulting in considerable reversals of previously recognized interest income.~~80%~~ In addition, ~~respectively~~from an asset/liability management perspective, ~~while~~we are in an asset sensitive position, meaning our earning assets reprice more immediately with a rate change than the cost of our funding and deposits. In a declining rate environment, asset sensitivity has a negative impact on net interest margin ~~was~~and 3earnings.~~70%~~ Therefore, ~~and~~in ~~4.34%~~the declining rate environment of the past year, ~~respectively.~~we Ahave ~~number~~experienced a significant decline in earnings as our earning assets reprice immediately downward with each rate change, while our funding costs adjust over a longer period of ~~factors~~time. Management ~~contributed~~has implemented measures to combat the ~~net~~compression associated with interest ~~spread~~rate ~~and~~declines, ~~net~~such as interest ~~margin~~rate ~~compression~~floors ~~from~~on aloans, ~~year~~no ~~ago.~~changes ~~Competition~~to ~~for~~lending ~~deposits,~~rates ~~particularly~~despite ~~time~~reductions ~~deposits,~~in ~~increased.~~the ~~Additionally~~Prime rate, and the ~~higher~~ ~~level~~continued collection of ~~nonperforming~~fees ~~assets~~on ~~lowered~~renewing ~~loan yields~~loans.

~~Net~~For ~~interest income for~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2007~~2009 and 2008, the net interest spread was ~~$16~~1.01% and 2 ~~million~~.28%, anrespectively, ~~increase~~while ofthe ~~$1.7~~net ~~million~~interest ormargin 11was 0.998% ~~over~~and ~~the~~2.69%, ~~third~~respectively. ~~quarter~~As noted above, a couple of ~~2006.~~primary factors ~~The~~contributed ~~increase~~to inthe net interest ~~income~~spread ~~was~~and ~~primarily~~net ~~driven~~interest bymargin ~~loan~~compression ~~growth~~from a year ago. Additionally, competition for deposits has increased and we have had to offer relatively higher rates to retain deposits and to attract new core deposits for liquidity purposes.

~~Average~~27 loans for the first nine months of 2007 were $419.4 million, compared to $325.2 million for the nine months ended September 30, 2006. The average yield on loans increased slightly from 9.49% for the first nine months of 2006 to 9.51% for the nine months ended September 30, 2007. For the nine months ended September 30, 2007, average securities available for sale were $101.3 million compared to $82.6 million for the same period of 2006.

The average cost of funds increased 66 basis points to 5.07% for the nine months ended September 30, 2007 compared to the same period in 2006, primarily due to increases in volume and the interest rates paid on certificates of deposits. Average time deposits

~~for~~The ~~the~~following ~~first~~tables ~~nine~~show ~~months~~the ofrelationship ~~2007~~between ~~were~~interest ~~$376.1~~income ~~million,~~and ~~compared~~expense toand ~~$271.8 million for~~ the ~~nine~~average ~~months~~balances ~~ended September 30, 2006, an increase~~ of ~~38%. The~~interest ~~average~~earning ~~rate~~assets ~~paid~~and oninterest ~~time~~bearing ~~deposits~~liabilities ~~increased from 4.72%~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2006~~2009 toand ~~5.42%~~2008: ~~for the first nine months of 2007.~~

For the nine months ended September 30, 2007 and 2006, the net interest spread was 3.29% and 3.87%, respectively, while the net interest margin was 3.84% and 4.41%, respectively. Our asset sensitive position (where assets reprice more immediately than deposits) resulted in margin compression. In addition, competition for deposits, particularly time deposits, increased the rates paid and the higher level of nonperforming assets lowered loan yields.


	Three Months Ended
	March 31, 2009						March 31, 2008
(Dollars in thousands)(Unaudited)	Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate
ASSETS:
Federal funds sold	$	29,373	$	10	0.14	%	$	33,277	$	261	3.15	%
Interest bearing deposits		895		3	1.36	%		2,174		23	4.26	%
Investment securities available for sale
Taxable		80,618		810	4.02	%		84,917		1,078	5.02	%
Nontaxable¹		5,245		57	4.35	%		23,785		235	6.01	%
Loans		716,655		8,172	4.62	%		683,958		12,673	7.45	%


Total interest earning assets		832,786		9,052	4.41	%		828,111		14,270	6.93	%
All other assets		100,826						76,621

Total assets	$	933,612					$	904,732


LIABILITIES AND SHAREHOLDERS’ EQUITY:

Interest bearing demand deposits and savings	$	117,722		583	2.01	%	$	133,155		952	2.88	%
Time		651,978		5,994	3.73	%		577,586		7,294	5.08	%
Junior subordinated debt		15,465		135	3.54	%		15,465		250	6.50	%
Short-term borrowings		38,537		184	1.94	%		24,748		207	3.36	%
Long-term borrowings		16,000		150	3.80	%		3,946		28	2.85	%


Total interest bearing liabilities		839,702		7,046	3.40	%		754,900		8,731	4.65	%

Noninterest-bearing deposits		38,709						45,002
Other liabilities		3,580						13,146
Shareholders’ equity		51,621						91,684

Total liabilities and shareholders’ equity	$	933,612					$	904,732


Net interest spread					1.01	%					2.28	%
Net interest margin on average earning assets					0.98	%					2.69	%

Net interest income			$	2,006					$	5,539

~~The~~1 ~~following~~Yield ~~tables~~is ~~show~~on ~~the~~a ~~relationship~~tax-equivalent ~~between~~basis ~~interest income and expense and the average balances of interest earning assets and interest bearing liabilities~~ for ~~the~~March ~~third quarter of 2007 and 2006 and for the nine months ended September 30~~31, ~~2007 and 2006.~~ 2008

	Three Months Ended
	September 30, 2007						September 30, 2006
(Dollars in thousands)(Unaudited)	Average Balance		Income/ Expense		Yield/ Rate		AverageBalance		Income/ Expense		Yield/ Rate
ASSETS:
Federal funds sold	$	36,980	$	485	5.20	%	$	31,077	$	418	5.34	%
Interest bearing deposits		362		4	3.95	%		394		4	4.02	%
Investment securities available for sale
Taxable		80,253		1,033	5.04	%		72,862		917	4.92	%
Nontaxable1		22,667		215	5.71	%		23,689		236	6.00	%
Loans		441,070		10,407	9.36	%		359,813		8,885	9.80	%
Total interest earning assets		581,332		12,144	8.29	%		487,835		10,460	8.51	%
All other assets		15,402						7,312
Total assets	$	596,734					$	495,147
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Interest bearing demand deposits and savings	$	94,576		841	3.53	%	$	94,925		839	3.51	%
Time		397,889		5,467	5.45	%		310,601		3,893	4.97	%
FHLB Borrowings		-		-	-			1,500		12	3.10	%
Trust preferred securities		15,465		291	7.46	%		15,465		299	7.66	%
Other Borrowings		13,826		120	3.44	%		8,690		76	3.47	%
Total interest bearing liabilities		521,756		6,719	5.11	%		431,181		5,119	4.71	%
Noninterest-bearing deposits		31,852						30,862
Other liabilities		4,334						3,417
Shareholders’ equity		38,792						29,687
Total liabilities and shareholders’ equity	$	596,734					$	495,147
Net interest spread					3.18	%					3.80	%
Net interest margin on average earning assets					3.70	%					4.34	%
Net interest income			$	5,425					$	5,341

Nonaccrual loans and the interest income which was recorded on these loans, if any, are included in the yield calculation for loans in all periods reported. Loan fees totaled $671.9 thousand and $628.7 thousand for the three months ended March 31, 2009 and 2008, respectively, and are included with interest income on loans.

128 ~~Yield is on a tax-equivalent basis~~

	Nine Months Ended
	September 30, 2007						September 30, 2006
(Dollars in thousands)(Unaudited)	AverageBalance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate
ASSETS:
Federal funds sold	$	42,305	$	1,641	5.19	%	$	29,833	$	1,091	4.89	%
Interest bearing deposits		382		12	4.32	%		430		13	3.91	%
Investment securities available for sale
Taxable		78,664		3,090	5.18	%		60,892		2,305	4.99	%
Nontaxable1		22,661		668	5.98	%		21,722		630	5.88	%
Loans		419,356		29,829	9.51	%		325,202		23,086	9.49	%
Total interest earning assets		563,368		35,240	8.36	%		438,079		27,125	8.28	%
All other assets		15,461						9,684
Total assets	$	578,829					$	447,763
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Interest bearing demand deposits and savings	$	98,556		2,629	3.57	%	$	93,978		2,284	3.25	%
Time		376,088		15,248	5.42	%		271,846		9,603	4.72	%
FHLB Borrowings		-		-	-			1,500		35	3.12	%
Trust preferred securities		15,465		865	7.48	%		9,762		566	7.75	%
Other Borrowings		12,422		325	3.50	%		7,402		185	3.34	%
Total interest bearing liabilities		502,531		19,067	5.07	%		384,488		12,673	4.41	%
Noninterest-bearing deposits		32,438						31,383
Other liabilities		4,565						2,745
Shareholders’ equity		39,295						29,147
Total liabilities and shareholders’ equity	$	578,829					$	447,763
Net interest spread					3.29	%					3.87	%
Net interest margin on average earning assets					3.84	%					4.41	%
Net interest income			$	16,173					$	14,452

1 Yield is on a tax-equivalent basis

Other Income and Other Expense

For the three months ended ~~September~~March 3031, ~~2007~~2009 and ~~2006~~2008, total noninterest income ~~remained~~totaled ~~flat~~$1.0 atmillion and $~~469~~215 thousand, respectively. ~~While~~There ~~there~~ was aan ~~32.7%~~$829 thousand increase in gains on ~~the~~sales ~~sale~~ of ~~SBA loans, this was offset by no~~ securities ~~gains~~available ~~realized during the third quarter of 2007. In addition, there was a 29.8% decrease in~~for ~~other~~sale ~~noninterest income~~ compared to the ~~third~~first quarter of ~~2006~~2008. ~~Other noninterest income was comprised primarily of service charge and fee income.~~

~~For~~Total noninterest expense for the ~~nine~~three months ended ~~September~~March 3031, ~~2007~~2009 decreased $683 thousand, or 13.1% from 2008. The primary component of total noninterest ~~income~~expense ~~decreased~~was salary and employee benefits, which totaled $~~145~~1.9 ~~thousand~~million and $2.9 million for the first quarter of 2009 and 2008, respectively. The $1.0 million, or 1033.17% decrease in salary and employee benefits primarily resulted from a reduction in force of approximately 30% of headcount during the ~~same~~third ~~period~~quarter of ~~2006~~2008. ~~The~~We ~~decrease~~had ~~was~~91 ~~primarily~~full ~~due~~time equivalent employees at March 31, 2009, compared to a120 full time equivalent employees at March 31, 2008. Other operating expenses increased $~~157~~136 thousand, or 1512.3% ~~decline~~from the three months ended March 31, 2008, primarily due to a $407 thousand increase in ~~gains~~provision onfor ~~the~~OREO ~~sale~~losses ofand ~~SBA~~OREO expenses. The OREO-related increase was ~~loans~~partially offset by decreases in other categories, such as advertising and marketing, and other expenses, as management continued its efforts to reduce discretionary expenses.

~~Total~~The ~~noninterest~~following ~~expense~~table ~~increased~~shows ~~$968 thousand, or 33.2% from~~ the ~~third~~components ~~quarter~~ of ~~2006. The primary component of total~~ noninterest expense ~~was salary and employee benefits, which totaled $2.2 million and $1.8 million~~ for the three months ended ~~September~~March 3031, ~~2007~~2009 and ~~2006,~~2008: respectively. The $447 thousand, or 25.3% increase in salary and employee benefits primarily resulted from additional employees hired in late 2006. We had 98 full time equivalent employees at September 30, 2007, compared to 84 full time equivalent employees at September 30, 2006. Legal and other professional services totaled $165 thousand and $37 thousand for the three months ended September 30, 2007 and 2006, respectively. The increase was primarily due to additional professional fees associated with our public registration. Other operating expenses increased $356 thousand, or 77.9% from the three months ended September 30, 2006, primarily due to an increase in FDIC premiums.


	Three months ended March 31
(Dollars in thousands)(Unaudited)	2009		2008
Salaries and employee benefits	$	1,921	$	2,899
Occupancy expenses		592		583
Advertising and marketing		93		156
Legal and other professional services		388		228
FDIC premiums		167		168
Provision for OREO losses		301		248
OREO expenses		490		136
Amortization of intangibles		—		71
Data processing and technology		362		343
Other expenses		222		387

Total noninterest expense	$	4,536	$	5,219

For the nine months ended September 30, 2007, total noninterest expense was $10.5 million compared to $8.2 million for the same period of 2006. The increase was primarily driven by a $1.4 million, or 27.3% increase in salaries and employee benefits. Other operating expenses increased $577 thousand, or 42.9%, from the nine months ended September 30, 2006 to the nine months ended September 30, 2007, primarily due to a $241 thousand provision for OREO losses recorded in 2007 that was not recorded in 2006, as well as approximately $98 thousand in additional expenses related to carrying OREO.

Income Taxes

~~The~~We ~~provision~~had ~~for~~no ~~income~~tax ~~taxes~~benefit ~~was $550 thousand and $842 thousand~~ for the ~~three~~first ~~months~~quarter ~~ended~~of ~~September 30~~2009, ~~2007~~compared ~~and~~to ~~2006,~~an ~~respectively.~~income ~~Effective~~ tax ~~rates~~benefit ~~for~~of ~~the~~$668 ~~periods~~thousand ~~were~~for ~~34.1% and 35.5%, respectively. For~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2007 and 2006, provision for income taxes totaled $2~~2008.0 ~~million~~Effective ~~and $2.2 million, respectively. This represents a 34.5% effective~~ tax ~~rate~~rates for the ~~first~~periods ~~nine~~were ~~months~~0% ofand ~~2007 compared to 35~~(42.21)% ~~for the nine months ended September 30~~, ~~2006~~respectively.

Liquidity

We must maintain, on a daily basis, sufficient funds to cover the withdrawals from depositors’ accounts and to supply new borrowers with funds. To meet these obligations, we keep cash on hand, maintain account balances with our correspondent banks, and purchase and sell federal funds and other short-term investments. Asset and liability maturities are monitored in an attempt to match these to meet liquidity needs. We seek to monitor our liquidity to meet regulatory requirements and local funding requirements. WeManagement ~~believe~~is constantly ~~the~~monitoring ~~current~~our liquidity in an effort to improve our position; and maintaining an adequate level of liquidity iscontinues ~~adequate~~ to ~~meet~~be ~~current~~a ~~needs~~top priority of management.

~~Our~~29 primary sources of liquidity are a stable base of deposits, scheduled repayments on loans, and interest and maturities of investments. All securities have been classified as available for sale, which means they are carried at fair value with unrealized gains and losses excluded from earnings and reported as a separate component of other comprehensive income. If necessary, we have the ability to sell a portion of our investment securities to manage interest sensitivity gap or liquidity. Cash and due from banks and federal funds sold may be utilized to meet liquidity needs.

Our ~~cash~~primary ~~flows~~sources of liquidity are ~~composed~~our deposits, the scheduled repayments on our loans, and interest and maturities of our ~~three~~investments. All ~~classifications:~~securities ~~cash~~have ~~flows~~been ~~from~~classified ~~operating~~as ~~activities~~available for sale, ~~cash~~which ~~flows~~means ~~from~~they ~~investing~~are ~~activities,~~carried ~~and~~at ~~cash flows~~fair ~~from~~value ~~financing~~with ~~activities.~~unrealized ~~Cash~~gains and ~~due~~losses excluded from ~~banks~~earnings ~~decreased~~and ~~$1.7~~reported ~~million~~as ~~from~~a ~~December~~separate component of other comprehensive income. ~~31,~~If ~~2006~~necessary, we have the ability to sell a ~~total~~portion of our unpledged investment securities to manage interest sensitivity gap or liquidity. Our pledged securities totaled $660.18 million at ~~September~~March 3031, ~~2007~~2009 compared to $57.2 million at December 31, 2008. Cash ~~used~~and indue ~~investing~~from ~~activities~~banks ~~totaled~~and ~~$78.3~~federal ~~million~~funds ~~for~~sold may also be utilized to meet liquidity needs. During the first ~~nine~~quarter ~~months~~ of ~~2007~~ 2009, ~~primarily~~we ~~due~~increased toour ~~increases~~core indeposits ~~loans~~by approximately 34% from December 31, 2008 and invested ~~investments.~~the ~~Cash~~funds ~~provided~~in byshort-term, ~~financing~~liquid ~~activities~~investments ~~totaled~~and ~~$71~~cash.8 ~~million~~Our ~~for~~liquidity ~~the~~position ~~nine~~has ~~months~~substantially ~~ended~~improved ~~September~~since December 3031, ~~2007~~2008, ~~due~~and tois ~~increases~~ in ~~deposits~~compliance with our policy guidelines.

At March 31, 2009 and December 31, 2008, we had arrangements with a correspondent and commercial banks for short-term unsecured advances up to $18.5 million and $33.5 million, respectively. At March 31, 2009, none of these available facilities were being utilized. Subsequent to March 31, 2009, we will be required to collateralize any advances under these facilities. As our access to unsecured, short-term advances has diminished, we will need to continue to rely on non-brokered deposit generation for liquidity. As mentioned above, our deposit campaigns in 2009 have been successful to date.

Our cash flows are composed of three classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Cash and due from banks increased $18.5 million from December 31, 2008, to a total of $23.6 million at March 31, 2009. Cash used in operating activities totaled $705 thousand for the first quarter of 2009. Cash used in investing activities totaled $51.7 million for the first quarter of 2009, primarily due to an increase in federal funds sold. Cash provided by financing activities totaled $71.0 million for the three months ended March 31, 2009, primarily due to proceeds from increased deposits.

Capital Resources

InWe ~~addition, we~~ are subject to various regulatory capital requirements administered by our respective federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary-—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, both the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s respective capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors.

Quantitative measures established by regulations to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier I capital ~~(as defined in the regulations)~~ to risk-weighted assets ~~(as defined)~~, and of Tier I capital ~~(as defined)~~ to average assets ~~(as defined). Management believes~~, as ofsuch ~~September 30,~~terms ~~2007,~~are ~~that~~defined ~~the~~in ~~Company and~~ the ~~Bank meet all capital adequacy requirements to which each is subject~~regulations.

As of ~~September~~March 3031, ~~2007~~2009, the most recent regulatory notification categorized the Bank as adequately ~~well~~ capitalized under the regulatory framework for prompt corrective action. ToOur befailure ~~categorized~~to asmeet capital guidelines for well capitalized ~~the~~status ~~Bank~~could ~~must~~subject ~~maintain~~us ~~minimum~~to ~~total~~a ~~risk-based,~~variety ~~Tier~~of Ienforcement ~~risk-based,~~remedies ~~and~~from ~~Tier~~our Iregulators. ~~leverage~~As ~~ratios.~~a ~~There~~result of our current adequately capitalized status, we are noprohibited ~~conditions~~from accepting or ~~events~~renewing ~~since~~additional ~~that~~brokered ~~notification~~deposits ~~that~~without the prior formal waiver of this prohibition by our bank regulators. Our Board of Directors and management ~~believes~~are ~~have~~currently ~~changed~~engaged in strategic initiatives to restore the well-capitalized status of the Bank’s ~~category~~and Company.

2330

~~At September 30, 2007, our capital ratios were adequate based on regulatory minimum capital requirements.~~ The minimum capital requirements and the actual capital ratios on a consolidated and bank-only basis are as follows:

	Tier 1Leverage		Tier 1Risk-~~Based~~based		~~Total Risk~~TotalRisk-~~Based~~based
Minimum required	4.00	%	4.00	%	8.00	%
Minimum required to be well capitalized	5.00	%	6.00	%	10.00	%
Actual ratios at September 30, 2007
Actual ratios at March 31, 2009
Consolidated	8.96	%	10.11	%	11.11	%
The Buckhead Community Bank	4.69	%	5.71	%	8.27	%
The Buckhead Community Bank	8.47	%	9.47	%	10.48	%
Consolidated	4.85	%	5.79	%	8.35	%

The terms of our informal MOU, among other things, direct us to increase our capital ratios to levels at or above the relevant thresholds for a well capitalized institution, and to achieve a leverage ratio several percent higher than required of a well capitalized institution. Specifically, the MOU provides for a Tier I Leverage Ratio of 8%, a Tier 1 Risk Based Ratio of 6% and Total Risk Based Capital Ratio of 10%. We have not reached these elevated capital levels since coming under the MOU. As mentioned above, our Board of Directors and management are currently engaged in strategic initiatives to improve our capital position.

In light of the requirement to improve the capital ratios of the Bank and to reestablish “well capitalized” status, management is pursuing a number of strategic alternatives. Current market conditions for banking institutions, the overall uncertainty in financial markets and the Company’s high level of non-performing assets are potential barriers to the success of these strategies. Failure to adequately address the regulatory concerns may result in actions by the banking regulators including, but not limited to, entry into a formal written agreement. Ongoing failure to adequately address regulatory concerns could ultimately result in the eventual appointment of a receiver or conservator of the Bank’s assets. If current adverse market factors continue for a prolonged period of time, new adverse market factors emerge, and/or the Company is unable to successfully execute its plans or adequately address regulatory concerns in a sufficiently timely manner, it could have a material adverse effect on the Company’s business, results of operations and financial position.

Off-Balance-Sheet Items

Our financial statements do not reflect various commitments and contingent liabilities that arise in the normal course of business. These off-balance-sheet financial instruments include commitments to extend credit and standby letters of credit. These financial instruments are included in the financial statements when funds are distributed or the instruments become payable. We use the same credit policies in making commitments as we do for on-balance sheet instruments. Our exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit, standby letters of credit and credit card commitments is represented by the contractual amount of those instruments. The table below contains a summary of our contractual obligations as of December 31, 2006. There has been no material change to the Company’s overall exposure to these off-balance-sheet items in the first nine months of 2007.

~~Commitments~~31 ~~and Contractual Obligations~~

(Dollars in thousands)(Unaudited)	Less than one year		1-3 years		3-5 years		Thereafter		Total
Contractual obligations
Deposits having no stated maturity	$	132,289	$	-	$	-	$	-	$	132,289
Subordinated Debentures				5,155		10,310				15,465
Certificates of Deposit		283,068		21,226		35,506		-		339,800
FHLB advances and other borrowed funds		10,035								10,035
Leases		612		1,171		1,098		1,168		4,049
Total contractual obligations	$	426,004	$	27,552	$	46,914	$	1,168	$	501,638

The table below contains a summary of our commitments as of September 30, 2007 and December 31, 2006.

	September 30,2007		December 31,2006
Commitments
Commitments to extend credit	$	126,577	$	100,120
Commercial standby letters of credit		6,605		1,921
Total commitments	$	133,182	$	102,041

~~ITEM~~The 3.table ~~Quantitative~~below ~~and~~contains ~~Qualitative~~a ~~Disclosures~~summary ~~about~~of ~~Market~~our ~~Risk~~commitments as of March 31, 2009, December 31, 2008 and March 31, 2008:


(Dollars in thousands)(Unaudited)	March 31 2009		December 31 2008		March 31 2008
Commitments to extend credit	$	59,450	$	75,849	$	136,620
Standby letters of credit		6,143		8,178		13,633

	$	65,593	$	84,027	$	150,253

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity Management

The absolute level and volatility of interest rates can have a significant impact on the Company’s profitability. The objective of interest rate risk management is to identify and manage the sensitivity of net interest income to changing interest rates, in order to achieve the Company’s overall financial goals. Based on economic conditions, asset quality and various other considerations, management establishes tolerance ranges for interest rate sensitivity and manages within these ranges.

The Company’s net interest income and the fair value of its financial instruments are influenced by changes in the level of interest rates. We manage our exposure to fluctuations in interest rates through policies established by the asset/liability committee of the board of directors. The asset/liability committee meets periodically and has responsibility for approving asset/liability management policies, formulating and implementing strategies to improve balance sheet positioning and/or earnings and reviewing the Company’s interest rate sensitivity.

One of the tools management utilizes to estimate the sensitivity of net interest revenue to changes in interest rates is an interest rate simulation model. Such estimates are based upon a number of assumptions for each scenario, including the level of balance sheet growth, deposit repricing characteristics and the rate of prepayments. The simulation model measures the potential change in net interest revenue over a twelve-month period under six interest rate scenarios. The first scenario assumes rates remain flat over the next twelve months and is the scenario that all others are compared to in order to measure the change in net interest income. The second scenario is a most likely scenario that projects the most likely change in rates over the next twelve months based on the slope of the yield curve. The Company models ramp scenarios that assume gradual increases and decreases of 300 basis points each over the next twelve months. At ~~September~~March 3031, ~~2007~~2009, our simulation model indicated that a 300 basis point increase in rates over the next twelve months would cause an approximate 1518.531% increase in net interest income and a 300 basis point decrease in rates over the next twelve months would cause an approximate 1517.291% decrease in net interest income. At ~~September~~ December 3031, ~~2006~~2008, our simulation model indicated that a 300 basis point increase in rates over the next twelve months would cause an approximate 1719.523% increase in net interest income and a 300 basis point decrease in rates over the next twelve months would cause an approximate 1513.947% decrease in net interest income.

Interest rate sensitivity is a function of the repricing characteristics of the portfolio of assets and liabilities. These repricing characteristics are the time frames within which the interest-earning assets and interest-bearing liabilities are subject to change in interest rates either at replacement, repricing or maturity during the life of the instruments. Interest rate sensitivity management focuses on the maturity structure of assets and liabilities and their repricing characteristics during periods of changes in market interest rates. Effective interest rate sensitivity management seeks to ensure that both assets and liabilities respond to changes in interest rates within an acceptable timeframe, thereby minimizing the impact of interest rate changes on net interest revenue. Interest rate sensitivity is measured as the difference between ~~the volumes of assets and liabilities in the Company’s current portfolio that are subject~~ to repricing at various time horizons: immediate; one to three months; four to twelve months; one to five years; over five years, and on a cumulative basis. The differences are known as interest sensitivity gaps.

2532

~~The~~ the ~~following~~volumes ~~table~~of ~~shows~~assets ~~interest~~and ~~sensitivity~~liabilities ~~gaps~~in ~~for~~the ~~these~~Company’s ~~different~~current ~~intervals~~portfolio that are subject to repricing at various time horizons: immediate; one to three months; four to twelve months; one to five years; over five years, and on a cumulative basis. The differences are known as interest sensitivity gaps.

	Interest Sensitivity by Month As of September 30, 2007
(Dollars in thousands)(Unaudited)	Interest Sensitivity by Month As of March 31, 2009
(Dollars in thousands)(Unaudited)	Immediate			1 to 3			4 to 12			13 to 60			Over 60			Total
	Immediate				1 to 3			4 to 12			13 to 60			Over 60			Total
Interest-earning assets:
Federal funds sold	~~32,050~~$	75,086		-	—		-	—		-	—		-	—		~~32,050~~	75,086
Interest Bearing Due From accounts	341			-			-			-			-			341
Interest Bearing due from accounts		313			—			—			—			—			313
Investment securities available for sale	-			15,768			18,541			31,024			36,891			102,224
Investment securities		—			16,375			26,897			45,278			26,981			115,531
Loans	-	—		~~395,879~~	572,931		~~21,144~~	68,785		~~26,785~~	43,150		~~12,597~~	11,726		~~456,405~~	696,592
Total earning assets	~~32,391~~	75,399		~~411,647~~	589,306		~~39,685~~	95,682		~~57,809~~	88,428		~~49,488~~	38,707		~~591,020~~	887,522
Interest-bearing liabilities
Interest-bearing liabilities:
Non-Interest Bearing Deposits	-			1,080			3,240			18,284			11,902			34,506
Non-interest bearing deposits		—			1,299			3,894			10,380			25,880			41,453
Interest bearing deposits	-			1,383			4,149			22,065			-			27,597
Interest bearing deposits (NOW)		42,387			—			—			—			—			42,387
Savings Deposits (includes MMkt)	-			67,786			162			921			-			68,869
Savings deposits (includes MMkt)		80,590			—			—			—			—			80,590
Time Deposits	-			108,649			246,306			56,453			-			411,408
Time deposits		—			143,268			428,068			122,456			99			693,891
Other Borrowings	11,585			-			-			-			-			11,585
Short-term borrowings		24,549			—			10,000			—			—			34,549
Junior subordinated debt				-			-			15,465			-			15,465
Long-term debt		—			10,000			—			6,000			—			16,000
Interest-bearing liabilities	11,585			178,898			253,857			113,188			11,902			569,430
Junior subordinated debt		—			15,465			—			—			—			15,465
Interest Sensitivity Gap	20,806			232,749			(214,172	)		(55,379	)		37,586
Total interest-bearing liabilities		147,526			170,032			441,962			138,836			25,979			924,335
Cumulative interest-sensitivity gap	20,806			253,555			39,383			(15,996	)		21,590
Interest sensitivity gap		(72,127	)		419,274			(346,280	)		(50,408	)		12,728
Ratio of cumulative interest-sensitivity gap to total earning assets	3.52	%		42.90	%		6.66	%		-2.71	%		3.79	%
Cumulative interest-sensitivity gap	$	(72,127	)		347,147			867			(49,541	)		(36,813	)
Ratio of cumulative interest-sensitivity gap to total earning assets		-8.13	%		39.11	%		0.10	%		-5.58	%		-4.15	%

As demonstrated in the preceding table, 7882.02% of interest-bearing liabilities will reprice within twelve months compared with 8685.97% of interest-earning assets, however such changes may not be proportionate with changes in market rates within each balance sheet category. In addition, the Company may have some discretion in the extent and timing of deposit repricing depending upon the competitive pressures in the markets in which it operates. Changes in the mix of earning assets or supporting liabilities can either increase or decrease the net interest margin without affecting interest rate sensitivity. The interest rate spread between an asset and its supporting liability can vary significantly even when the timing of repricing for both the asset and the liability remains the same, due to the two instruments repricing according to different indices.

Varying interest rate environments can create unexpected changes in prepayment levels of assets and liabilities that are not reflected in the interest rate sensitivity gap analysis. These prepayments may have significant impact on the net interest margin. Because of these limitations, an interest sensitivity gap analysis alone generally does not provide an accurate assessment of exposure to changes in interest rates.

Impact of Inflation and Changing Prices

The effect of relative purchasing power over time due to inflation has not been taken into effect in our financial statements. Rather, the statements have been prepared on a historical cost basis in accordance with generally accepted accounting principles in the United States.

Since most of the assets and liabilities of a financial institution are monetary in nature, the effect of changes in interest rates will have a more significant impact on our performance than will the effect of changing prices and inflation in general. Interest rates may generally increase as the rate of inflation increases, although not necessarily in the same magnitude.

The table below summarizes the return on average assets, return on average equity, and average equity to average assets for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2007~~2009 and ~~2006~~2008:


	Three months ended March 31
	2009		2008
Return on average assets	-2.86	%	-0.41	%
Return on average equity	-51.64	%	-4.03	%
Average equity to average assets	5.53	%	10.13	%

	Three Months Ended September 30				Nine Months Ended September 30
	2007		2006		2007		2006
Return on average assets	0.71	%	1.23	%	0.87	%	1.19	%
Return on average equity	10.89	%	20.49	%	12.88	%	18.25	%
Average equity to average assets	6.50	%	6.00	%	6.79	%	6.51	%

ITEM 4T.

Controls and Procedures

ITEM 4. Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have evaluated the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”). Disclosure Controls, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure Controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Our management, including the CEO and CFO, does not expect that our Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based upon their controls evaluation, our CEO and CFO have concluded that our Disclosure Controls are effective at a reasonable assurance level.

There have been no changes in our internal controls over financial reporting during our ~~third~~first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

~~Item~~ITEM 1. Legal Proceedings

The Company and its subsidiaries are subject to claims and suits arising in the ordinary course of business. In the opinion of management, the ultimate resolution of these pending claims and legal proceedings will not have a material adverse effect on the Company’s results of operations.

~~Item~~ITEM 1A. Risk Factors

~~Risks~~In addition to the other information set forth in ~~Related~~this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008, which could materially affect our business, financial condition or future results. The risks described above and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to ~~Our~~us ~~Business~~or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

~~Our~~ITEM ~~business~~2. ~~strategy~~Unregistered ~~includes~~Sales ~~the continuation~~ of ~~significant~~Equity ~~growth~~Securities ~~plans,~~ and ~~our~~Use ~~financial condition and results~~ of ~~operations could be negatively affected if we fails to manage our growth effectively.~~ Proceeds

~~We have grown~~The ~~rapidly~~Company ~~over~~made ~~the~~no ~~past~~repurchases ~~several~~of ~~years~~its ~~and~~common ~~intend~~stock toduring ~~continue to pursue a significant growth strategy for our business. Our prospects must be considered in light of~~ the ~~risks,~~quarter ~~expenses~~ended and difficulties frequently encountered by companies in significant growth stages of development. We may not be able to further expand our market presence in existing markets or to enter new markets successfully nor can we guarantee that any such expansion would not adversely affect our results of operations. Failure to manage growth effectively could have a material adverse effect on our businessMarch 31, ~~future prospects, financial condition or results of operations, and could adversely affect our ability to successfully implement business strategies~~2009. ~~Also, if such growth occurs more slowly than anticipated or declines, our operating results could be materially adversely affected.~~

27ITEM 3. Defaults upon Senior Securities

Our ability to grow successfully will depend on a variety of factors including the continued availability of desirable business opportunities, the competitive responses from other financial institutions in its market areas and our ability to manage growth. While our management believes it has the management resources and internal systems in place to manage future growth successfully, it is possible that we may not be able to grow or to sustain growth because of insufficient management resources or poor internal systems, or that future growth opportunities may be unavailable.

Our recent results may not be indicative of our future results.

We may not be able to sustain our historical rate of growth and may be unable to grow our business at all. In addition, our recent and rapid growth may distort some of its historical financial ratios and statistics. In the future, we may not have the benefit of several recently favorable factors, such as a generally predictable interest rate environment, a strong residential mortgage market or the ability to find suitable expansion opportunities. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may also impede or prohibit our ability to expand our market presence. If we experience a significant decrease in our historical rate of growth, our results of operations and financial condition may be adversely affected due to a high percentage of its operating costs being fixed expenses.

We operate in a heavily regulated environment.

The banking industry is heavily regulated. We are subject, in certain respects, to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Federal Deposit Insurance Corporation, the Georgia Department of Banking and Finance, and the Securities and Exchange Commission. Our success depends not only on competitive factors but also on state and federal regulations affecting banks and bank holding companies. The regulations are primarily intended to protect depositors, not shareholders. The ultimate effect of any proposed changes to the regulation of the financial institution industry cannot be predicted. Regulations currently affecting us may be modified at any time, and such modification may adversely affect our business.

It is possible that we will not pay dividends to shareholders in the future.

Our principal business operations are conducted through The Buckhead Community Bank. Cash available to pay dividends to our shareholders is derived primarily, if not entirely, from dividends paid by the Bank. The ability of the Bank to pay dividends to the Company, as well as the Company’s ability to pay dividends to our shareholders, are subject to and limited by certain legal and regulatory restrictions. Further, any lenders making loans to the Company may impose financial covenants that may be more restrictive than regulatory requirements with respect to our payment of dividends. We have not paid cash dividends to our shareholders since inception, and have no plans to pay dividends in the future.

Changes in the policies of monetary authorities could adversely affect our profitability.

Our results of operations 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 or the federal funds rate on bank borrowing and changes in reserve requirements against bank deposits. From June 30, 2004, to June 29, 2006, the Federal Reserve increased its target federal funds rate 17 times, from 1.00% to 5.25%. The Federal Reserve has subsequently decreased this rate in 2007 to 4.50%, where it currently remains. In view of changing conditions in the national economy and in the money markets, we are unable to predict possible future changes in interest rates, deposit levels or loan demand, and it is possible that any such changes, individually or in the aggregate, could have an adverse effect on our business and earnings.

Changes in interest rates could have an adverse effect on our income.

Our profitability depends to a significant extent upon our net interest income. Net interest income is the difference between interest income on interest-earning assets, such as loans and investments, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Our net interest income will be adversely affected if market interest rates change such that the interest we pay on deposits and borrowings increases faster than the interest earned on loans and investments. Changes in interest rates could also adversely affect the income derived from certain of our non-interest income businesses. For example, if mortgage interest rates increase, the demand for residential mortgage loans will likely decrease, and this would have an adverse effect on our mortgage origination fee income.

Changes in the allowances for loan losses could affect our profitability.

Our management maintains an allowance for loan losses based upon, among other things, (1) historical experience, (2) an evaluation of local and national economic conditions, (3) regular reviews of delinquencies and loan portfolio quality, (4) current

trends regarding the volume and severity of past due and problem loans, (5) the existence and effect of concentrations of credit and

(6) results of regulatory examinations. Based upon such factors, management makes various assumptions and judgments about the ultimate collectability of the respective loan portfolios. Although we believe that the allowance for loan losses at each of their branches is adequate, such allowances may prove insufficient to cover future losses. Future adjustment may be necessary if economic conditions differ or adverse developments arise with respect to our non-performing or performing loans. Material additions to the allowance for loan losses would result in a material decrease in net income, and possibly capital, and could result in our inability to pay dividends, among other adverse consequences.

Competition in the banking industry is intense.

Competition in the banking and financial services industry is intense. In our primary market areas, we compete with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerages and investment banking firms operating locally and elsewhere. Many of these competitors are well-established, much larger financial institutions with substantially greater resources and lending limits than we have, and may offer certain services that we do not or cannot provide. Our profitability depends upon our continued ability to compete effectively in our market areas. While we believe that we can and do successfully compete with the other financial institutions in our primary market, we may face competitive disadvantages as a result of its smaller size and lack of geographic diversification.

As a community bank, we have different lending risks than larger banks.

We provide services to our local communities. Our ability to diversify our economic risks is limited by our local markets and economies. We lend primarily to individuals and to small to medium-sized businesses, which may expose us to greater lending risks than those of banks lending to larger, better-capitalized businesses with longer operating histories.

We manage our credit exposure through careful monitoring of loan applicants and loan concentrations in particular industries, and through loan approval and review procedures. We have established an evaluation process designed to determine the adequacy of its allowance for loan losses. While this evaluation process uses historical and other objective information, the classification of loans and the establishment of loan losses is an estimate based on experience, judgment and expectations regarding our borrowers, the economies in which we and our borrowers operate, as well as the judgment of our regulators. Our loan loss reserves may be insufficient to absorb future loan losses or prevent a material adverse effect on our business, profitability or financial condition.

Our success depends upon local economic conditions.

Our success depends to a certain extent on the general economic conditions of the geographic markets served by the Bank. The local economic conditions in these areas have a significant impact on commercial, real estate and construction loans, the ability of borrowers to repay these loans and the value of the collateral securing these loans. Adverse changes in the economic conditions of the Southeastern United States in general, or in or around metropolitan Atlanta in particular, could negatively impact our financial results and have a negative effect on profitability.

If the value of real estate in our core market were to decline materially, a portion of our loan portfolio could become under-collateralized, which could have a material adverse effect on our business, financial condition and results of operations.

With the concentration of our loans in our primary market area, a decline in local economic conditions could adversely affect the values of our real estate collateral. Consequently, a decline in local economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are geographically diverse.

In addition to considering the financial strength and cash flow characteristics of borrowers, we often secure loans with real estate collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected.

Our continued pace of growth may require us to raise additional capital in the future, but that capital may not be on favorable terms or available when it is needed.

We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control, and on our financial performance. We may be unable to raise additional capital, if needed, on terms acceptable to it or at all. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth or acquisitions could be materially impaired.

Our directors and executive officers own a significant portion of our common stock and can influence stockholder decisions.

Our directors and executive officers, as a group, beneficially owned approximately 57% of its fully diluted outstanding common stock as of November 30, 2007. As a result of their ownership, our directors and executive officers have the ability, if they vote their shares in concert, to influence the outcome of all matters submitted to our stockholders for approval, including the election of directors.

Holders of our subordinated debentures have rights that are senior to those of our common stockholders.

We have supported our continued growth by issuing trust preferred securities and accompanying junior subordinated debentures from two special purpose trusts. As of September 30, 2007, we had outstanding trust preferred securities and associated junior subordinated debentures with an aggregate principal amount of approximately $15.5 million. We have unconditionally guaranteed the payment of principal and interest on the trust preferred securities. Also, the junior debentures issued to the special purpose trust that relate to those trust preferred securities are senior to our common stock. As a result, we must make payments on the junior subordinated debentures before we can pay any dividends on our common stock; in the event of our bankruptcy, dissolution or liquidation, holders of the junior subordinated debentures must be satisfied before any distributions can be made on our common stock. We do have the right to defer distributions on our junior subordinated debentures (and related trust preferred securities) for up to five years, but during that time would not be able to pay dividends on our common stock.

We continually encounter technological change and may have fewer resources than our competition to continue to invest in technological improvements.

The banking and financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, in part, upon our ability to address the needs of customers by using technology to provide products and services that enhance customer convenience, as well as create additional efficiencies in operations. Many of our competitors have greater resources to invest in technological improvements, and we may not be able to effectively implement new technology-driven products and services, which could reduce our ability to effectively compete.

Risks Related to the Possible Acquisition of Allied Bancshares, Inc.

On March 1, 2007, the Company entered into a definitive agreement to acquire Allied Bancshares, Inc., (“Allied”), and its wholly-owned subsidiary, First National Bank of Forsyth County (collectively, “the acquired companies” or “the acquisition”). In addition to the risk factors relating generally to the Company’s business outlined above, if the Company does not successfully integrate the acquired companies into its business, the Company may not realize the expected benefits from its acquisitions, and may face other risks. Specifically:

Combining our two companies may be more difficult, costly, or time-consuming than we expect, or may not occur at all.

The Company and Allied have operated, and, until completion of the acquisition, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees or disruption of each company’s ongoing business or inconsistencies in standards, procedures and policies that would adversely affect our ability to maintain relationships with clients and employees or to achieve the anticipated benefits of the acquisition. If we have difficulties with the integration process, we might not achieve the economic benefits we expect to result from the acquisition. As with any merger of banking institutions, there also may be business disruptions that cause the combined entity to lose customers or cause customers to take their deposits out of our banks and move their business to other financial institutions.

Extensions of required regulatory approvals, such as may be needed, may not be received, may take longer than expected or may impose conditions that are not presently anticipated.

The acquisition must be approved by the Federal Reserve, the FDIC and the Georgia Department of Banking and Finance (“GDBF”) in order to be consummated. While the merger has received the prior approval of the Federal Reserve, the FDIC and the GDBF, our prior approval from the Federal Reserve expires on December 5, 2007, and our prior approval from the FDIC expires on December 22, 2007. We have already received a three-month extension of prior approval from the Federal Reserve and intend to apply for additional extensions of our approvals as necessary. While we have no reason to believe that such extensions will not be granted, there is the possibility that a necessary extension may not be granted on a timely basis or at all, or may impose conditions not presently anticipated and which may have a materially adverse effect on the combined company following the merger or may preclude completion of the merger entirely.

We may not be able to maintain our historical growth rate, which may adversely affect our results of operations and financial condition.

We have grown substantially in the recent past. To this point, our growth has been achieved primarily through internal, organic growth. Our future profitability will depend in part on our continued ability to grow. We may not be able to sustain our historical rate of growth or may not be able to grow our business at all in the future. We may also not be able to obtain the capital or financing necessary to fund additional growth and may not be able to find suitable candidates for acquisitions in the future. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may impede or prohibit our ability to acquire banks and bank holding companies and open new branch offices. The acquisition of Allied and the transitional costs associated therewith, both from the perspective of tangible costs such as technology conversion as well as less tangible but very real costs to management time, may likewise impede our ability to maintain our historic growth rate.

Substantial sales of the Company’s common stock could cause its stock price to fall.

If stockholders sell substantial amounts of our common stock in the public market following the acquisition, the market price of our common stock could fall. Such sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

The risks described above are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company made no repurchases of its common stock during the quarter ended September 30, 2007.

Item 3. Defaults upon Senior Securities

None.

~~Item~~ITEM 4. Submission of Matters to a Vote of Security Holders

None.

~~Item~~ITEM 5. Other Information

~~On March 1, 2007, we entered into a definitive Agreement and Plan of Reorganization (the “Agreement”) with Allied~~None. At the effective time of the acquisition, the corporate existence of Allied will cease, and First National Bank of Forsyth County, the wholly-owned subsidiary of Allied, will be merged into The Buckhead Community Bank, the wholly-owned subsidiary of Buckhead. Under the terms of the Agreement, Allied shareholders will be entitled to elect to receive 1.2 shares of Buckhead common stock or $30.00 in cash in exchange for each outstanding share of Allied, with the maximum cash consideration being limited to $13,375,000. The Agreement includes representations, warranties, covenants and indemnifications typical for transactions of this type.

AtITEM ~~a special meeting of shareholders held on November 29, 2007, Allied’s shareholders voted to approve the acquisition proposal~~6. Exhibits

We have filed a Registration Statement on Form S-4, as amended, with the SEC relating to the acquisition, which Registration Statement was declared effective by the SEC on October 19, 2007, and may be viewed free of charge at the SEC’s web site, www.sec.gov.

Item 6. Exhibits

Exhibits


Exhibit No. 31.1		Chief Executive Officer Certification Pursuant to Rule 13a-14(a)/15d-14(a)

Exhibit No. 31.2		Chief Financial Officer Certification Pursuant to Rule 13a-14(a)/15d-14(a)

Exhibit No. 32.1		Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit No. 32.2		Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

3236

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Buckhead Community Bancorp, Inc.


Buckhead Community Bancorp, Inc. (Registrant)

DATE: May 15, 2009	BY:	/s/ Marvin Cosgray
		Marvin Cosgray
		President and Chief Executive Officer

DATE: May 15, 2009	BY:	/s/ Dawn Kinard
		Dawn Kinard
		Chief Financial Officer

~~(Registrant)~~37

DATE: December 3, 2007	BY:	/s/ Marvin Cosgray
		Marvin CosgrayPresident and Chief Executive Officer
DATE: December 3, 2007	BY:	/s/ Jesse R. Cheatham
		Jesse R. CheathamChief Financial Officer

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