The Company. HBancorporation, Inc. (the "Company") was formed in December 1995 by Lawrenceville Federal Savings and Loan Association (the "Association"), the predecessor institution to Heritage National Bank (the "Bank"). The acquisition of the Association (and subsequently the Bank) by the Company was consummated on March 29, 1996, in connection with the Association's conversion from the mutual to the stock form. All references to the Company prior to March 29, 1996, except where otherwise indicated, are to the Bank.

At June 30, 1998, the Company had $21.5 million of assets and stockholders' equity of $7.0 million (or 32.9% of total...