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 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 securities laws. Forward-looking statements 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, and other statements that are not historical facts. When we use words like "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 may cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among others, 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 economic conditions may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduction in demand for credit;
(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 may have greater financial resources and develop products that enable such competitors to compete more successfully than us; 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.

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.

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 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.

Estimates of Fair Value

The estimation of fair value is significant to a number of the Company's assets, including, but not limited to, investment securities, impaired loans, other real estate owned, goodwill and other intangible assets. Investment securities are recorded at fair value while other real estate owned, goodwill 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 other real estate owned are typically determined based on third-party appraisals less estimated costs to sell. Goodwill and 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, other real estate owned, goodwill 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 reported net income.

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 Sheet Review

At March 31, 2008, we had total assets of $944.5 million as compared to $898.9 million as of December 31, 2007. For the same periods, total liabilities increased to $855.3 million from $809.5 million. The increase in assets and liabilities was primarily due to an approximately $34 million customer deposit that was received within a few days of quarter-end and invested in securities available for sale. The deposit was redeemed shortly after quarter-end and the related investments matured. Shareholder's equity totaled $89.2 million at March 31, 2008, a decrease of $0.3 million, or 0.3% when compared to December 31, 2007. The decrease was primarily driven by a net loss for the first quarter of 2008. On December 4, 2007, we completed the acquisition of Allied, which added approximately $273.8 in total assets to our balance sheet. This transaction is described more fully in Note 2 to the Consolidated Financial Statements included in Item 1.

Investment Portfolio

The fair value of the investment securities portfolio as of March 31, 2008 was $146.5 million compared to $109.6 million as of December 31, 2007. The growth of the investment portfolio was primarily related to the approximately $34 million purchase of treasury securities near quarter-end, due to the aforementioned customer deposit. Our investment portfolio is managed with primary consideration of collateral requirements for our growing overnight sweep product and public deposit balances.

                                         March 31, 2008         December 31, 2007          March 31, 2007
                                     Amortized      Fair      Amortized      Fair       Amortized      Fair
(Dollars in thousands)(Unaudited)       Cost        Value        Cost        Value        Cost        Value
U.S. Treasury government sponsored
securities, agencies and
corporations                         $   85,830   $  86,655   $   62,106   $  62,250   $    59,091   $ 58,451
Trust Preferred Securities                  450         444        1,450       1,457         1,450      1,450
Corporate bonds                             250         251          250         251           250        250
State and municipal securities           24,540      24,204       24,561      24,242        23,899     24,110
Mortgage-backed securities               34,826      34,942       21,704      21,447        14,801     14,437

Total securities available for
sale                                 $  145,896   $ 146,496   $  110,071   $ 109,647   $    99,491   $ 98,698

The carrying value of investment securities at March 31, 2008, 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.

Maturity Distribution and Weighted Average Yield on Investments

                                                                 After One Year          After 5 Years
                                         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
Carrrying value:
March 31, 2008
U.S. Government sponsored securities,
agencies and corporations               $    39,040    3.96 %      2,689     4.59 %     21,295       4.96 %    23,631     5.58 %    86,655    4.67 %
Trust preferred securities                       -       -            -        -            -          -          444     7.23 %       444    7.23 %
Corporate bonds                                  -       -            -        -            -          -          251     7.23 %       251    7.23 %
State and municipal securities1                  -       -           486     5.29 %      3,355       5.25 %    20,363     5.73 %    24,204    5.65 %
Mortgage-backed securities                       -       -         7,585     4.55 %      1,625       4.26 %    25,732     5.59 %    34,942    5.30 %

Total securities                        $    39,040               10,760                26,275                 70,421              146,496

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 increased $13.7 million, or 2.0% from December 31, 2007 to March 31, 2008. The following table presents various categories of loans contained in the loan portfolio of the Company as of March 31, 2008, December 31, 2007, and March 31, 2007:

                                               March 31               December 31                March 31
                                                 2008                     2007                     2007
                                                        % of                     % of                     % of
(Dollars in thousands)(Unaudited)         Amount       Loans       Amount       Loans       Amount       Loans
Breakdown of loan receivables:
Commercial                               $  74,075      10.73 %   $  77,837      11.50 %   $  71,235      17.63 %
Real estate - mortgage                     229,677      33.26 %     213,248      31.50 %      99,460      24.62 %
Real estate - construction                 373,997      54.15 %     371,506      54.88 %     230,122      56.95 %
Consumer                                    12,861       1.86 %      14,358       2.12 %       3,230       0.80 %

Total loans                                690,610     100.00 %     676,949     100.00 %     404,047     100.00 %
Less: Allowance for loan losses             11,167                    9,787                    5,021
Less: Unearned loan fees                       688                      830                      796

Net loans                                $ 678,755                $ 666,332                $ 398,230

Ratio of the allowance for loan losses
to total loans                                1.62 %                   1.45 %                   1.24 %

The major components of the loan portfolio at March 31, 2008 were real estate construction and mortgage and represented 87.4% 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.

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 March 31, 2008:

                                                        After One,     After
                                           One Year     but within      Five
  (Dollars in thousands)(Unaudited)         or Less     Five Years     Years       Total
  Commercial, financial and agricultural   $  50,274   $     15,743   $  8,058   $  74,075
  Real estate - mortgage                     139,437         77,922     12,318     229,677
  Real estate - construction                 342,265         31,732         -      373,997
  Consumer                                     9,377          3,365        119      12,861

  Total                                    $ 541,353   $    128,762   $ 20,495   $ 690,610

The following table represents the rate structure for loans as of March 31, 2008:

                                                   Variable
          (Dollars in thousands)(Unaudited)          Rate       Fixed Rate
          Commercial, financial and agricultural   $  53,936   $     20,139
          Real estate - mortgage                      96,996        132,681
          Real estate - construction                 314,070         59,927
          Consumer                                     2,984          9,877

          Total                                    $ 467,986   $    222,624

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 March 31, 2008 the allowance for loan losses was $11.2 million or 1.62% of outstanding loans, as compared to $9.8 million or 1.45% at December 31, 2007. 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 March 31, 2008, 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 loan grading system that rates loans in different categories. Certain grades representing criticized or classified loans are assigned allocations of loss based on management's estimate of potential loss that is generally based on historical losses and/or collateral deficiencies. Other loans are graded by type and allocated loss ranges based on management's perceived inherent loss for the loan type. The combination of these results is compared monthly to the recorded allowance for loan losses and material differences are adjusted by increasing or decreasing the provision for loan losses.

The following table shows an analysis of allowance for loan loss, including charge-off activity, for the three months ended March 31, 2008 and 2007:

Summary of Loan Loss Experience

                                                                    Three Months Ended
                                                                         March 31
(Dollars in thousands)(Unaudited)                                   2008           2007
Balance at beginning of period                                   $     9,787      $ 4,518
Loans charged off:
Commercial                                                               326           -
Real estate - mortgage                                                    -            -
Real estate - construction                                               416           -
Consumer                                                                  -            -

Total loans charged off                                                  742           -

Recoveries of losses previously charged off:
Commercial                                                                -            28
Real estate - mortgage                                                    -            -
Real estate - construction                                                -            -
Consumer                                                                  -            -

Total recoveries                                                          -            28

Net loans charged off                                                    742          (28 )
Provision for loan losses                                              2,122          475

Allowance for loan losses at end of period                       $    11,167      $ 5,021

Net loans charged off (recovered), as a percent of average
loans outstanding (annualized)                                          0.44 %      -0.01 %

Our provision for loan losses for the three months ended March 31, 2008 was $2.1 million, which was $1.4 million higher than net charge-offs of $0.7 million. The comparable provision and net charge-off

amounts for 2007 were $0.5 million and $(28) thousand, respectively. The loan loss provision increased from 2007 to 2008, primarily due to increases in non-performing loans and net charge-offs. Net charge-offs for the three months ended March 31, 2008 represented 0.44% of average loans, compared to a net recovery of 0.01% of average loans for the first quarter of 2007.

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

                                                March 31             December 31            March 31
                                                  2008                  2007                  2007
(Dollars in thousands)(Unaudited)           Amount    Percent     Amount    Percent     Amount    Percent
Commercial, financial and agricultural     $  1,561     13.98 %   $ 1,231     12.58 %   $   875     17.43 %
Real estate - mortgage                        3,540     31.70 %     3,234     33.04 %     1,222     24.34 %
Real estate - construction                    5,930     53.10 %     5,181     52.94 %     2,884     57.44 %
Consumer                                        136      1.22 %       141      1.44 %        40      0.79 %

Total                                      $ 11,167    100.00 %   $ 9,787    100.00 %   $ 5,021    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 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 March 31, 2008, our impaired loans, consisting solely of loans on nonaccrual status, totaled $21.9 million and had associated reserves of approximately $3.2 million. This is compared to impaired loans and associated reserves of $8.3 million and approximately $760 thousand, respectively, as of December 31, 2007. A loan is considered impaired when it is probable, based on current information and events, the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans are measured by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes are included in the allowance for loan losses. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status.

. . .