<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-QSB
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934


For Quarterly Period Ended                               Commission File Number:
     March 31, 1998                                              0-24113


                      ROCKDALE NATIONAL BANCSHARES, INC.
--------------------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)


           Georgia                                               58-2292563
--------------------------------------------------------------------------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

P.O. Box 82030, Conyers, Georgia                                    30013
--------------------------------------------------------------------------------
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number:  (770) 785-7880
                           -----------------------------------------------------
       

                                Not Applicable
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 _______
                       -----

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

     Common Stock, $1.00 Par Value                           676,188
----------------------------------------            -------------------------
                Class                             Outstanding as of May 11, 1998

Transitional Small Business Disclosure Format:

                  Yes  _____           No    X
                                          -------   
<PAGE>
 
                        PART I. - FINANCIAL INFORMATION


Item 1.   Financial Statements
------    --------------------

                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                          Consolidated Balance Sheet

<TABLE>
<CAPTION>
                                                       March 31,
                                                         1998      December 31,
ASSETS                                               (Unaudited)       1997
------                                               -----------   ------------
<S>                                                  <C>           <C>
Cash and due from banks............................  $ 2,647,045    $ 1,344,297
Federal funds sold.................................    3,200,000      4,290,000
Investment securities:
         Securities available-for-sale,
         at market value...........................   11,632,019      5,325,870
Other investments..................................      180,000        180,000
Loans, net.........................................    7,517,573      3,599,142
Premises and equipment, net........................    1,654,561      1,663,678
Accrued interest receivable........................      196,870        101,073
Other assets.......................................      197,926        166,014
                                                     -----------   ------------
         Total assets..............................  $27,225,994    $16,670,074
                                                     ===========   ============ 
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Liabilities:
Deposits
         Noninterest-bearing demand................  $ 2,193,973    $ 1,568,410
         Interest-bearing demand and money market..   15,794,994      6,478,310
         Savings...................................      305,075        629,190
         Time deposits of $100,000 or more.........    1,837,677      1,205,719
         Other time deposits.......................    1,041,329        511,002
                                                     -----------   ------------
                  Total deposits...................   21,173,048     10,392,631

         Accrued interest payable..................       10,133          6,380
         Other liabilities.........................       13,200          6,000
                                                     -----------   ------------
                  Total liabilities................   21,196,381     10,405,011
                                                     -----------   ------------
</TABLE>
                                  (Continued)


            Refer to notes to the consolidated financial statements.

                                       2
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                          Consolidated Balance Sheet
                                  (continued)

<TABLE> 
<CAPTION> 
                                                    March 31,
                                                      1998      December 31,
Shareholders' Equity:                              (Unaudited)      1997
                                                   -----------  ------------
<S>                                                <C>          <C> 
Common stock, $1.00 par value,
   10,000,000 shares authorized,       
   676,188 shares issued and outstanding.......       676,188        676,188
Surplus........................................     6,060,196      6,060,196
Retained earnings (deficit)....................      (683,240)      (468,628)
Accumulated other comprehensive income (loss)..       (23,531)        (2,693)
                                                   ----------   ------------
   Total Shareholders' Equity..................     6,029,613      6,265,063
Commitments and contingent liabilities.........            --             --
                                                   ----------   ------------
   Total Liabilities and                                                     
      Shareholders' Equity.....................   $27,225,994    $16,670,074 
                                                   ==========   ============
</TABLE>

           Refer to notes to the consolidated financial statements.

                                       3
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three-months Ended March 31, 1998
             and for the Period from Inception (February 13, 1997)
                            Through March 31, 1997
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                             For the period ended
                                                                                  March 31,
                                                                        -----------------------------
                                                                            1998              1997
                                                                            ----              ----
<S>                                                                     <C>               <C>
Interest income
         Loans, including fees...............................              $146,502       $    --
         Investment securities:
                  U.S. Treasury Securities...................                    --            --
                  U.S. Government agencies and corporations..               112,062            --
                  Other investments..........................                    --            --
         Federal funds sold..................................                59,662            --
                                                                         ----------       ----------- 
                  Total interest income......................               318,226            --
                                                                         ----------       ----------- 
Interest expense                                                                                
         Interest bearing demand and money market............               133,514            --
         Savings.............................................                 1,071            --
         Time deposits of $100,000 or more                                   25,589            --
         Other time deposits.................................                 9,463            --
         Other borrowings....................................                     0            --
                                                                         ----------       ----------- 
                  Total interest expense.....................               169,637            --
                                                                         ----------       ----------- 
                  Net interest income........................               148,589            --
Provision for possible loan losses...........................                42,498            --
                                                                         ----------       ----------- 
Net interest income after provision                                                             
         for possible loan losses............................               106,091            --
                                                                         ----------       ----------- 
Other income                                                                                    
         Service charges on deposit accounts.................                10,567            --
         Investment securities gains, net....................                    --            --
         Other income........................................                 8,429            --
                                                                         ----------       ----------- 
                  Total other income.........................                18,996            --
                                                                         ----------       -----------
Other expense................................................                                   
         Salaries and other compensation.....................               144,980            --
         Employee benefits...................................                10,361            --
         Net occupancy and equipment expense.................                56,853            --
</TABLE>

           Refer to notes to the consolidated financial statements.

                                       4
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three-months Ended March 31, 1998
             and for the Period from Inception (February 13, 1997)
                            Through March 31, 1997
                                  (Unaudited)
                                  (continued)

<TABLE>
<CAPTION>
                (Continued)
                                                                   For the period Ended 
                                                                         March 31,      
                                                                   -------------------
                                                                  1998             1997  
                                                                  ----             ----
<S>                                                            <C>               <C>
 
         Professional and other outside services..               123,774              -- 
         Other expense............................                 3,732           3,831
                                                                --------         ------- 
                  Total other expenses............               339,700           3,831
                                                                --------         ------- 
Net income (loss) before taxes....................              (214,613)         (3,831)
Income taxes......................................                    --              --
                                                                --------         ------- 
Net income (loss).................................             $(214,613)        $(3,831)
                                                                ========         =======  
Basic income (loss) per share.....................                 $(.32)        $    -- 
                                                                ========         =======  
</TABLE>

           Refer to notes to the consolidated financial statements.

                                       5
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                Consolidated Statements of Comprehensive Income
                   For the Three-months Ended March 31, 1998
             and for the Period from Inception (February 13, 1997)
                            Through March 31, 1997
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                 For the period ended
                                                                       March 31,
                                                              ----------------------------
                                                                 1998              1997
                                                               --------          --------
<S>                                                            <C>               <C>        
Net Loss....................................................   $(214,613)        $ (3,831)
Other comprehensive income, before tax:                                                   
   Unrealized holding gains (losses) arising during period       (35,652)              -- 
   Income tax benefit (expense).............................      12,122               -- 
                                                                --------          -------  
Comprehensive Loss..........................................   $(238,143)        $ (3,831) 
                                                                ========          =======  
</TABLE>

           Refer to notes to the consolidated financial statements.

                                       6
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three-Months Ended March 31, 1998
             and for the Period from Inception (February 13, 1997)
                            Through March 31, 1997
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                         For the period ended       
                                                                                March 31,
                                                                   -----------------------------------                
                                                                           1998             1997          
                                                                           ----             ----
<S>                                                                    <C>                <C>            
Cash flows from operating activities:                                                                    
     Net loss.................................................         $   (214,613)      $ (3,831)      
     Adjustments to reconcile net loss to net cash used                                                  
      by operating activities:                                                                           
          Net (accretion) amortization of investment                                                     
             securities.......................................                4,861             --       
          Depreciation and amortization of premises                                                      
          and equipment.......................................               33,024             --        
          Provision for loan losses...........................               42,498             --        
          Deferred income tax benefit.........................              (12,122)            --        
          Amortization of organization costs..................                4,294             --        
          Increases in other assets...........................              (13,350)       (66,131)       
          Increase in accrued interest receivable.............              (95,797)            --        
          Increase in accrued interest payable................                3,753             --        
          Increase in other liabilities.......................                7,200             --        
                                                                        -----------      ---------  
               Net cash used by operating activities..........             (240,252)       (69,962)       
                                                                        -----------      ---------  
Cash flows from investing activities:                                                                     
     Purchases of investment securities                                                                   
          available for sale..................................           (6,942,581)            --       
     Purchases of other investments...........................                   --             --       
     Maturities of investment securities available-for-sale...              600,000             --       
     Loans originated, net of principal repayments............           (3,960,928)            --       
     Purchases of premises and equipment......................              (23,908)       (10,000)      
                                                                        -----------      ---------  
               Net cash used by investing activities..........          (10,327,417)       (10,000)      
                                                                        -----------      ---------  
Cash flows from financing activities:                                                                    
     Proceeds from loans by Organizers........................                   --         85,000       
     Repayment of loans by Organizers.........................                   --             --       
     Sale of common stock.....................................                   --             --       
     Increase in deposits.....................................           10,780,417             --       
                                                                        -----------      ---------  
               Net cash provided from financing                                                          
               activities.....................................           10,780,417         85,000       
                                                                        -----------      ---------  
Net increase in cash and cash equivalents.....................              212,748          5,038       
Cash and cash equivalents,                                                                               
     beginning of period......................................            5,634,297             --       
                                                                        -----------      ---------  
Cash and cash equivalents,                                                                                 
     end of period............................................         $  5,847,045       $  5,038         
                                                                        -----------      ---------  
</TABLE>

                                       7
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three-Months Ended March 31, 1998
             and for the Period from Inception (February 13, 1997)
                            Through March 31, 1997
                                  (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

     The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-QSB. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three-month period ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. For further
information, refer to the financial statements and footnotes included in the
Company's annual report on Form 10-KSB for the year ended December 31, 1997.


NOTE 2 - ORGANIZATION OF THE BUSINESS

     Rockdale National Bancshares, Inc., Conyers, Georgia (the "Company"), was
incorporated under the laws of the State of Georgia on February 13, 1997, for
the purpose of becoming a bank holding company for a proposed national bank,
Rockdale National Bank (the "Bank"). On August 26, 1997, the Company completed
an initial public offering of its common stock, $1.00 par value per share. Each
share of common stock was sold for $10.00 per share and 676,188 shares were
sold. Proceeds from the stock offering amounted to $6,736,384, net of selling
expenses. The Company injected $6.0 million into the Bank's capital accounts
upon opening on October 14, 1997.


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation and Reclassification. The consolidated financial
     ------------------------------------------
statements include the accounts of the Company and the Bank. All significant
intercompany accounts and transactions have been eliminated in consolidation.

     Basis of Accounting. The accounting and reporting policies of the Company
     -------------------
conform to generally accepted accounting principles and to general practices in
the banking industry. The Company uses the accrual basis of accounting by
recognizing revenues when earned and expenses when incurred, without regarding
the time of receipt or payment of cash.

     Organizational Costs. In accordance with the Financial Accounting Standards
     --------------------
Board ("FASB") Statement No. 7, the Company and the Bank capitalized all direct
organizational costs that were incurred in the expectation that they would
generate future revenues or otherwise be of benefit after the Bank opened for
business. These capitalized costs are amortized over a sixty-month period using
the straight line method. As of March 31, 1998, total organizational costs, net
of accumulated amortization, were $78,360.

                                       8
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three-Months Ended March 31, 1998
             and for the Period from Inception (February 13, 1997)
                            Through March 31, 1997
                                  (Unaudited)

     Investment Securities. The Company adopted Statement of Financial
     ---------------------
Accounting Standards No. 115, "Accounting for Certain Investment in Debt and
Equity Securities" ("SFAS 115") on February 13, 1997. SFAS 115 requires
investments in equity and debt securities to be classified into three
categories:

     1.   Held-to-maturity securities: These are securities which the Company
          has the ability and intent to hold until maturity. These securities
          are stated at cost, adjusted for amortization of premiums and the
          accretion of discounts.

     2.   Trading securities: These are securities which are bought and held
          principally for the purpose of selling in the near future. Trading
          securities are reported at fair market value, and related unrealized
          gains and losses are recognized in the income statement.

     3.   Available-for-sale securities: These are securities which are not
          classified as either held-to-maturity or as trading securities. These
          securities are reported at fair market value. Unrealized gains and
          losses are reported, net of tax, as separate components of
          shareholders' equity. Unrealized gains and losses are excluded from
          the income statement.

     Federal Reserve Bank stock is reported at cost. Earnings are reported when
interest is accrued or when dividends are received.

     Premium and discount on all investment securities are amortized (deducted)
and accredited (added), respectively, to interest income on the effective yield
method over the period to the maturity of the related securities.

     Gains or losses on disposition are computed by the specific identification
method for all securities.

     Property and Equipment. Furniture and equipment are stated at cost, net of
     ----------------------
accumulated depreciation. Depreciation is computed using the straight line
method over the estimated useful lives of the related assets. Maintenance and
repairs are charged to operations, while major improvements are capitalized.
Upon retirement, sale or other disposition of property and equipment, the cost
and accumulated depreciation are eliminated from the accounts, and gain or loss
is included in income from operations.

     Income Taxes. The consolidated financial statements have been prepared on
     ------------
the accrual basis. When income and expenses are recognized in different periods
for financial reporting purposes and for purposes of computing income taxes
currently payable, deferred taxes are provided on such temporary differences.

     Effective February 13, 1997, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under
SFAS 109, deferred tax assets and liabilities are recognized for the expected
future tax consequences of events that have been recognized in the financial
statements or tax return. Deferred tax assets and liabilities are measured using
the enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be realized or settled.

                                       9
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three-Months Ended March 31, 1998
             and for the Period from Inception (February 13, 1997)
                            Through March 31, 1997
                                  (Unaudited)

     Statement of Cash Flows. For purposes of reporting cash flows, cash and
     -----------------------
cash equivalents include cash on hand, amounts due from banks and federal funds
sold. Generally, federal funds are purchased or sold for one day periods.

     Net Income Per Share. Net income per share was calculated using 676,188 as
     --------------------
the weighted average number of shares outstanding for the period ended March 31,
1998. For the three-month period ended March 31, 1998 net income (loss) per
share was ($.32).

     Accounting for Transfers and Servicing of Financial Assets and
     --------------------------------------------------------------
Extinguishments of Liabilities. SFAS 125 is effective for transfers and
------------------------------
servicing of financial assets and extinguishments of liabilities occurring after
December 31, 1996, and is to be applied prospectively. Earlier or retroactive
application is not permitted. However, in December 1996, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 127 ("SFAS 127"), "Deferral of the Effective Date of Certain Provisions of
FASB Statement No. 125." This statement defers the effective date of certain
provisions for one year (December 31, 1997). The deferred provisions relate to
repurchase agreements, dollar-roll transactions, securities lending, and similar
transactions. The effective date for all other transfers and servicing of
financial assets is unchanged. The adoption of SFAS 125 did not have a material
impact on the Company's financial statements.

     Earnings Per Share. The Financial Accounting Standards Board has issued
     ------------------
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per
Share." This statement is effective for financial statements issued for periods
ending after December 15, 1997. This statement supersedes Accounting Principles
Board Opinion No. 15 ("APB 15"), "Earnings Per Share," and simplifies earnings
per share computations by replacing primary earnings per share with basic
earnings per share, which shows no effects from dilutive securities. Entities
with complex capital structures will have to show diluted earnings per share,
which is similar to the fully diluted earnings per share computation under APB
15. The adoption of SFAS 128 did not have a significant impact on the financial
condition or results of operations of the Company.

     Disclosure of Information About Capital Structure. The Financial Accounting
     -------------------------------------------------
Standards Board has issued Statement of Financing Accounting Standards No. 129
("SFAS 129"), "Disclosure of Information About Capital Structure." This
statement is effective for financial statements issued for periods ending after
December 15, 1997. This statement consolidates existing disclosure requirements
on capital structure. The adoption of SFAS 129 did not have a significant impact
on the financial condition or results of operations of the Company.

     Reporting Comprehensive Income. The Financial Accounting Standards Board
     ------------------------------
has issued Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income." SFAS 130 is effective July 1, 1998. Under SFAS
130, a company will begin showing changes in assets and liabilities in a new
comprehensive income statement or alternative presentation as opposed to showing
some of the items as transactions in shareholders' equity accounts. Upon
adoption, all comparative annual and interim financial statements will present a
comprehensive income statement or alternative disclosure, for all years
presented. The adoption of SFAS 130 did not have a significant impact on the
financial condition or results of operations of the Company.

                                      10
<PAGE>
 
                      ROCKDALE NATIONAL BANCSHARES, INC.
                                AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three-Months Ended March 31, 1998
             and for the Period from Inception (February 13, 1997)
                            Through March 31, 1997
                                  (Unaudited)

     Pending Accounting Pronouncements. The Financial Accounting Standards Board
     ---------------------------------
has issued Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Relation Information." SFAS 131
is effective July 1, 1998, and requires disclosure of certain financial
information by segments of a company's business. The adoption of SFAS 131 is not
expected to have a significant impact on the financial condition or results of
operations of the Company.

     The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 132 ("SFAS 132"), "Employers' Disclosures about
Pensions and other Postretirement Benefits." SFAS 132 is effective for fiscal
years beginning after December 31, 1997. The adoption of SFAS 132 is not
expected to have a significant impact on the financial condition or results of
operations of the Company.


NOTE 4 - OTHER COMPREHENSIVE INCOME

     Other comprehensive income (loss) is compiled of the following:

<TABLE> 
<CAPTION> 
                                                              Unrealized
                                                            Gains (Losses)
                                                            on Securities
                                                           ---------------
                  <S>                                      <C> 
                  Beginning balance - January 1, 1998          (2,693)
                  Current - period change                     (20,838)
                                                             --------
                  Ending balance - March 31, 1998            $(23,531)
                                                             ========
</TABLE> 

                                      11
<PAGE>
 
Item 2.   Management's Discussion and Analysis of Financial Condition and
------    ---------------------------------------------------------------
          Results of Operations
          ---------------------

     Rockdale National Bancshares, Inc. (the "Company") was incorporated in
Georgia on February 13, 1997 to become a bank holding company and to own and
control all of the outstanding shares of a de novo bank, Rockdale National Bank,
Conyers, Georgia (the "Bank"). In a public offering conducted during 1997, the
Company sold and issued 676,188 shares of its own $1.00 par value common stock
at $10.00 per share. Proceeds from the stock offering amounted to $6,736,384,
net of selling expenses. The Company purchased 100% of the Bank's common stock
by injecting $6.0 million into the Bank's capital accounts immediately prior to
commencement of banking operations on October 14, 1997.

     Total consolidated assets increased by $10,555,920 to $27,186,994 during
the three-month period ended March 31, 1998. The increase was generated
primarily through a $10,780,417 increase in deposits.

                              Financial Condition
                              -------------------

     Management continuously monitors the financial condition of the Bank in
order to protect depositors, increase retained earnings and protect current and
future earnings. Further discussion of significant items affecting the Bank's
financial condition are discussed in detail below.

Asset Quality
-------------

     A major key to long-term earnings growth is the maintenance of a high-
quality loan portfolio. The Bank's directive in this regard is carried out
through its policies and procedures for extending credit to the Bank's
customers. The goal and result of these policies and procedures is to provide a
sound basis for a new credit extensions and an early recognition of problem
assets to allow the most flexibility in their timely disposition.

     Because principal banking operations commenced on October 14, 1997,
management is not yet in a position to determine the composition of non-
performing assets. Additions to the allowance for loan losses will be made
periodically to maintain the allowance at an appropriate level based upon
management's analysis of potential risk in the loan portfolio. The amount of the
loan loss provision is determined by an evaluation of the level of loans
outstanding, the level of non-performing loans, historical loan loss experience,
delinquency trends, the amount of actual losses charged to the reserve in a
given period, and assessment of present and anticipated economic conditions.

Liquidity and Sources of Capital
--------------------------------

     Liquidity is the Company's ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers. The
March 31, 1998 financial statements evidence a satisfactory liquidity position
as total cash and cash equivalents amounted to $6.0 million, representing 22% of
total assets. Investment securities amounted to $12.0 million, representing 44%
of total assets; these securities provide a secondary source of liquidity since
they can be converted into cash in a timely manner. Note that the Company's
ability to maintain and expand its deposit base and borrowing capabilities are a
source of liquidity. For the three-month period ended March 31, 1998, total
deposits increased from $10.0 million to $21.0 million, representing an
annualized increase of 110%. Note, however, that the Company does not expect to
maintain or duplicate this growth rate. The Company's management closely
monitors and maintains appropriate levels of interest earning assets and
interest bearing liabilities so that maturities of assets are such that adequate
funds are provided to meet customer withdrawals and loan demand. There are no
trends, demands, commitments, events or uncertainties that will result in, or
are reasonably likely to result in, the Company's liquidity increasing or
decreasing in any material way.

                                      12
<PAGE>
 
     Management is committed to maintaining capital at a level sufficient to
protect depositors, provide for reasonable growth, and fully comply with all
regulatory requirements. Management's strategy to achieve this goal is to retain
sufficient earnings while providing a reasonable return on equity. The Bank
maintains an adequate level of capitalization as measured by the following
capital ratios and the respective minimum capital requirements by the Bank's
primary regulator, the OCC.

<TABLE> 
<CAPTION> 
                                         Bank's            Minimum required
                                     March 31, 1998          by regulator
                                     --------------          ------------
<S>                                  <C>                   <C> 
Leverage ratio                           13.6%                   4.0%

Risk weighted ratio                      20.6%                   8.0%
</TABLE> 

     Note that with respect to the leverage ratio, the OCC expects a minimum of
5.0 percent to 6.0 percent ratio for banks that are not rated CAMEL 1. Although
the Bank is not rated CAMEL 1, its leverage ratio of 13.6% is well above the
required minimum.

                             Results Of Operations
                             ---------------------

     Since principal banking operations only commenced on October 14, 1997, a
comparison of the March 31, 1998 results (when banking operations were in
progress) to those of March 31, 1997 is not meaningful. This discussion will
therefore concentrate on the March 31, 1998 results.

     Net income (loss) for the three-month period ended March 31, 1998 amounted
to $(214,613), or $(.32) per share. The following is a brief discussion of the
more significant components of net income:

     a.   Net interest income represents the difference between interest
          received on interest earning assets and interest paid on interest
          bearing liabilities. The following presents, in a tabular form, the
          main components of interest earning assets and interest bearing
          liabilities.

<TABLE>
<CAPTION>
        Interest                                        Interest
     Earning Assets/                    Average          Income/      Yield/
   Bearing Liabilities                  Balance           Cost         Cost
   -------------------                  -------         --------       ----
<S>                                   <C>               <C>           <C>
Federal funds sold                    $ 3,720,000       $ 53,247       5.73%
Securities                              7,837,190        112,062       5.72%
Loans                                   5,865,357        146,502       9.99%
                                      -----------       --------       ----- 
     Total                            $17,422,547       $311,811       7.16%
                                      ===========       ========       ===== 
Deposits                              $15,051,412       $169,637       4.51%
                                      ===========       ========       ===== 
Net interest income                                     $142,174            
                                                        ========
Net yield on earning assets                                            3.26%
                                                                       ===== 
</TABLE>

     b.   Other income for the three-month period ended March 31, 1998 amounted
          to $18,996. On an annualized basis, this represents .28% of total
          assets. This figure is relatively low because in order to attract new
          banking relationships, the Bank's fee structure and charges are low
          when compared to other banks. The above fees and charges may increase
          in the future.

     c.   Operating expenses for the three-month period ended March 31, 1998
          amounted to $339,700. On an annualized basis, this represents 5.0% of
          total assets. In the future this percentage may increase due to costs
          and expenses associated with the new facility.

                                      13
<PAGE>
 
     At December 31, 1997, the allowance for loan losses amounted to $45,373. By
March 31, 1998, the allowance had grown to $87,871. The allowance for loan
losses, as a percentage of total gross loans, decreased from 1.24% to 1.15%
during the three-month period ended March 31, 1998. Management considers the
allowance for loan losses to be adequate and sufficient to absorb possible
future losses; however, there can be no assurance that charge-offs in future
periods will not exceed the allowance for loan losses or that additional
provisions to the allowance will not be required.

     The Company is not aware of any current recommendation by the regulatory
authorities which, if they were to be implemented, would have a material effect
on the Company's liquidity, capital resources, or results of operations.

     The Company is currently addressing a universal situation commonly referred
to as the "Year 2000 Problem." The Year 2000 Problem relates to the inability of
certain computer software programs and equipment to properly recognize and
process date-sensitive information relative to the year 2000 and beyond. During
1997, the Company developed a plan to devote the necessary resources to identify
and modify systems impacted by the Year 2000 Problem, or implement new systems
to become year 2000 compliant in a timely manner. The cost of executing the plan
is not expected to have a material impact on the Company's results of operations
or financial condition.


Cautionary Note Regarding Forward-Looking Statements
----------------------------------------------------

     The Company may, from time to time, make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission (the "Commission") and its reports to
stockholders. Such forward-looking statements are made based on management's
belief as well as assumptions made by, and information currently available to,
management pursuant to "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The Company's actual results may differ
materially from the results anticipated in these forward-looking statements due
to a variety of factors, including governmental monetary and fiscal policies,
deposit levels, loan demand, loan collateral values, securities portfolio values
and interest rate risk management; the effects of competition in the banking
business from other commercial banks, savings and loan associations, mortgage
banking firms, consumer finance companies, credit unions, securities brokerage
firms, insurance companies, money market mutual funds and other financial
institutions operating in the Company's market area and elsewhere, including
institutions operating through the Internet; changes in government regulations
relating to the banking industry, including regulations relating to branching
and acquisitions; failure of assumptions underlying the establishment of
reserves for loan losses, including the value of collateral underlying
delinquent loans, and other factors. The Company cautions that such factors are
not exclusive. The Company does not undertake to update any forward-looking
statements that may be made from time to time by, or on behalf of, the Company.

                                      14
<PAGE>
 
                         PART II. - OTHER INFORMATION

Item 6.        Exhibits and Reports on Form 8-K.
------         --------------------------------

          (a)  Exhibits.  The following exhibit is filed with this Report.

               Exhibit No.    Description
               ----------     -----------

               27.1           Financial Data Schedule (for SEC use only)

          (b)  Reports on Form 8-K. No report on Form 8-K was filed during the
               quarter ended March 31, 1998.

                                      15
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


Date:  May 13, 1998           By:    /s/  William L. Daniel
                                 -----------------------------------------------
                                 William L. Daniel, President and Chief 
                                 Executive Officer (principal executive officer)



Date: May 13, 1998            By:    /s/  Sandra L. Davis
                                 -----------------------------------------------
                                 Sandra L. Davis, Chief Financial Officer
                                 (principal financial and accounting officer)

                                      16