<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, 1999                                           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 12, 1999

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

                                                March 31, 1999     December 31,
ASSETS                                            (Unaudited)          1998
------                                          --------------     ------------

Cash and due from banks.......................      $ 3,409,249    $ 2,969,184
Federal funds sold............................        2,550,000      2,970,000
Investment securities:
     Securities available for sale,           
     at market value..........................       10,644,664      9,753,621
Other investments.............................          280,700        180,000
Loans, net....................................       21,048,938     15,942,009
Premises and equipment, net...................        2,433,286      1,926,958
Accrued interest receivable...................          252,528        247,573
Other assets..................................          100,168         66,856
                                                    -----------    -----------
     Total assets.............................      $40,719,533    $34,056,201
                                                    ===========    ===========
 
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits
   Noninterest-bearing demand.................      $ 6,086,989    $ 4,691,963
   Interest-bearing demand and money market...       20,193,917     16,035,788
   Savings....................................          989,377        873,773
   Time deposits of $100,000 or more..........        3,794,751      3,216,087
   Other time deposits........................        3,960,993      3,483,977
                                                    -----------    -----------
     Total deposits...........................       35,026,027     28,301,588
 
   Accrued interest payable...................           26,208         19,754
   Other liabilities..........................           59,225         46,576
                                                    -----------    -----------
   Total liabilities..........................       35,111,460     28,367,918
                                                    -----------    -----------
 
                  (Continued)



      Refer to notes to the consolidated unaudited financial statements.

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



                                                 March 31, 1999   December 31,
Shareholders' Equity:                              (Unaudited)        1998
                                                 --------------   ------------
Common stock, $1.00 par value,                         
     10,000,000 shares authorized,
     676,188 shares issued and outstanding......        676,188        676,188
Surplus.........................................      6,051,196      6,051,196
Retained earnings (deficit).....................     (1,082,890)    (1,053,032)
Accumulated other comprehensive income (loss)...        (36,421)        13,931
                                                    -----------    -----------
     Total Shareholders' Equity.................      5,608,073      5,688,283
Commitments and contingent liabilities..........             --             --
                                                    -----------    -----------
Total Liabilities and                               
          Shareholders' Equity..................    $40,719,533    $34,056,201
                                                    ===========    ===========




      Refer to notes to the consolidated unaudited financial statements.

                                       3
<PAGE>
 
                       ROCKDALE NATIONAL BANCSHARES, INC.
                                 AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three Months Ended March 31, 1999
                 and for the Three Months Ended March 31, 1998
                                  (Unaudited)

                                                 For the Three Months
                                                   ended March 31,
                                                ----------------------
                                                   1999        1998
                                                ----------  ----------
Interest income
   Loans, including fees.......................  $433,943   $ 146,502
   Investment securities:
     U.S. Government agencies and corporations.   139,235     112,062
     Other investments.........................     5,400          --
   Federal funds sold..........................    50,223      59,662
                                                 --------   ---------
     Total interest income.....................   628,801     318,226
                                                 --------   ---------
 
Interest expense
   Interest bearing demand and money market....   137,742     133,514
   Savings.....................................     5,197       1,071
   Time deposits of $100,000 or more...........    46,602      25,589
   Other time deposits.........................    51,071       9,463
                                                 --------   ---------
     Total interest expense....................   240,612     169,637
                                                 --------   ---------
     Net interest income (loss)................   388,189     148,589
Provision for possible loan losses.............    64,868      42,498
                                                 --------   ---------
Net interest income (loss) after provision
   for possible loan losses....................   323,321     106,091
                                                 --------   ---------
 
 
Other income
   Service charges on deposit accounts.........    41,508      10,567
   Investment securities gains (losses), net...       462          --
   Other income................................     9,856       8,429
                                                 --------   ---------
      Total other income.......................    51,826      18,996
                                                 --------   ---------
Other expense
   Salaries and other compensation.............   151,023     144,980
   Employee benefits...........................    30,886      10,361
   Net occupancy and equipment expense.........    65,471      56,853
 
                     (Continued)

      Refer to notes to the consolidated unaudited financial statements.

                                       4
<PAGE>
 
                       ROCKDALE NATIONAL BANCSHARES, INC.
                                 AND SUBSIDIARY
                       Consolidated Statements of Income
                   For the Three Months Ended March 31, 1999
                 and for the Three Months Ended March 31, 1998
                                  (Unaudited)
                                  (continued)


                                                For the Three Months
                                                   ended March 31,
                                                --------------------
                                                   1999        1998
                                                ---------   ---------
                                                  
   Professional and other outside services.....    73,977      44,866
   Other expense...............................    83,648      82,640
                                                 --------   ---------
      Total other expenses.....................   405,005     339,700
                                                 --------   ---------
Net income (loss) before taxes.................   (29,858)   (214,613)
Income taxes...................................        --          --
                                                 --------   ---------
Net income (loss)..............................  $(29,858)  $(214,613)
                                                 ========   =========
Basic income (loss) per share..................  $   (.04)  $    (.32)
                                                 ========   =========    


                                                           
      Refer to notes to the consolidated unaudited financial statements.

                                       5
<PAGE>
 
                       ROCKDALE NATIONAL BANCSHARES, INC.
                                 AND SUBSIDIARY
                Consolidated Statements of Comprehensive Income
                   For the Three Months Ended March 31, 1999
                 and for the Three Months Ended March 31, 1998
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                For the Three Months
                                                                  ended March 31,
                                                              ------------------------
                                                                 1999         1998
                                                              ----------  ------------
<S>                                                           <C>         <C>
Net Loss.....................................................  $(29,858)    $(214,613)
Other comprehensive income, before tax:                                  
   Unrealized holding gains (losses) arising during period...   (76,291)      (35,652)
   Income tax benefit (expense)..............................    25,939        12,122
                                                               --------     ---------
Comprehensive Loss...........................................  $(80,210)    $(238,143)
                                                               ========     =========

</TABLE>




      Refer to notes to the consolidated unaudited financial statements.

                                       6
<PAGE>
 
                       ROCKDALE NATIONAL BANCSHARES, INC.
                                 AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                   For the Three Months Ended March 31, 1999
                 and for the Three Months Ended March 31, 1998
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                          For the Three Months
                                                                             ended March 31,
                                                                       ---------------------------
                                                                           1999          1998
                                                                       ------------  -------------
<S>                                                                    <C>           <C>
Cash flows from operating activities:
   Net loss.........................................................   $   (29,858)  $   (214,613)
   Adjustments to reconcile net loss to net cash used
     by operating activities:
     Net (accretion) amortization of investment
      securities....................................................        14,890          4,861
     Depreciation and amortization of premises                             
     and equipment..................................................        29,202         33,024
     Provision for loan losses......................................        64,868         42,498
     Deferred income tax benefit (liability)........................             -        (12,122)
     Amortization of organization costs.............................             -          4,294
     (Increases) in other assets....................................        (7,373)       (13,350)
     (Increases) in accrued interest                       
        receivable..................................................        (4,666)       (95,797)
     Increases in accrued interest payable..........................         6,453          3,753
     Increases in other liabilities.................................        12,649          7,200
                                                                       -----------   ------------
               Net cash provided from (used by) operating                       
                activities..........................................        86,165       (240,252)
                                                                       -----------   ------------
Cash flows from investing activities:
   Purchases of investment securities                               
      available for sale............................................    (2,810,813)    (6,942,581)
   Purchases of Federal Reserve Stock...............................             -              -
   Purchase of FHLB stock...........................................      (100,700)             -
   Calls of investment securities AFS...............................     1,799,538             --
   Maturities of investment securities AFS..........................        29,052        600,000
   Loans originated, net of principal repayments....................    (5,172,086)    (3,960,928)
   Purchases of premises and equipment..............................      (535,530)       (23,908)
                                                                       -----------   ------------
          Net cash used by investing activities.....................    (6,790,539)   (10,327,417)
                                                                       -----------   ------------
Cash flows from financing activities:
   Increase in deposits.............................................     6,724,439     10,780,417
      Net cash provided from financing                              
       activities...................................................     6,724,439     10,780,417
                                                                       -----------   ------------
Net increase in cash and cash equivalents...........................        20,065        212,748
Cash and cash equivalents,                                         
   beginning of period..............................................     5,939,184      5,634,297
                                                                       -----------   ------------
Cash and cash equivalents,                                           
   end of period....................................................   $ 5,959,249   $  5,847,045
                                                                       ===========   ============

</TABLE>

      Refer to notes to the consolidated unaudited financial statements.


                                       7
<PAGE>
 

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, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999.   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, 1998.


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 $6,727,384, net of selling
expenses.  The Company injected $6.0 million into the Bank's capital accounts
upon opening on October 14, 1997.


Note 3 - Loans

     Loans are reported at the gross amount outstanding, reduced by the net
deferred loan fees and a valuation allowance for loan losses.  Interest Income
is recognized over the terms of the loans based on the unpaid daily principal
amount outstanding.  If the collectibility of interest appears doubtful, the
accrual thereof is discontinued.  Loan organization fees, net of direct loan
origination costs, are deferred and recognized as income over the life of the
loan on a level-yield basis.

     Major classifications of loans are as follows:

<TABLE>
<CAPTION>
                                          March 31, 1999   December 31, 1998
                                          ---------------  ------------------
<S>                                       <C>              <C>
Commercial, financial and agricultural...    $ 4,438,860         $ 2,590,345
Real estate - construction...............      3,773,829           3,714,502
Real estate - mortgage...................      9,978,648           7,439,822
Installment & simple interest............      3,142,627           2,383,218
Other....................................          9,812              38,373
                                             -----------         -----------
 Total loans.............................    $21,343,776         $16,166,260
Deferred loan fees.......................        (35,389)            (29,670)
                                             -----------         -----------
 Total loans, net of deferred fees.......    $21,308,387         $16,136,590
                                             ===========         ===========

</TABLE>

Through March 31, 1999 there were no charge offs and no nonperforming loans.

                                       8
<PAGE>
 
Note 4 - Accumulated Other Comprehensive Income

     Accumulated other comprehensive income (loss) is comprised of the
following:

                                                 Unrealized
                                               Gains (Losses)
                                               on Securities
                                               --------------

          Beginning balance - January 1, 1999      $ 21,107
          Current - period change                   (76,291)
                                                   --------
          Ending balance - March 31, 1999          $(55,184)
                                                  =========


Note 5 - Earnings Per Share

     Basic and diluted loss per share are based on 676,188 weighted average
shares outstanding for the quarter ended March 31, 1999 and the quarter ended
March 31, 1998. There were 0 and 65,329 potential weighted common shares
outstanding at March 31, 1998 and March 31, 1999, respectively, related to
common stock options. These shares were not included in the computation of the
diluted loss per share amount because the Company was in a net loss position
and, thus, any potential common shares were anti-dilutive.


Note 6 - New Accounting Pronouncements

     Reporting Comprehensive Income

     Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income."
Under SFAS 130, a company is required to show 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.
Since SFAS 130 solely relates to display and disclosure requirements, it had no
effect on the Company's financial results.

     Segment Reporting

     Effective December 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information."  SFAS 131 establishes standards for the
disclosure of segment information about services, geographic areas, and major
customers.  The Company acts as an independent community financial services
provider and offers traditional banking services to individual, commercial, and
government customers.  Because management of the Company views and operates the
Bank as one versus multiple segments, no segmentation of bank operations between
services, types of customers and market areas is provided.

     Costs of Startup Activities

     Effective January 1, 1998, the Company adopted American Institute of
Certified Public Accountants Statement of Position 98-5 (SOP 

                                       9
<PAGE>
 
98-5), "Reporting the Costs of Start-Up Activities." SOP 98-5 applies to all
nongovernmental entities and requires that costs of start-up activities and
organization costs be expensed as incurred.

     Accounting Pronouncements Affecting Future Periods

     The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133 (SFAS 133) "Accounting for Derivative Instruments
and Hedging Activities."  SFAS 133 is effective for fiscal years beginning after
June 15, 1999.  Under SFAS 133, a company will recognize all free-standing
derivative instruments in the statement of financial position as either assets
or liabilities and will measure them at fair value.  The difference between a
derivative's previous carrying amount and its fair value shall be reported as a
transition adjustment presented in net income or other comprehensive income, as
appropriate, in a manner similar to the cumulative effect of a change in
accounting principle.  This statement also determines the accounting for the
change in fair value of a derivative, depending on the intended use of the
derivative and resulting designation.  The adoption of SFAS 133 is not expected
to have a significant impact on the consolidated financial condition or results
of operations of the Company.

     In October 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 134 (SFAS 134). "Accounting for Mortgage-
Backed Securities Retained after the Securitization of Mortgage Loans Held for
Sale by a Mortgage Banking Enterprise." SFAS 134 is effective for the first
fiscal quarter after December 15, 1998, and amends Statement of Financial
Accounting Standards No. 65, "Accounting for Certain Mortgage Banking
Activities," which revises the accounting for retained securities and beneficial
interests. The adoption of SFAS 134 is not expected to have a significant impact
on the consolidated financial condition or results of operations of the Company.

                                       10
<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.

                              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.

     Total assets increased by $6,663,332 from $34,056,201 at December 31, 1998
to $40,719,533 at March 31, 1999.  Gross loans increased by $5,171,796 from
$16,136,590 to $21,308,386.  Federal Funds sold decreased by $420,000 from
$2,970,000 to $2,550,000.  Investments rose $891,043 from $9,753,621 to
$10,644,664 during the quarter.

     Deposits rose by $6,724,439 from $28,301,588 at December 31, 1998 to
$35,026,027 at March 31, 1999.  Noninterest bearing deposits increased by
$1,395,026 from $4,691,963 to $6,086,989. Interest bearing demand deposits and
money market accounts increased by $4,158,129 during the quarter to $20,193,917
at March 31, 1999.  It is management's opinion that the Bank maintains
competitive deposit rates while exercising prudent strategies in competing with
local institutions.

     At March 31, 1999 the Bank's equity was 13.8% of its assets, down from
16.7% at December 31, 1998.  The Bank's loan to deposit ratio increased from
56.3% to 60.1%.  22% of the Bank's deposits were in IRAs and certificates of
deposit at March 31, 1999.  At year end, IRAs and certificates of deposit were
23.7% of total deposits.

     The Bank maintains federal funds lines totaling $4,000,000 with three
regional banks in an effort to support short term liquidity and offset interest
rate risk in the loan or investment portfolio.  The Bank is a member of the
Federal Home Loan Bank and is eligible to apply for the term advances.

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.

     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

                                       11
<PAGE>
 
losses charged to the reserve in a given period, and assessment of present and
anticipated economic conditions. The current monthly provision is being made
based on 1.25% of average gross loans.

     At December 31, 1998, the allowance for loan losses amounted to $194,581.
By March 31, 1999, the allowance had grown to $259,449.  The allowance for loan
losses, as a percentage of total gross loans, increased slightly from 1.21% to
1.22% of total gross loans during the three-month period ended March 31, 1999.
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.

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, 1999 financial statements evidence a satisfactory liquidity position as
total cash and cash equivalents amounted to $5,959,249, representing 14.6% of
total assets.  Investment securities amounted to $10,925,364, representing 26.8%
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 is a
source of liquidity.  For the three-month period ended March 31, 1999, total
deposits increased from $28.3 million at December 31, 1998 to $35.0 million,
representing an annualized increase of 95.0%.  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.

     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 table below illustrates the Bank's and the Company's regulatory
capital ratios at March 31, 1999:

                                                            Minimum
                                              March 31,    regulatory
Bank                                            1999      requirement
----                                         -----------  ------------
 
       Tier 1 Capital                            21.2%         4.0%
       Tier 2 Capital                             1.1%          --
                                                 ----          ---
 
           Total risk-based capital ratio        22.3%         8.0%
                                                 ====          ===
 
       Leverage ratio                            14.2%         4.0%
                                                 ====          ===

                                       12
<PAGE>
 
Company - Consolidated
----------------------
 
       Tier 1 Capital                            24.1%         4.0%
       Tier 2 Capital                             1.1%          --
                                                 ----          ---
 
           Total risk-based capital ratio        25.2%         8.0%
                                                 ====          ===
 
       Leverage ratio                            16.0%         4.0%
                                                 ====          ===

     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 CAMELS 1.
Although the Bank is not rated CAMELS 1, its leverage ratio of 16.0% is well
above the required minimum.

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

     Net income (loss) for the three-month period ended March 31, 1999 amounted
to ($29,858), or ($0.04) per share, compared to $(214,613), or $(.32) per share,
for the period ended March 31, 1998. 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.
        Net interest income increased by $239,600 from $148,589 for the three
        months ended March 31, 1998 to $388,189 for the three months ended March
        31, 1999. Yield on earning assets increased to 4.65% for the first
        quarter of 1999 from 3.26% for the first quarter of 1998.

          Interest                            Interest   
       Earning Assets/            Average      Income/   Yield/
     Bearing Liabilities          Balance       Cost      Cost
     -------------------        -----------   --------  --------

Federal funds sold              $ 4,312,667   $ 50,223    4.66%
Securities                       10,255,666    144,635    5.64%
Loans                            18,815,966    433,943    9.23%
                                -----------   --------    ----
   Total                        $33,384,299   $628,801    7.53%
                                ===========   ========    ====
Deposits                        $26,564,828   $240,612    3.62%
                                ===========   ========    ====
Net interest income                           $388,189    3.91%
                                              ========    ====
Net yield on earning assets                               4.65%
                                                          ====

  b. Other income for the three-month period ended March 31, 1999 amounted to
     $51,826. On an annualized basis, this represents .54% of total average
     assets. Of this amount, $41,508 was comprised of service charges. 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. At
     March 31, 1998, fee income for the first quarter was $10,567.

                                       13
<PAGE>
 
  c. Operating expenses for the three-month period ended March 31, 1999 amounted
     to $405,005. On an annualized basis, this represents 4.25% of total average
     assets. In the future this percentage may increase due to costs and
     expenses associated with the new facility. At March 31, 1998, operating
     expenses were $339,700.

  d. The Bank has operated at a cumulative loss since inception and therefore it
     has no income tax liability.

  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.

Year 2000
---------

  A critical issue affecting companies that rely extensively on electronic data
processing systems, such as the Company, is the Year 2000 issue. The Year 2000
issue has arisen due to the widespread use of computer programs that rely on 
two-digit date codes to perform computations or decision-making functions. Many
of these programs may fail as a result of their inability to properly interpret
date codes beginning January 1, 2000. For example, such programs may
misinterpret "00" as the year 1900 rather than 2000. In addition, some
equipment, being controlled by microprocessor chips, may not deal appropriately
with the year "00." This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions or engage in similar normal business
activities.

  The Bank uses a third-party vendor for processing its primary banking
applications.  During 1998, the Company developed a plan to address the Year
2000 issue, conduct a comprehensive review of the Company's systems and ensure
that the Company takes any necessary measures.  The plan incorporated guidelines
set forth by the OCC, FRB and the FFIEC.  The Company believes that its systems,
those of the Bank and its data processing vendor are currently Year 2000
compliant and does not believe that material expenditures will be necessary to
implement any further modifications.  As of March 31, 1999, the Company had
spent approximately $12,000 to help ensure that its systems would be Year 2000
compliant.  The Company's data processing vendor has assured the Company that
its systems are Year 2000 compliant now or will be well in advance of the Year
2000.  However, there can be no assurance that unforeseen difficulties or costs
will not arise.  In addition, there can be no assurance that the systems of
other companies on which the Company's systems rely, such as the Bank's data
processing vendor, will be modified on a timely basis, or that the failure by
another company to properly modify its systems will not negatively impact the
Company's systems or operations.  The Bank currently is working on a contingency
plan, focusing on manual processing to enable its customers to be served in the
event of a crisis.  The Year 2000-oriented contingency plan will supplement the
current all-purpose disaster plan.  The deadline imposed by the FFIEC for the
contingency plan is June 30, 1999.  The Bank anticipates having its contingency
plan completed prior to that date.

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 

                                       14
<PAGE>
 
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.

                                       15
<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, 1999.

                                       16
<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 14, 1999            By: /s/ William L. Daniel
                                 -----------------------------     
                                 William L. Daniel, President and Chief 
                                 Executive Officer
                                 (principal executive officer)



Date: May 14, 1999            By: /s/ Brian D. Hawkins
                                 ----------------------------     
                                 Brian D. Hawkins, Chief Financial Officer
                                 (principal financial and accounting officer)

                                       17