UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                   FORM 10-QSB


(Mark One)
[ ]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the quarterly period ended December 31, 2000


[X]      TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from October 1, 2000   to  December 31, 2000
                                        ----------------      -----------------

                         Commission File Number 0-23971


                          GASTON FEDERAL BANCORP, INC.
                          ----------------------------
             (Exact name of registrant as specified in its charter)

            United States                             56-2063438
     ---------------------------              --------------------------
   (State or other jurisdiction of                 (I.R.S. Employer
   incorporation or organization)               Identification Number)

            245 West Main Avenue, Gastonia, North Carolina 28052-4140
            ---------------------------------------------------------
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (704)-868-5200
                                                           --------------

                               September 30, 2000
--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

         Indicate by check |X| whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 -----


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: There were 4,218,934
shares of the Registrant's common stock outstanding as of February 12, 2001.
<PAGE>
GASTON FEDERAL BANCORP, INC.

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>     <C>                                                                                                  <C>
PART I.  FINANCIAL INFORMATION

         Item 1.   Consolidated Financial Statements......................................................        2
2

              Consolidated Statements of Financial Condition as of
                    December 31, 2000 and September 30, 2000 .............................................        2
2

              Consolidated Statements of Operations for the three
                  months ended December 31, 2000 and 1999.................................................        3
3

              Consolidated Statements of Comprehensive Income for the
                  three months ended December 31, 2000 and 1999...........................................        4
4

              Consolidated Statements of Cash Flows for the three months ended
                  December 31, 2000 and 1999..............................................................        5
5

              Notes to Consolidated Financial Statements..................................................        6
6

         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations...............................................................        8
 8


PART II. OTHER INFORMATION................................................................................        11
</TABLE>

                                       1
<PAGE>
PART I.  FINANCIAL INFORMATION

         ITEM 1.  Consolidated Financial Statements

Gaston Federal Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
(in thousands)
<TABLE>
<CAPTION>
                                                                                  December 31,       September 30,
                                                                                      2000               2000
                                                                                  -----------        -----------
                                                                                  (unaudited)
<S>                                                                                   <C>                 <C>
Assets
Cash and cash equivalents....................................................         26,709              3,555
Investment securities available-for-sale, at fair value......................         32,822             20,066
Investment securities held-to-maturity, at amortized cost....................              0             12,863
Mortgage-backed securities available-for-sale, at fair value.................         22,955             17,014
Mortgage-backed securities held-to-maturity, at amortized cost...............              0              2,758
Loans, net...................................................................        158,820            176,963
Premises and equipment, net..................................................          4,163              3,823
Accrued interest receivable..................................................          1,352              1,382
Federal Home Loan Bank stock.................................................          2,177              2,177
Other assets.................................................................          3,752              4,050
                                                                                  ----------         ----------
   Total assets..............................................................     $  252,750         $  244,651
                                                                                  ==========         ==========

Liabilities and Equity
Deposits ....................................................................     $  167,931         $  161,351
Advances from borrowers for taxes and insurance..............................            351              1,071
Borrowed money...............................................................         42,737             40,606
Other liabilities............................................................          1,968              2,336
                                                                                  ----------         ----------
   Total liabilities.........................................................        212,987            205,364

Retained earnings, substantially restricted..................................         23,930             23,976
Common stock and additional paid in capital, net of ESOP loan................         15,242             15,203
Unrealized gain/(loss) on securities available-for-sale, net of tax..........            591                108
                                                                                  ----------         ----------
   Total equity..............................................................         39,763             39,287
                                                                                  ----------         ----------

Total liabilities and equity.................................................     $  252,750         $  244,651
                                                                                  ==========         ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       2
<PAGE>
Gaston Federal Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                       Three Months
                                                                     Ended December 31,
                                                                    --------------------
                                                                    2000            1999
                                                                    -----          -----
<S>                                                            <C>             <C>
Interest income
Loans   ....................................................   $     3,436     $   3,102
Investment securities.......................................           561           550
Mortgage-backed and related securities......................           373           299
                                                                ----------     ---------
  Total interest income.....................................         4,370         3,951

Interest Expense
Deposits....................................................         1,997         1,669
Borrowed funds..............................................           601           463
                                                                ----------     ---------
Total interest expense......................................         2,598         2,132
                                                                ----------     ---------

Net interest income.........................................         1,772         1,819

Provision for loan losses...................................            30             8
                                                                ----------     ---------

  Net interest income after provision for loan losses.......         1,742         1,811

Noninterest Income
Service charges on deposit accounts.........................           302           129
Other income................................................           409           191
                                                                ----------     ---------
  Total noninterest income..................................           711           320

Noninterest Expense
Compensation and benefits...................................           886           805
Occupancy and equipment expense.............................           142           154
Loss on sale of assets......................................           859             0
Other expenses..............................................           498           425
                                                                ----------     ---------
  Total noninterest expense.................................         2,385         1,384

Income before income taxes..................................            68           747

Provision for income taxes..................................             5           247
                                                                ----------     ---------

Net income..................................................    $       63     $     500
                                                                ==========     =========


Basic earnings per share....................................    $     0.02     $    0.12
Diluted earnings per share..................................    $     0.02     $    0.12

Basic weighted average outstanding shares ..................     4,082,270     4,181,804
Diluted weighted average outstanding shares ................     4,082,270     4,181,804

Dividends paid per share....................................    $  0.060       $   0.055
</TABLE>

                                       3
<PAGE>
Gaston Federal Bancorp, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income (unaudited)
(in thousands)
<TABLE>
<CAPTION>
                                                                                          Three Months Ended
                                                                                             December 31,
                                                                                          2000           1999
                                                                                      -----------    -----------
<S>                                                                                   <C>            <C>
  Net income........................................................................  $       63     $      500
  Other comprehensive income, net of tax:
      Unrealized gains on securities:
          Cumulative effect of a change in accounting principle for the adoption
              of the provisions of SFAS No. 133.....................................        (367)             0
          Unrealized holding gains/(losses) arising during  period..................         853           (202)
          Reclassification adjustment for (gains)/losses included in net income.....          (3)             0
                                                                                      -----------    ----------
      Other comprehensive income....................................................         483           (202)
                                                                                      ----------     -----------

  Comprehensive income..............................................................  $      546     $      298
                                                                                      ----------     ----------
</TABLE>

                                       4
<PAGE>
Gaston Federal Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
<TABLE>
<CAPTION>
                                                                                          Three Months Ended
                                                                                             December 31,
                                                                                      --------------------------
                                                                                          2000           1999
                                                                                      -----------    -----------
<S>                                                                                   <C>            <C>
Cash flows from operating activities:
  Net income........................................................................  $       63     $      500
  Adjustments to reconcile net income to net cash provided by operating activities:
      Provision for loan losses.....................................................          30              8
      Depreciation..................................................................          81             95
      (Gain) on sale of investment securities.......................................          (4)             0
      Loss on sale of loans ........................................................         872              0
      (Gain) loss on sale of other assets...........................................         (10)             0
      (Increase) decrease in other assets...........................................         214            255
      Increase (decrease) in other liabilities......................................        (366)            268
                                                                                      -----------    -----------

        Net cash provided by operating activities...................................         880          1,126
                                                                                      ----------     ----------

Cash flows from investing activities:
  Net (increase) in loans receivable................................................        (906)        (1,915)
  Sale of investment securities.....................................................       3,000              0
  Sale of mortgage-backed securities................................................           0              0
  Sale of loans ....................................................................      18,159              0
  Maturities and prepayments of investment securities...............................       1,234          1,856
  Maturities and prepayments of mortgage-backed securities..........................         755          1,127
  Purchases of investments..........................................................      (3,500)        (4,750)
  Purchases of mortgage-backed securities...........................................      (3,939)             0
  Net cash flows from other investing activities....................................        (411)          (513)
                                                                                      -----------    -----------

        Net cash provided by (used for) investment activities.......................      14,392         (4,195)
                                                                                      ----------     -----------

Cash flows from financing activities:
  Net increase (decrease) in deposits...............................................       6,579           (822)
  Dividends to stockholders.........................................................        (109)          (241)
  Repurchase of common stock........................................................           0           (904)
  Net increase in borrowed money....................................................       2,131              0
  (Decrease) in advances from borrowers for insurance and taxes.....................        (719)          (349)
                                                                                      -----------    -----------

        Net cash provided by (used for) financing activities........................       7,882         (2,316)
                                                                                      ----------     -----------


Net increase (decrease) in cash and cash equivalents................................      23,154         (5,385)

Cash and cash equivalents at beginning of period....................................       3,555         12,582
                                                                                      ----------     ----------

Cash and cash equivalents at end of period..........................................  $   26,709     $    7,197
                                                                                      ==========     ==========
</TABLE>

                                       5
<PAGE>
                   GASTON FEDERAL BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A - Basis of Presentation

         In management's opinion, the financial information, which is unaudited,
reflects all adjustments (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the financial information as of and for the
three month periods ended December 31, 2000 and 1999, in conformity with
generally accepted accounting principles. The financial statements include the
accounts of Gaston Federal Bancorp, Inc. (the "Company") and its wholly-owned
subsidiary, Gaston Federal Bank (the "Bank"). Operating results for the three
month periods ended December 31, 2000, are not necessarily indicative of the
results that may be expected for future periods.

         The organization and business of the Company, accounting policies
followed, and other information are contained in the notes to the consolidated
financial statements of the Company as of and for the years ended September 30,
2000 and 1999, filed as part of the Company's annual report on Form 10-KSB.
These consolidated financial statements should be read in conjunction with the
annual consolidated financial statements.

         During the quarter, the Company's Board of Directors adopted a
resolution to change the Company's fiscal year end from September 30th to
December 31st, effective October 1, 2000. On January 22, 2001, the Company filed
a form 8-K providing public notice of the change in fiscal year.

Note B - Earnings per Share

         Earnings per share has been determined under the provisions of the
Statement of Financial Accounting Standards No. 128, Earnings Per Share. For the
quarters ended December 31, 2000 and 1999, basic earnings per share has been
computed based upon the weighted average common shares outstanding of 4,082,270
and 4,181,804 respectively.

         The only potential stock of the Company as defined in the Statement of
Financial Accounting Standards No. 128, Earnings Per Share, is stock options
granted to various directors and officers of the Bank. The following is a
summary of the diluted earnings per share calculation for the three months ended
December 31, 2000, and 1999: (in thousands, except share data)
<TABLE>
<CAPTION>
                                                                     Three Months
                                                                  Ended December 31,
                                                                  ------------------
                                                                  2000        1999
                                                                  -----------------
<S>                                                           <C>          <C>
Net income..................................................  $       62   $      500

Weighted average outstanding shares.........................   4,082,270    4,181,804
Dilutive effect of stock options............................           0        4,425
                                                               ---------   ----------
Weighted average diluted shares.............................   4,082,270    4,186,229

Diluted  earnings per share.................................  $     0.02   $     0.12
</TABLE>

                                       6
<PAGE>
         Options were excluded from the calculation of diluted earnings per
share for the three months ended December 31, 2000, because the exercise prices
of $12.00 for 192,569 shares and $13.00 for 10,000 shares exceeded the average
market price of $10.92 for the period.
Note C - Stock Compensation Plans

         On April 12, 1999, the Company's shareholders, among other actions,
approved the Gaston Federal Bank 1999 Recognition and Retention Plan.
Subsequently, 84,534 shares of common stock were awarded under the plan to
directors and management. All such awards vested during the quarter ended June
30, 1999. In addition, the Company's shareholders approved the Gaston Federal
Bank 1999 Stock Option Plan that provided for the issuance of 211,335 options
for directors and officers to purchase the Company's common stock. As of
December 31, 2000, 202,569 options had been awarded under the plan at a weighted
average exercise price of $12.05 and a weighted average contractual life of 100
months. There were 111,628 options fully vested as of December 31, 2000. The
Company applies the provisions of Accounting Principles Board Opinion No. 25 in
accounting for the Stock Option Plan described above and, accordingly, no
compensation expense has been recognized in connection with the granting of the
stock options.


Note D - Impact of Recently Adopted Accounting Standards

         SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, issued in June 1998, as amended by SFAS No. 137 and SFAS No. 138,
establishes accounting and reporting requirements for derivative instruments,
including derivative instruments embedded in other contracts. The Company
adopted the provisions of this statement effective October 1, 2000. In
connection with the adoption of the provisions of SFAS No. 133, the Company
transferred all securities previously designated as held-to-maturity at
September 30, 2000, into the available-for-sale category. The transfer was
accounted for at the fair values of the securities at September 30, 2000. The
effect of the transfer was to decrease carrying values of these securities by
approximately $603,000 and increase deferred tax assets by approximately
$236,000. The unrealized holding loss on the transferred securities, net of tax,
of approximately $367,000 is reported in accumulated other comprehensive income
as the cumulative effect of an accounting change

                                       7
<PAGE>
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

         From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, and similar matters. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements provided that the Company notes that a variety of
factors could cause the Company's actual results to differ materially from the
anticipated results expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, and results
of the Company's business include, but are not limited to, changes in economic
conditions, changes in interest rates, and changes in laws and regulations.
Accordingly, past results and trends should not be used by investors to
anticipate future results or trends. Statements included in this report should
be read in conjunction with the Company's Annual Report on Form 10-KSB and are
incorporated into this discussion by this reference.

Comparison of Financial Condition

         Assets. Total assets of the Company increased by $8.1 million, or 3.3%,
from $244.7 million as of September 30, 2000, to $252.8 million as of December
31, 2000. During the three month period ended December 31, 2000, cash and cash
equivalents increased by $23.2 million to $26.7 million. This increase was
primarily due to the sale of $18.2 million in fixed-rate mortgage loans and a
$6.6 million increase in deposits. Funds received from the loan sale are
expected to be used to fund commercial and consumer loans over the next six to
twelve months. During the period, mortgage loans decreased by $21.5 million, or
16.0%, to $112.9 million, while nonmortgage loans increased by $3.4 million, or
7.9%, to $45.9 million. This shift in the loan portfolio composition reflects
management's efforts to make the Company's balance sheet more reflective of a
community bank as evidenced by the sale of $18.2 million in fixed-rate mortgage
loans. Management plans to continue to grow the loan portfolio in a safe and
sound manner with an emphasis on short-term, high-yielding nonmortgage loans.
Also during the period, investment securities decreased by $107,000 to $32.8
million, and mortgage-backed securities increased by $3.2 million to $23.0
million. The increase in mortgage-backed securities was funded by increases in
borrowed money and deposits.

         Liabilities. Total liabilities increased by $7.6 million, or 3.6%, from
$205.4 million as of September 30, 2000, to $213.0 million as of December 31,
2000. The primary reason for the change was a $6.6 million, or 3.9%, increase in
total deposits from $161.4 million to $167.9 million. Deposits increased due to
competitive interest rates, aggressive marketing, and employee incentives.
Management plans to continue in its efforts to gain deposit market share through
new product development and branch expansion with an emphasis on demand
deposits. Borrowed money also increased by $2.1 million, or 5.0%, to $42.7
million. Borrowed money is primarily comprised of various callable and
fixed-term Federal Home Loan Bank advances with a weighted average interest rate
of 6.1%.

         Equity. Total equity increased by $476,000, or 1.2%, from $39.3 million
as of September 30, 2000, o $39.8 million as of December 31, 2000. This increase
was primarily due to the $483,000 increase in unrealized gains on
available-for-sale securities. Also during the three month period, the Company
paid $109,000 in cash dividends and recognized $63,000 in earnings. The Company
did not repurchase any

                                       8
<PAGE>

common stock during the period. However, management will continue to repurchase
common stock of the Company at levels that are considered to be attractive by
management. The Company has been authorized to repurchase a total of 303,894
shares of common stock, or 78,476 additional shares.

                                       9
<PAGE>
Comparison of Results of Operations for the Three Months Ended December 31, 2000
and 1999

         General. Net income for the Company for the three months ended December
31, 2000, amounted to $63,000, or $0.02 per share, as compared to $500,000, or
$0.12 per share, for the three months ended December 31, 1999.

         Net interest income. Net interest income decreased by $47,000, or 2.6%,
to $1.8 million for the three months ended December 31, 2000. Interest income
increased by $419,000, primarily due to a $5.6 million increase in investment
and mortgage-backed securities, coupled with an increase in interest rates.
Also, while average outstanding loans remained relatively flat at $170.3
million, the portfolio mix has continued to shift to a larger mix of
higher-yielding nonmortgage loans. These nonmortgage loans amounted to 28.9% of
the total loan portfolio as of December 31, 2000, compared to 24.0% as of
December 31, 1999. In addition, interest expense increased by $466,000, due to a
$9.3 million increase in total deposits and a $7.2 million increase in borrowed
money, coupled with an increase in interest rates.

         Provision for loan losses. The provision for loan losses amounted to
$30,000 for the three months ended December 31, 2000, as compared to $7,500 for
the three months ended December 31, 1999. This represents an increase of
$22,500. The amount of the provision for loan losses was increased, in part, due
to an overall increase in the percentage of nonperforming assets to total
assets. This ratio amounted to 0.18% as of December 31, 2000, and 0.15% as of
December 31, 1999. In addition, since converting to stock, the Bank has
emphasized the origination and retention of higher-yielding commercial and
consumer loans. These loans possess a higher level of risk than owner-occupied
mortgage loans and require a high level of reserves. The ratio of loan loss
reserves to gross loans was 0.98% as of December 31, 2000, and 0.86% as of
December 31, 1999.

         Noninterest income. Noninterest income amounted to $711,000 for the
three months ended December 31, 2000, as compared to $320,000 for the three
months ended December 31, 1999. This increase of $391,000, or 122.2%, was
primarily due to additional commissions paid on the sale of uninsured financial
products through the Bank's wholly-owned subsidiary and additional fee income
derived from loan and deposit products. Management plans to continue in its
efforts to increase its outstanding balance of fee-generating demand deposit
accounts through targeted advertising and branch expansion. Outstanding demand
deposit accounts increased by 17.2% during the past 12 months to $21.7 million
as of December 31, 2000.

         Noninterest expense. Noninterest expense, net of nonrecurring losses on
sales of assets, amounted to $1.5 million for the three months ended December
31, 2000, as compared to $1.4 million for the three months ended December 31,
1999. This increase was primarily due to the expenses associated with the
operation of the Bank's fifth full-service branch office which opened in
February 2000. The Company plans to open its sixth full-service branch office in
Stanley, North Carolina in February 2001.

         Also during the three month period ended December 31, 2000, the Bank
sold $18.2 million of low-yielding, fixed-rate mortgage loans as part of the
overall strategy to reduce interest rate risk and improve future earnings. The
proceeds from this sale are expected to be used to fund higher-yielding
short-term commercial and consumer loans. As a result of the sale, the Company
realized a nonrecurring, pretax loss of $872,000.

         Income taxes. Income taxes amounted to $5,000, or 7.8% of taxable
income, for the three month period ended December 31, 2000, as compared to
$247,000, or 33.1% of taxable income, for the three month period ended December
31, 1999.

                                       10
<PAGE>
Liquidity and Capital Resources

         The objective of the Bank's liquidity management is to ensure the
availability of sufficient cash flows to meet all financial commitments and to
capitalize on opportunities for expansion. Liquidity management addresses the
Bank's ability to meet deposit withdrawals on demand or at contractual maturity,
to repay borrowings as they mature, and to fund new loans and investments as
opportunities arise.

         The Bank's primary sources of internally generated funds are principal
and interest payments on loans receivable and cash flows generated from
operations. External sources of funds include increases in deposits and advances
from the Federal Home Loan Bank of Atlanta.

         The Bank is required under applicable federal regulations to maintain
specified levels of liquid investments in qualifying types of investments having
maturities of five years or less. Current OTS regulations require that a savings
bank maintain liquid assets of not less than 4% of its average daily balance of
net withdrawable deposit accounts and borrowings payable in one year or less.
Monetary penalties may be imposed for failure to meet applicable liquidity
requirements. At December 31, 2000, the Bank's liquidity, as measured for
regulatory purposes, was 28.2%, or $41.2 million in excess of the minimum OTS
requirement.

         The Bank is subject to various regulatory capital requirements
administered by the banking regulatory agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly discretionary actions
by the regulators that, if undertaken, could have a direct material effect on
the Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classifications are subject
to qualitative judgments by the regulators about components, risk-weightings,
and other factors. As of December 31, 2000, Gaston Federal Bank's level of
capital substantially exceeded all applicable regulatory requirements.

                                       11
<PAGE>
PART II.  OTHER INFORMATION

Legal Proceedings

         There are various claims and lawsuits in which the Bank is periodically
involved incidental to the Bank's business. In the opinion of management, no
material loss is expected from any of such pending claims or lawsuits.

Changes in Securities

         Not applicable.

Defaults Upon Senior Securities

         Not applicable.

Submission of Matters to a Vote of Security Holders

         There were no meetings of the Company's shareholders during the quarter
ended December 31, 2000.

Exhibits and Report on Form 8-K.

         On January 22, 2001, the Company filed a form 8-K in order to provide
notice to the public that the Company's Board of Directors had adopted a
resolution to change the Company's fiscal year end from September 30th to
December 31st, effective October 1, 2000.

                                       12
<PAGE>


SIGNATURES

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


                                    GASTON FEDERAL BANCORP, INC.


Date: February 13, 2001             By:  /s/ Kim S. Price
                                         --------------------------------------
                                         Kim S. Price
                                         President and Chief Executive Officer


Date: February 13, 2001             By:   /s/ Gary F. Hoskins
                                          -------------------------------------
                                         Gary F. Hoskins
                                         Senior Vice President, Chief Financial
                                         Officer and Treasurer