Exhibit 10.3

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                                                         Pentegra Services, Inc.












                               GASTON FEDERAL BANK
               EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST







                            Summary Plan Description





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                                 plan highlights

Understanding your 401(k) plan

Who can participate.
Participation in the Plan is open to all employees who have completed 3 months
of continuous employment (during which at least 250 hours have been completed).

How the plan works.
You elect to defer a certain percentage of your salary. That amount is then
taken out of your paycheck each payday and placed in your plan account. So, if
you are paid weekly and earn $400 a week, and elect to defer 5% of your pay,
translated into dollars, $20 would be deducted out of your check and placed in
your plan account. Your account continues to grow on a tax-deferred basis, until
you withdraw money from the plan.

How are contributions deducted.
Contributions are automatically deducted from your salary each pay period. You
pay no federal income tax on your deferrals until you withdraw money from the
plan. Similarly, no current income tax is due on any employer matching
contributions.

How much can you contribute.
You can save between 1% and 15% of salary, (subject to the 2001 IRS maximum of
$10,500 on a pretax basis). As an incentive, Gaston Federal Bank will match 50%
of the first 6% that you save. That means for every $1.00 that you save, up to
6% of salary, your employer will match .50c. The total of employee and employer
contributions allocated to your account may not exceed the lesser of 25% of
total compensation or $35,000 annually. You may change your contribution rate as
often as once per contribution reporting period.

Rollovers.
You may make a rollover contribution of an eligible rollover distribution from
any other Internal Revenue Service Qualified retirement plan or an individual
retirement arrangement (IRA) if such arrangement only contains a prior IRS
Qualified plan distribution. These funds will be maintained in a separate
rollover account in which you will have a nonforfeitable vested interest. Please
note that you may establish a "rollover" account within the Plan prior to
satisfying the Employer's eligibility requirements. However, the establishment
of a "rollover" account prior to satisfying such eligibility will not constitute
active membership in the Plan.

Vesting.
Vesting refers to your right to receive a benefit from the Plan. You are always
100% vested in your contributions to the Plan, plus the earnings they generate.
The employer contributions, plus any earnings are vested according to the
following schedule.



                 Years of Vesting Service             Vested Percentage
             ------------------------------   -------------------------------
                      Less than 3                           0%
                      3 or more                           100%


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                            SUMMARY PLAN DESCRIPTION
                                       for
                               GASTON FEDERAL BANK
                            Gastonia, North Carolina
                                 August 1, 2001




                             PENTEGRA SERVICES, INC.
                            108 Corporate Park Drive
                             White Plains, NY 10604





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To Participating Employees of Gaston Federal Bank:

We are pleased to present this booklet so that you may better understand and
appreciate the benefit which is provided by your employer by establishing the
Gaston Federal Bank Employees' Savings & Profit Sharing Plan and Trust (the
"Plan").

The Plan enables you to save and invest on a regular, long term basis. All
contributions to the Plan (a defined contribution plan) are paid to the Trustee
to be invested in the investment options offered under the Plan. An individual
account is maintained for each member. Under certain conditions, a member may
make withdrawals or loans from his account based on its market value.

The Plan offers federal income tax advantages. The employee does not pay taxes
on employer contributions or investment income until he/she withdraws them. An
employer subject to income tax may deduct its contributions.

This booklet highlights the main features of the Plan. The Plan and Trust
contain the governing provisions and should be consulted as official text in all
cases. If there is any conflict between this booklet (Summary Plan Description)
and the Plan Document, the Plan Document will control.


                                                   Your Employer,
                                                   Gaston Federal Bank




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                            SUMMARY OF YOUR BENEFITS

ELIGIBILITY                You will be eligible for membership in the Plan on
                           the first day of the month coincident with or next
                           following the date you complete 3 months of
                           employment.

PLAN SALARY                Plan  Salary is defined as your basic  salary rate
                           plus  commissions  to the extent that your basic
                           salary plus  commissions  do not exceed  $80,000.  In
                           addition, any pre-tax contributions which you make to
                           an Internal  Revenue Code Section 401(k) plan as well
                           as pre-tax  contributions  to a Section 125 cafeteria
                           plan  and,  unless  the  employer  elects  otherwise,
                           Qualified  Transportation  Fringe benefits as defined
                           under  Section  132(f) of the Internal  Revenue Code,
                           are included in Plan Salary.

PLAN                       Employee - You may elect to make a contribution of
CONTRIBUTIONS              1%, 2%, 3% ,4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%,
                           13%,14% or 15% of Plan Salary.

                           Employer -Your employer will contribute an amount
                           equal to 50% of your contribution to the Plan.

                           The above percentage rate shall apply to only the
                           first 6% of your Plan Salary (see "Plan Salary"
                           section of this booklet).

                                               Illustration
                                               ------------
                             Employee Contribution      Employer Matching
                                    Rate                  Contribution
                             ---------------------      -----------------
                                     1%                        0.5%
                                     2%                        1.0%
                                     3%                        1.5%
                                     4%                        2.0%
                                     5%                        2.5%
                                  6-15%                        3.0%

                           Please refer to the "Making Withdrawals From Your
                           Account" section of this booklet to determine if
                           there are any restrictions on employer contributions
                           on account of a withdrawal.

VESTING                    Generally, you will be 100% vested in any employer
                           contributions after 3 years of employment. You are
                           always 100% vested (i.e., you will not give up any
                           units when you terminate employment) in any
                           contributions you make to the Plan.

LOANS                      You may take a loan from your account and pay your
                           account back with interest. Please refer to the
                           "Borrowing From Your Account" section of this booklet
                           to determine how you may take a loan from your
                           account.

WITHDRAWALS                While you are working, you may withdraw all or part
                           of your vested account balance subject to certain
                           limitations. You may also make withdrawals from your
                           account after termination of employment.

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DISABILITY                 If you are disabled, you will be entitled to the same
                           withdrawal rights as if you had terminated
                           employment.

DEATH                      If you die before the value of your account is paid
                           to you, your beneficiary may receive the full value
                           of your account or may defer payment within certain
                           limits. If you are married, your spouse will be your
                           beneficiary unless your spouse consents in writing to
                           the designation of a different beneficiary.



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                                TABLE OF CONTENTS

Determining Your Eligibility...................................................1

Reenrollment...................................................................1

Making Contributions to the Plan...............................................1

       o      Plan Contributions...............................................1

       o      Allocation of Contributions......................................1

       o      Rollovers........................................................2

       o      Plan Salary......................................................2

Investing Your Account.........................................................2

       o      Investment of Contributions......................................2

       o      Valuation of Accounts............................................3

       o      Reporting to Members.............................................3

Vesting........................................................................3

Making Withdrawals From Your Account...........................................4

       o      Upon Termination of Employment...................................5

       o      Upon Disability..................................................5

       o      Upon Death.......................................................5

Borrowing From Your Account....................................................6

Plan Limitations...............................................................7

Top Heavy Information..........................................................7

Disputed Claims Procedure......................................................8

Qualified Domestic Relations Orders ("QDROs")..................................8
Statement of Member's Rights...................................................8
Plan Information..............................................................10



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                          DETERMINING YOUR ELIGIBILITY


EMPLOYEE                   You  will be eligible for membership in the Plan on
ELIGIBILITY                the first day of the month coincident with or next
                           following the date you complete 3 months of
                           employment. In order for you to complete 3 months of
                           employment, you must complete at least 250 hours of
                           employment in a 3 consecutive month period. The
                           initial 3 consecutive month period is measured from
                           your employment, and (if you do not complete at least
                           250 hours of employment in such period) subsequent 3
                           month periods are measured.

                           In counting hours, you will be credited with an hour
                           of employment for every hour you have a right to be
                           paid. This includes vacation, sick leave, jury duty,
                           etc., and any hours for which back pay may be due.

                           You will become a member as soon as a properly
                           executed enrollment application is received and
                           processed by Pentegra Services, Inc. Your membership
                           will continue until the earlier of (a) your
                           termination of employment and payment to you of your
                           entire account or (b) your death.

REENROLLMENT               If you terminate employment and are subsequently
                           reemployed by the same employer, you will be eligible
                           for immediate reenrollment.


                        MAKING CONTRIBUTIONS TO THE PLAN


PLAN                       Employee-You may elect to make pre-tax contributions
CONTRIBUTIONS              of 1%, 2%, 3%, 4%,5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%,
                           13%, 14% or 15% of Plan Salary  (See Plan Salary"
                           section of this booklet). You may elect not to make
                           any contributions. You may change the rate at which
                           you are contributing one time in any pay period. You
                           may suspend your contributions at any time, but
                           suspended contributions may not be subsequently made
                           up.

                           Employer-Your employer will contribute an amount
                           equal to 50% of your contribution to the Plan.

                           The above percentage rate shall apply to only the
                           first 6% of your Plan Salary (see "Plan Salary"
                           section of this booklet).

                           Please refer to the "Making Withdrawals From Your
                           Account" section of this booklet to determine if
                           there are any restrictions on employer contributions
                           on account of withdrawal.

ALLOCATION OF              Your employer has an account for each member. All of
CONTRIBUTIONS              your own contributions and all employer contributions
                           will be allocated to this account. The total of the
                           value of your account represents your interest in the
                           Plan.

                                       1

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                           Internal Revenue Service Nondiscrimination Rules

                           If you are a highly compensated employee, a portion
                           of your contributions and/or employer contributions,
                           made on your behalf, if any, may have to be returned
                           to you in order to comply with special Internal
                           Revenue Service (IRS) nondiscrimination rules (See
                           "Plan Limitations" section of this booklet for other
                           limitations). In general, effective for years
                           beginning after December 31, 1996, a highly
                           compensated employee is an employee who:

                           (a)  was a 5% owner at anytime during the current or
                                preceding year, or

                           (b) received annual compensation from the employer
                               for the preceding year in excess of $85,000
                               (indexed for cost-of-living adjustments, if any).

ROLLOVERS                  You may make a rollover  contribution  of an eligible
                           rollover distribution from any other Internal Revenue
                           Service  qualified  retirement  plan or an individual
                           retirement  arrangement  (IRA).  These  funds will be
                           maintained  in a separate  rollover  account in which
                           you  will  have  a  nonforfeitable  vested  interest.
                           Please  note  that  you may  establish  a  "rollover"
                           account  within  the  Plan  prior to  satisfying  the
                           Employer's  eligibility  requirements.  However,  the
                           establishment  of  a  "rollover"   account  prior  to
                           satisfying  such   eligibility  will  not  constitute
                           active membership in the Plan.

PLAN SALARY                Plan Salary is defined as your basic salary rate plus
                           commissions to the extent that your basic salary plus
                           commissions do not exceed $50,000.  In addition,  any
                           pre-tax  contributions  which you make to an Internal
                           Revenue Code  Section  401(k) plan as well as pre-tax
                           contributions  to a Section 125  cafeteria  plan and,
                           unless  the  employer  elects  otherwise,   Qualified
                           Transportation   Fringe  benefits  as  defined  under
                           Section  132(f) of the  Internal  Revenue  Code,  are
                           included in Plan Salary. However, Plan Salary for any
                           year may not exceed  $170,000  for 2001  (indexed for
                           cost-of-living adjustments).

                             INVESTING YOUR ACCOUNT

INVESTMENT OF              Contributions  are invested at your  direction in one
CONTRIBUTIONS              or more of the  investment  funds provided under your
                           Plan.  These funds are described in greater detail in
                           your enrollment kits.

                           Contributions made by you are invested at your
                           direction in one or more of these funds in whole
                           percentages. You may apply different investment
                           instructions to amounts already accumulated as
                           opposed to future contributions. Certain restrictions
                           may apply. Changes in investment instructions may be
                           made by submitting a properly completed form or by
                           using Pentegra by Phone, the Pentegra Voice Response
                           System. You may access Pentegra by Phone by calling
                           1-800-433-4422.

                           Any changes made by using Pentegra by Phone which are
                           received by Stock Market Closing (usually 4 p.m.
                           Eastern Time) will be processed at the business day's
                           closing price. Transaction changes received after
                           Stock Market Closing will be processed on the next
                           business day. Your plan allows for a change of
                           investment allocation on a daily basis.


                                       2
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                           Investment  changes  made by  submitting  a form  are
                           effective on the  valuation  date (see  "Valuation of
                           Accounts"  section  of this  booklet)  on which  your
                           written notice is processed.

                           No amounts invested in the Stable Value Fund may be
                           transferred directly to the Money Market Fund. Stable
                           Value fund amounts transferred to and invested in any
                           of the other funds provided under the Plan for a
                           period of three months may be transferred to the
                           Money Market Fund upon the submission of a separate
                           Change of Investment form.

                           If no investment direction is given, all
                           contributions credited to a participant's account
                           will be invested in the Money Market Fund.

VALUATION OF               The  Plan  uses  a  unit  system  for  valuing   each
ACCOUNTS                   Investment Fund. Under this system each participant's
                           share in any Investment Fund is represented by units.
                           The  unit  value  is  determined  as of the  close of
                           business each regular business day (daily valuation).
                           The total  dollar value of a  participant's  share in
                           any  Investment  Fund  as of any  valuation  date  is
                           determined by multiplying  the number of units to the
                           participant's credit by the unit value of the Fund on
                           that  date.  The sum of the  values  of the Funds you
                           select  represents  the  total  value  of  your  Plan
                           account.

                           Transaction requests, such as withdrawals, change of
                           investment elections, distributions, that are
                           received by Pentegra Services, Inc. (assuming proper
                           receipt of all pertinent information) will be
                           processed as directed by the Plan Administrator.

                           NOTE: If for some reason (such as shut down of
                           financial markets) the underlying portfolio of any
                           Investment Fund cannot be valued, the valuation date
                           for such Investment Fund shall be the next day on
                           which the underlying portfolios can be valued.

REPORTING TO               As soon as practicable after the end of each calendar
MEMBERS                    quarter you will  receive a personal  statement  from
                           the plan. This statement  provides  information about
                           your  account  including  its  market  value  in each
                           investment fund. Activity for the quarter is reported
                           by investment fund and contribution type.


                                     VESTING

`Vesting" is the process under which you earn a non-forfeitable right to the
units in your account. You are always 100% vested (i.e., you will not give up
any units when you terminate employment) in any contributions you make to the
Plan.

With respect to any employer contributions credited to your account, the
following schedule will dictate when vesting will occur:

                   Years of Employment      Vesting Percentage
                       Less than 3                 0%
                       3 or more                 100%


                                       3
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Years of employment prior to attaining age 18 shall be disregarded for vesting
purposes.

You will also become 100% vested in the employer contributions and earnings
thereon credited to your account upon your death, approved disability or
attainment of age 65 while employed with this employer.

If you terminate employment with this employer prior to completing 3 years of
service, you will forfeit all of the employer contributions and earnings thereon
credited to your account. However, if you are reemployed by this employer prior
to incurring 5 consecutive 1-year breaks in service, measured from your date of
termination, you are eligible to have the amount of the forfeiture and your
corresponding vesting service restored to your account.


                      MAKING WITHDRAWALS FROM YOUR ACCOUNT


ACCOUNT                    While Employed
WITHDRAWAL                 You may make a total or partial withdrawal of the
                           vested portion of your account by filing the
                           appropriate form with the Plan Administrator for
                           transmittal to Pentegra Services, Inc. A withdrawal
                           is based on the unit values on the valuation date
                           coinciding with the date that a properly completed
                           withdrawal form is receive and processed by Pentegra
                           Services, Inc. ("Valuation of Accounts" section of
                           this booklet).

                           Under  current law, an excise tax of 10% is generally
                           imposed  on  the  taxable   portion  of   withdrawals
                           occurring  prior  to your  attainment  of age 59 1/2.
                           There are certain  exceptions  to the 10% excise tax.
                           For  example,  the 10%  excise  tax will not apply to
                           withdrawals   made  on  account  of  separation  from
                           service at or after  attainment  of age 55,  death or
                           disability.

                           In general, employer contributions credited on your
                           behalf will not be available for in-service
                           withdrawal until such employer contributions have
                           been invested in the Plan for at least 24 months (2
                           years) or you have been a participant in the Plan for
                           at least 60 months (5 years) or the attainment of age
                           59 1/2.

                           As required by Internal Revenue Service Regulations,
                           a withdrawal of your pre-tax contributions prior to
                           age 59 1/2 or termination of employment can only be
                           made on account of a hardship. In addition, an
                           in-service withdrawal of employer matching and/or
                           supplemental contributions, if any, as well as
                           employee rollover contributions may only be made
                           prior to the attainment of age 59 1/2 or termination
                           of employment on account of hardship. The existence
                           of an immediate and heavy financial need, and the
                           lack of any other available financial resources to
                           meet this need, must be demonstrated for a hardship
                           withdrawal. The following situations will be
                           considered to constitute an immediate and heavy
                           financial need:

                           (1)   Medical expenses (other than amounts paid by
                                 insurance).
                           (2)   The purchase of a principal residence (mortgage
                                 payments are excluded).
                           (3)   Tuition, Including room and board, for the next
                                 12 months of post-secondary education.

                                       4
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                           (4    The prevention of the eviction from a principal
                                 residence or foreclosure on the mortgage of a
                                 principal residence.

                           Only  one  in-service  withdrawal  may be made in any
                           Plan Year.

                           Upon Termination of Employment
                           You may leave your account with the Plan and defer
                           commencement of receipt of your vested balance until
                           April 1 of the calendar year following the calendar
                           year in which you attain age 70 1/2. You may make
                           withdrawals from your account(s) at any time after
                           you terminate employment. You may continue to change
                           the investment instructions with respect to your
                           remaining account balance and make withdrawals as
                           provided above. (See "Investment of Contributions"
                           section of this booklet).

                           You may elect, in lieu of a lump sum payment, to be
                           paid in annual installments with the right to take in
                           a lump sum the vested balance of your account at any
                           time during such payment period. If the actuarial
                           determination of your life expectancy is less than
                           the period you elect, the maximum period over which
                           you can receive annual installments will be the next
                           lower payment period.

                           Upon Disability
                           If you are disabled in accordance with the definition
                           of disability under the Plan, you will be entitled to
                           the same withdrawal rights as if you had terminated
                           your employment.

                           You are disabled under the Plan if you are eligible
                           to receive (i) disability insurance benefits under
                           Title II of the Federal Social Security Act or (ii)
                           disability benefits under any other internal Revenue
                           Service qualified employee benefits plan or long-term
                           disability plan of your employer.

                           Upon Death
                           If you die when you are a participant of the Plan,
                           the value of your entire account will be payable to
                           your beneficiary. This payment will be made in the
                           form of a lump sum, unless the payment would exceed
                           $500, and you had elected prior to your death that
                           the payment be made in annual installments over a
                           period not to exceed 5 years (10 years if your spouse
                           is your beneficiary). If such an election is not in
                           effect at the time of your death, your beneficiary
                           may elect to receive the benefit in the form of
                           annual installments over a period not to exceed 5
                           years (10 years if your spouse is your beneficiary)
                           or make withdrawals as often as once per year, except
                           that any balance remaining must be withdrawn by the
                           5th anniversary (10th anniversary if your spouse is
                           your beneficiary) of your death.

                           If you are married, your spouse will be your
                           beneficiary unless your spouse consents in writing to
                           the designation of a different beneficiary.


                                       5
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                           BORROWING FROM YOUR ACCOUNT


    LOANS                  You may borrow from the vested portion of your
                           account. You may borrow any amount between $1,000 and
                           $50,000 (reduced by your highest outstanding loan
                           balance(s) from the Plan during the preceding 12
                           months). In no event may you borrow more than 50% of
                           the vested balance of your account.

                           The amount of your loan will be deducted on the
                           valuation date (see "Valuation of Accounts" section
                           of this booklet) coinciding with the date that
                           Pentegra Services, Inc. receives and processes your
                           properly executed Loan Application, Promissory Note
                           and Disclosure Statement and Truth-in-Lending
                           Statement. On request, the Plan Administrator will I
                           provide you with the application form. The loan will
                           not affect your right to continue making
                           contributions or to receive the corresponding
                           employer contributions.

                           The rate of interest for the term of the loan will be
                           established as of the loan date, and shall be a
                           reasonable rate of interest generally comparable to
                           the rates of interest then in effect at a major
                           banking institution (e.g., the Barron's Prime Rate
                           (base rate) plus 1%).

                           Repayments are made through payroll deductions and
                           will be transmitted along with the Employer's
                           contribution reports. The repayment period is between
                           1 and 15 years for loans used exclusively for the
                           purchase of a primary residence or 1 and 5 years for
                           all other loans, at your option. After 3 monthly
                           payments have been made, you may repay the
                           outstanding balance of the loan (subject to the terms
                           of your loan documents). If a loan includes any
                           employee pre-tax amounts, you will not be permitted
                           to default on the loan repayment while employed. Your
                           employer is required to withhold the loan repayments
                           from your salary.

                           As you repay the loan, the principal portion,
                           together with the interest, will be credited to your
                           account. In this way, you will be paying interest to
                           yourself. A $50.00 origination fee and a $40.00
                           annual administrative fee will be subtracted from
                           your account. The origination fee, plus the first
                           year's administrative fee will be deducted
                           proportionately from your account at the time of
                           origination. Subsequent annual administrative fees
                           will be deducted from your account each year on or
                           about the anniversary date of the loan origination.

                           In the event that you leave employment or die before
                           repaying the loan, the outstanding balance will be
                           due and, if not paid by the end of the calendar
                           quarter following the calendar quarter in which you
                           terminate employment or die, will be deemed a
                           distribution and subject to the applicable tax
                           treatment. However, you may elect upon termination of
                           employment to continue to repay the loan on a monthly
                           basis directly to Pentegra Services, Inc.

                                       6
<PAGE>


                                PLAN LIMITATIONS


PLAN                       Internal Revenue Service ("IRS")  requirements impose
LIMITATIONS                certain  limitations  on the amount of  contributions
                           that may be made to this and other  qualified  plans.
                           In  general,  the  annual  "contributions"  made to a
                           defined  contribution  plan  such  as this  Plan,  in
                           respect of any  member,  may not exceed the lesser of
                           25% of the member's  total  compensation  or $35,000.
                           (This amount may be subject to periodic adjustment by
                           the  IRS at  some  time  in  the  future).  For  this
                           purpose,     "contributions"     include     employer
                           contributions, member 401(k) contributions and member
                           after-tax    contributions.    The   annual    member
                           contributions  allocated to a member's 401(k) account
                           may not  exceed  the  lesser  of 25% of the  member's
                           total    compensation    or   $7,000   (indexed   for
                           cost-of-living   adjustments,  if  any  --$10,500  in
                           2001).   Further,   if  your   employer  has  another
                           tax-qualified  plan  in  effect,   these  limits  are
                           subject to additional restrictions.

                           Each member and beneficiary assumes the risk in
                           connection with any decrease in the market value of
                           his account. The benefit to which you may be entitled
                           upon your withdrawal of account cannot be determined
                           in advance.

                           As a defined contribution plan, the Plan is not
                           covered by the plan termination insurance provisions
                           of Title IV of the Employee Retirement Income
                           Security Act of 1974 ("ERISA"). Therefore, your
                           benefits are not insured by the Pension Benefit
                           Guaranty Corporation in the event of a plan
                           termination.

                           Except as may otherwise be required by applicable law
                           or pursuant to the terms of a Qualified Domestic
                           Relations Order, amounts payable by the Plan
                           generally may not be assigned, and if any person
                           entitled to a payment attempts to assign it, his
                           interest in the amount payable may be terminated and
                           held for the benefit of that person or his
                           dependents.

                           If Pentegra Services, Inc. cannot locate any person
                           entitled to a payment from the Plan and if 5 years
                           have elapsed from the due date of such payment, the
                           Plan Administrator may cancel all payments due him to
                           the extent permitted by law.

                           Membership in the Plan does not give you the right to
                           continued employment with your employer or affect
                           your employer's right to terminate your employment.

                           The Plan's qualified status is subject to IRS
                           approval and any requirements the IRS may impose.

                           The employer may terminate the Plan at any time. If
                           the Plan is terminated, there will be no further
                           contributions to the Plan for your account.

TOP HEAVY                  A "top  heavy"  plan is a plan under  which more than
INFORMATION                60% of the accrued benefits  (account values) are for
                           key  employees.   Key  employees   generally  include
                           officers and  shareholders  earning more than $45,000
                           (indexed for cost-of-living  adjustments;  $70,000 in
                           2001) per year. if your  employer's plan is top heavy
                           for a particular  plan year, you may be entitled to a
                           minimum employer  contribution equal to the lesser of
                           3% of your  Plan  Salary or the  greatest  percentage


                                       7
<PAGE>

                           contributed  by the  employer  for any key  employee.
                           This  minimum  contribution  would be  offset  by the
                           regular contribution made by your employer (See "Plan
                           Contributions" section of this booklet).

                           In order to receive the minimum contribution for any
                           plan year, you must be employed on the last day of
                           the plan year. if your employer also provides a
                           defined benefit or another defined contribution plan,
                           your minimum benefit may be provided under such plan.

DISPUTED                   If you disagree  with respect to any benefit to which
CLAIMS                     you feel you are entitled,  you should make a written
PROCEDURE                  claim to the Plan  Administrator of the Plan. If your
                           claim is  denied,  you will  receive  written  notice
                           explaining  the reason for the denial  within 90 days
                           after the claim is filed.

                           The Plan Administrator's decision shall be final
                           unless you appeal such decision in writing to the
                           Plan Administrator of the Plan, within 60 days after
                           receiving the notice of denial. The written appeal
                           should contain all information you wish to be
                           considered. The Plan Administrator will review the
                           claim within 60 days after the appeal is made. Its
                           decision shall be in writing, shall include the
                           reason for such decision and shall be final.

QUALIFIED                  A QDRO is a judgment,  decree or order which has been
DOMESTIC                   determined by the Plan  Administrator,  in accordance
RELATIONS                  with the procedures  established under the provisions
ORDERS                     of the Plan,  to constitute a QDRO under the Internal
("QDROS")                  Revenue  Code.  To obtain  copies of the Plan's  QDRO
                           Procedures,  free of charge,  please contact the Plan
                           Administrator.    (Please    refer   to   the   "Plan
                           information"  section  of this  booklet to obtain the
                           Plan Administrator's address and phone number).


                                 MEMBERS RIGHTS


STATEMENT OF               As a member of the plan,  you are entitled to certain
MEMBER'S                   rights and protection under ERISA which provides that
RIGHTS                     all members shall be entitled to:



                           o        Examine,   without   charge,   at  the  Plan
                                    Administrator's office or at other specified
                                    locations, all plan documents, and copies of
                                    all    documents    filed    by   the   Plan
                                    Administrator  with the U. S.  Department of
                                    Labor such as  detailed  annual  reports and
                                    plan descriptions.

                           o        Obtain  copies  of all  plan  documents  and
                                    other plan  information upon written request
                                    to the Plan Administrator. The Administrator
                                    may make a reasonable charge for the copies.

                           o        Receive  a  summary  of  the  Plan's  annual
                                    financial report.  The Plan Administrator is
                                    required by law to furnish  each member with
                                    a copy of such summary.

                           In  addition  to  creating  rights for Plan  members,
                           ERISA   imposes   duties  upon  the  people  who  are
                           responsible for the operation of the Plan. The people
                           who operate


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<PAGE>

                           your Plan, called "fiduciaries", have a duty to do so
                           prudently  and in the  interest of you and other plan
                           members  and  beneficiaries.  No one may  fire you or
                           otherwise  discriminate  against  you in  any  way to
                           prevent you from  obtaining  a benefit or  exercising
                           your rights under ERISA.  If your claim for a benefit
                           is  denied  in whole or in part,  you will  receive a
                           written  explanation of the reason for the denial. As
                           already  explained,  you also  have the right to have
                           your claim reconsidered.

                           Under ERISA, there are steps you can take to enforce
                           the above rights. For instance, if you request
                           materials from the Plan Administrator and do not
                           receive them within 30 days, you may file suit in a
                           federal court. In such a case, the court may require
                           the Plan Administrator to provide the materials and
                           pay you up to $100 a day until you receive them,
                           unless such materials were not sent for reasons
                           beyond the Administrator's control. If you have a
                           claim for benefits which is denied or ignored, in
                           whole or in part, you may file suit in a state or
                           federal court.

                           If it should happen that Plan fiduciaries misuse the
                           Plan's money, or if you are discriminated against for
                           asserting your rights, you may seek assistance from
                           the U.S. Department of Labor or you may file suit in
                           a federal court. The court will decide who should pay
                           court costs and legal fees. If you are successful,
                           the court may order the person you have sued to pay
                           these costs and fees. If you lose, the court may
                           order you to pay such costs and fees (for example, if
                           it finds your claim is frivolous).

                           If you have any questions about your Plan, you should
                           contact the Plan Administrator. If you have any
                           questions about this statement or your rights under
                           ERISA, you should contact the nearest Area Office of
                           the U.S. LaborManagement Services Administration,
                           Department of Labor.

                           This Statement of ERISA Rights is required by federal
                           law and regulation.



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<PAGE>


                                PLAN INFORMATION



Plan Name:                 Gaston  Federal  Bank  Employees'  Savings  &  Profit
                           Sharing Plan and Trust

Plan Administrator:
                           Administrative Committee for the Gaston Federal Bank
                           Employees' Savings & Profit Sharing Plan and Trust
                           Gaston Federal Bank
                           245 West Main Avenue / P.O. Box 2249
                           Gastonia, North Carolina 28053-2249

                           Phone No: (704) 868-5200

                           Employer Identification Number. 56-0233080

                           Plan Number: 002

                           Plan Year End: December 31

Trustee:
                           The Bank of New York
                           1 Wall Street
                           New York, NY 10286
                           Phone: (212) 635-8115

Agent for Service of
Legal Process:             Gaston Federal Bank

Administrative Services:   Record-keeping services are provided by:

                           Pentegra Services, Inc.
                           108 Corporate Park Drive
                           White Plains, New York 10604

                           Phone No.: (914) 694-1300    FAX No.: (914) 694-6429
                                      (800) 872-3473




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