<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q

(Mark One)

[X]  Quarterly Report under Section 13 or 15(d) of the Securities Exchange
     Act of 1934
     For the quarterly period ended September 30, 2000.
                                    ------------------

                                      or

[_]  Transition Report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 For the transition period from _______________ to ________________.

                         Commission File No. 0-23980
                                             -------

                      Georgia Bank Financial Corporation
                      ----------------------------------
            (Exact name of registrant as specified in its charter)

               Georgia                                  58-2005097
               -------                                  ----------
      (State of Incorporation)             (I.R.S. Employer Identification No.)

                   3530 Wheeler Road, Augusta, Georgia 30909
                   -----------------------------------------
                   (Address of principal executive offices)

                                (706) 738-6990
                                --------------
               (Issuer's telephone number, including area code)

                                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 Exchange Act 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
                                                                       ---   ---

                     APPLICABLE ONLY TO CORPORATE ISSUERS

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

     2,077,486 shares of common stock, $3.00 par value per share, issued and
outstanding as of September 30, 2000.
<PAGE>

                      GEORGIA BANK FINANCIAL CORPORATION
                                   FORM 10-Q
                                     INDEX

<TABLE>
<CAPTION>
                                                                                              Page
<S>                                                                                           <C>
Part I
        Item 1.   Financial Statements (Unaudited)

                  Consolidated Balance Sheets as of September 30, 2000 and
                  December 31, 1999                                                             3
                  Consolidated Statements of Income for the quarters
                  ended September 30, 2000 and September 30, 1999 and the
                  nine months ended September 30, 2000 and September 30, 1999                   4
                  Consolidated Statements of Cash Flows for the
                  nine months ended September 30, 2000 and September 30, 1999                   5
                  Notes to Consolidated Financial Statements                                    7

        Item 2.   Management's Discussion and Analysis of
                  Financial Condition and Results of Operations                                 8
        Item 3    Quantitative and Qualitative Disclosures about Market Risk                   16

Part II  Other Information

        Item 1.   Legal Proceedings                                                             *
        Item 2.   Changes in Securities                                                         *
        Item 3.   Defaults Upon Senior Securities                                               *
        Item 4.   Submission of Matters to a Vote of Security Holders                           *
        Item 5.   Other Information                                                             *
        Item 6.   Exhibits and Reports on Form 8-K                                              *

Signature                                                                                      18
</TABLE>

* No information submitted under this caption

                                       1
<PAGE>

                                    PART I
                             FINANCIAL INFORMATION

                                       2
<PAGE>

               GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                          Consolidated Balance Sheets
                                  (Unaudited)
                              ASSETS

<TABLE>
<CAPTION>
                                                                                September 30,     December 31,
                                                                                     2000               1999
                                                                                --------------------------------
<S>                                                                             <C>                <C>
Cash and due from banks                                                         $ 12,663,782        $ 13,642,007
Federal funds sold                                                                 5,540,000           9,830,000
Interest bearing deposits in other banks                                             500,000                   -
                                                                                ------------        ------------
    Cash and cash equivalents                                                     18,703,782          23,472,007

Investment Securities
   Available-for-sale                                                             70,182,829          60,054,449
   Held-to-maturity, at cost (fair values of
       $8,619,831 and $7,102,288, respectively)                                    8,722,546           7,281,743

Loans                                                                            269,740,236         239,031,667
   Less allowance for loan losses                                                 (4,004,102)         (3,591,613)
                                                                                ------------        ------------
Loans, net                                                                       265,736,134         235,440,054

Premises and equipment, net                                                       10,582,467          10,481,160
Accrued interest receivable                                                        3,288,235           2,792,978
Other real estate                                                                     16,942              16,942
Intangible assets, net                                                               400,492             492,806
Other assets                                                                       2,682,239           2,068,970
                                                                                ------------        ------------
                                                                                $380,315,666        $342,101,109
                                                                                ============        ============
                   LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
     Non-interest bearing                                                       $ 48,077,463        $ 43,171,186
     Interest bearing
        NOW accounts                                                              37,601,801          34,659,905
        Savings                                                                   97,443,908          94,010,408
        Money management accounts                                                 16,000,935          14,674,717
        Time deposits over $100,000                                               51,494,168          45,454,055
        Other time deposits                                                       48,616,927          51,150,474
                                                                                ------------        ------------
                                                                                 299,235,202         283,120,745
Federal funds purchased and securities sold
    under repurchase agreements                                                   27,909,925          11,331,388
Advances from Federal Home Loan Bank                                              17,000,000          15,000,000
Other borrowed funds                                                               1,000,000           1,000,000
Accrued interest and other liabilities                                             2,730,749           1,832,245
                                                                                ------------        ------------
          Total liabilities                                                      347,875,876         312,284,378
                                                                                ------------        ------------

Stockholders' equity
  Common Stock, $3.00 par value; authorized 10,000,000
     shares; issued 2,093,152 in 2000 and 1999; outstanding
     2,077,486 in 2000 and 2,093,152 in 1999                                       6,279,456           6,279,456
  Additional paid-in capital                                                      21,259,955          21,259,955
  Retained earnings                                                                6,071,302           3,166,195
  Accumulated  other comprehensive (loss)                                           (750,135)           (888,875)
  Treasury Stock, at cost, 15,666 shares                                            (420,788)                  -
                                                                                ------------        ------------

          Total stockholders' equity                                              32,439,790          29,816,731
                                                                                ------------        ------------
                                                                                $380,315,666        $342,101,109
                                                                                ============        ============
</TABLE>

See notes to consolidated financial statements.

                                       3
<PAGE>

               GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                       Consolidated Statements of Income
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended                  Nine Months Ended
                                                                        September 30,                       September 30,
                                                                 ----------------------------         ---------------------------
                                                                    2000             1999                2000            1999
                                                                 -----------      -----------         -----------    ------------
<S>                                                              <C>              <C>                 <C>            <C>
Interest Income
   Loans, including fees                                          $6,289,211       $5,110,058         $17,793,049     $14,699,110
   Investment securities                                           1,232,981          979,550           3,587,426       2,784,763
   Federal funds sold                                                 94,062          123,298             403,722         274,630
   Interest bearing deposits in other banks                            9,031                -              23,375               -
                                                                 -----------      -----------         -----------    ------------
                                                                   7,625,285        6,212,906          21,807,572      17,758,503
                                                                 -----------      -----------         -----------    ------------
Interest Expense
   Deposits                                                        3,255,680        2,572,955           9,282,424       7,259,536
   Federal funds purchased and securities sold
       under repurchase agreements                                   247,631          123,472             552,466         265,651
   Other borrowings                                                  267,269          138,673             765,892         439,167
                                                                 -----------      -----------         -----------    ------------
                                                                   3,770,580        2,835,100          10,600,782       7,964,354
                                                                 -----------      -----------         -----------    ------------

Net Interest Income                                                3,854,705        3,377,806          11,206,790       9,794,149

Provision for loan losses                                            250,000          591,000             748,000       1,015,000
                                                                 -----------      -----------         -----------    ------------

Net interest income after provision for loan losses                3,604,705        2,786,806          10,458,790       8,779,149
                                                                 -----------      -----------         -----------    ------------

Non-interest Income
   Service charges and fees on deposits                              753,927          686,188           2,091,594       1,989,146
   Gain on sale of loans                                             360,744          163,935             599,257         592,313
   Investment securities gain (loss), net                                  -        1,520,919             (28,517)      1,519,791
   Miscellaneous income                                               72,091           50,518             237,918         185,377
                                                                 -----------      -----------         -----------    ------------
                                                                   1,186,762        2,421,560           2,900,252       4,286,627
                                                                 -----------      -----------         -----------    ------------

Non-interest Expense
   Salaries                                                        1,540,365        1,137,050           4,074,006       3,438,980
   Employee benefits                                                 408,327          461,730           1,161,697       1,134,312
   Occupancy expenses                                                453,492          414,548           1,273,647       1,232,707
   Other operating expenses                                          841,811        1,266,780           2,402,585       2,697,002
                                                                 -----------      -----------         -----------    ------------
                                                                   3,243,995        3,280,108           8,911,935       8,503,001
                                                                 -----------      -----------         -----------    ------------

Income before income taxes                                         1,547,472        1,928,258           4,447,107       4,562,775

Income tax expense                                                   527,300          593,500           1,542,000       1,559,551
                                                                 -----------      -----------         -----------    ------------

Net Income                                                        $1,020,172       $1,334,758         $ 2,905,107     $ 3,003,224
                                                                 ===========      ===========         ===========    ============

Basic income per share                                            $     0.49       $     0.64         $      1.39           $1.43

Weighted average common shares outstanding                         2,081,340        2,093,152           2,087,722       2,093,152
</TABLE>

See notes to consolidated financial statements.

                                       4
<PAGE>

               GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended September 30,
                                                                                         2000                   1999
                                                                                      -----------            -----------
<S>                                                                                   <C>                   <C>
Cash flows from operating activities
Net Income                                                                           $  2,905,107           $  3,003,224
  Adjustments to reconcile net income to net cash
   provided by operating activities
     Depreciation and amortization                                                        855,500                854,107
     Provision for loan losses                                                            748,000              1,015,000
     Net investment securities losses (gains), net of related donation expense             28,517             (1,039,316)
     Net (accretion of discount) amortization of premium on investment securities         (36,141)                64,275
     Gain on disposal of premises and equipment                                           (53,893)                (1,020)
     Gain on the sale of other real estate                                                      -                (19,824)
     Gain on sale of loans                                                               (599,257)              (592,313)
     Real estate loans originated for sale                                            (30,484,631)           (26,592,477)
     Proceeds from sales of real estate loans                                          30,481,383             28,831,183
     Net increase in accrued interest receivable                                         (495,257)              (559,235)
     Net (increase) decrease in prepaid expense                                           (14,990)               125,520
     Net (increase) decrease in other assets                                             (669,750)             1,017,492
     Net increase in accrued interest and other liabilities                               898,504                139,813
                                                                                      -----------            -----------
         Net cash provided by operating activities                                      3,563,092              6,246,429
                                                                                      -----------            -----------
Cash flows from investing activities
     Proceeds from sales of available-for-sale securities                               2,927,861             15,349,100
     Proceeds from maturities of available-for-sale securities                          3,732,173             11,818,734
     Proceeds from maturities of held-to-maturity securities                              416,033                280,112
     Purchase of held-to-maturity securities                                           (1,864,517)            (2,823,849)
     Purchase of available-for-sale securities                                        (16,391,298)           (30,654,130)
     Purchase of FHLB stock                                                              (171,600)                     -
     Proceeds from redemption of FHLB stock                                                     -                211,200
     Net increase in loans                                                            (30,441,575)           (28,970,898)
     Net purchase of premises and equipment                                            (1,399,056)              (333,509)
     Proceeds from the sale of other real estate                                                -                509,382
     Proceeds from the sale of premises and equipment                                     588,456                 29,482
                                                                                      -----------            -----------
         Net cash used in investing activities                                        (42,603,523)           (34,584,376)
                                                                                       -----------            -----------

Cash flows from financing activities
     Net increase in deposits                                                          16,114,457             19,244,441
     Net increase in federal funds purchased and
      securities sold under repurchase agreements                                      16,578,537             15,647,910
     Proceeds from notes and bonds payable                                                      -                 50,000
     Advances from Federal Home Loan Bank                                              22,000,000             10,000,000
     Payments of Federal Home Loan Bank advances                                      (20,000,000)            (5,000,000)
     Purchase of treasury stock                                                          (420,788)                     -
                                                                                       -----------            -----------
         Net cash provided by financing activities                                     34,272,206             39,942,351
                                                                                       -----------            -----------
</TABLE>

                                       5
<PAGE>

               GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                       Nine Months Ended September 30,
                                                                                         2000                   1999
                                                                                      -----------            -----------
<S>                                                                                   <C>                   <C>
         Net (decrease) increase in cash and cash equivalents                          (4,768,225)             11,604,404

Cash and cash equivalents at beginning of period                                       23,472,007               9,916,911

                                                                                      -----------            ------------
Cash and cash equivalents at end of period                                            $18,703,782             $21,521,315
                                                                                      ===========            ============
Supplemental disclosures of cash paid during the period for:
     Interest                                                                         $10,730,957             $ 8,396,255
                                                                                      ===========            ============
     Income taxes                                                                     $ 1,417,000             $ 1,353,413
                                                                                      ===========            ============
</TABLE>

See notes to consolidated financial statements.


                                       6
<PAGE>

               GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY

                  Notes to Consolidated Financial Statements

                              September 30, 2000


Note 1 - Basis of Presentation

The accompanying consolidated financial statements include the accounts of
Georgia Bank Financial Corporation and its wholly-owned subsidiary, Georgia Bank
& Trust Company.  Significant intercompany transactions and accounts are
eliminated in the consolidation.

The financial statements for the nine months ended September 30, 2000 and 1999
are unaudited and have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. These consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and footnotes included in the Company's annual report on Form 10-KSB for the
year ended December 31, 1999.

In the opinion of management, all adjustments necessary to present fairly the
financial position and the results of operations and cash flows for the interim
periods have been made. All such adjustments are of a normal recurring nature.
The results of operations are not necessarily indicative of the results of
operations which the Company may achieve for the entire year.

Note 2 - Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133).  SFAS 133 is effective for
financial statements for all fiscal quarters of fiscal years beginning after
June 15, 1999.  In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the effective date
of FASB Statement No. 133."  SFAS 133, as amended, is now effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000.  The Company
does not believe the provisions of SFAS 133 will have a significant impact on
the financial statements upon adoption.

Note 3 - Comprehensive Income

Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130).  SFAS 130
establishes standards for reporting and displaying comprehensive income and its
components in a full set of general purpose financial statements.  The primary
component of the differences between net income and comprehensive income for the
Company is net unrealized gains and losses on investment securities.  Total
comprehensive income for the nine months ended September 30, 2000 was $3,043,847
compared to $570,655 for the nine months ended September 30, 1999 and for the
three months ended September 30, 2000 was $1,040,118 compared to $440,157 for
the three months ended September 30, 1999.

                                       7
<PAGE>

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

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
shareholders.  Statements made in such documents, other than those concerning
historical information, should be considered forward-looking and subject to
various risks and uncertainties.  Such forward-looking statements are made based
upon 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 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
governmental regulation 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 statement that may be made from time to time by, or on behalf
of, the Company.

Performance Overview -- Net Income
----------------------------------

The Company's net income for the third quarter of 2000 was $1,020,000, which was
a decrease of $315,000 (23.6%) compared to net income of $1,335,000 for the
third quarter of 1999.  Earnings per share for the three months ended September
30, 2000 were $0.49 compared to $0.64 for the three months ended September 30,
1999.  The decrease was primarily attributable to a non-recurring net gain
resulting from the sales and donation of investment securities which occurred in
the third quarter of 1999 (see further discussion under "non-interest income"
below).  In addition, the Company recorded a higher provision for loan losses in
the third quarter of 1999 due to the growth in the Company's loan portfolio and
modifications to risk factors in the Company's loan loss reserve analysis.

                                       8
<PAGE>

Net income for the first nine months of 2000 was $2,905,000, a decrease of
$98,000 (3.3%) when compared to net income of $3,003,000 for the first nine
months of 1999. Earnings per share for the nine months ended September 30, 2000
were $1.39 compared to $1.43 for the nine months ended September 30, 1999. The
decrease was primarily attributable to the non-recurring net gain mentioned
above offset by an increase in net interest income for the nine months ended
September 30, 2000 which was a result of continued growth in loans as well as
higher yielding investment securities. The annualized return on average assets
for the Company was 1.04% for the nine months ended September 30, 2000, compared
to 1.25% for the same period last year. The annualized return on average
stockholders' equity was 12.13% for the nine months ended September 30, 2000
compared to 13.60% for the comparable period in 1999. The 2000 returns have also
been impacted by start-up costs for the trust department and costs related to
the mortgage operations expansion.

Total assets of $380.3 million at September 30, 2000 reflects an increase of
$38.2 million (11.2%) from year-end 1999 and an increase of $44.9 million
(13.4%) over September 30, 1999.  Total assets at December 31, 1999 included
higher cash and federal funds sold balances in anticipation of funding any Year
2000 cash needs.  These funds were reduced in early 2000 and invested in higher
yielding investment securities.  The growth in total assets has been largely due
to growth in the loan portfolio.  Total loans at September 30, 2000 were $265.7
million which represented an increase of $30.3 million (12.9%) from December 31,
1999 and an increase of $34.2 million (14.8%) from September 30, 1999.

Total deposits have grown $16.1 million (5.7%) since December 31, 1999 and $28.5
million (10.5%) since September 30, 1999.  Given the slower growth rate in
deposits than loans, the Company has increased its securities sold under
repurchase agreements and advances from the Federal Home Loan Bank.  The balance
of securities sold under repurchase agreements has increased $16.6 million
(146.9%) from December 31, 1999 and $9.5 million (51.6%) since September 30,
1999.  Advances from the Federal Home Loan Bank have increased by $2.0 million
since December 31, 1999 and $3.0 million since September 30, 1999.

Net Interest Income
-------------------

Net interest income increased $477,000 (14.1%) in the third quarter of 2000
compared to the third quarter of 1999 and $1,413,000 (14.4%) during the first
nine months of 2000 compared to the same period in 1999.  The increase in both
the three-month and nine-month periods is due primarily to an increase in
interest income resulting from an increase in the volume of loans for the nine-
month period ended September 30, 2000 as well as higher interest rates on new
loans and variable rate loans tied to prime.  Interest earning assets increased
$38.5 million (12.17%) over December 31, 1999.  Loans, historically the highest
yielding component of interest earning assets, increased $30.7 million (12.8%)
over December 31, 1999.  Investment securities increased $11.5 million (17.0%)
over December 31, 1999.

                                       9
<PAGE>

The increase in interest income was offset by an increase in interest expense
for both the three month and nine month periods.  The increase in interest
expense was a result of increases in interest bearing deposit balances of $11.2
million (4.7%) since December 31, 1999 coupled with higher interest rates.  In
addition, higher volumes of other borrowings to fund loan growth contributed to
the increase in interest expense.

The Company's net interest margin increased from 4.19% for the nine months ended
September 30, 1999 to 4.27% for the nine months ended September 30, 2000 for the
reasons noted above.

Non-interest Income
-------------------

Non-interest income decreased $1.2 million (51.0%) compared to the three month
period ended September 30, 1999 and $1.4 million (32.3%) compared to the nine
month period ended September 30, 1999.  The decrease in non-interest income was
attributable to a non-recurring gain on the sale of 223,500 shares and donation
of 125,000 shares of Towne Services, Inc. common stock to Georgia Bank
Foundation, Inc. in the third quarter of 1999.  The Company recognized a gain of
$1.8 million on the sale and donation of the common stock which was offset by a
loss on the sale of other investment securities of $291,000.  The other
investment securities were sold to allow the Company to reinvest in higher
yielding investment securities.  Additionally, the Company has experienced
increases in service charges and fees on deposits of $68,000 (9.9%) over third
quarter 1999 and $102,000 (5.2%) over the nine-month period ended September 30,
1999 due to increases in volumes of deposit accounts.  The gain on sale of loans
increased $197,000 (120.1%) over the third quarter 1999 and $7,000 (1.2%) over
the nine month period ended September 30, 1999 which is attributable to the
expansion of mortgage operations in June 2000 and the resulting increase in
mortgage loan originations. Also, miscellaneous income increased $22,000 (42.7%)
over third quarter 1999 and $53,000 (28.3%) over the nine-month comparable 1999
period.  These increases are primarily attributable to increases in retail
investment income of $14,000 over the third quarter of 1999 and $29,000 over the
nine-month comparable 1999 period.

                                       10
<PAGE>

Non-interest Expense
--------------------

Non-interest expense decreased $36,000 (1.1%) from the third quarter of 1999 and
increased $409,000 (4.8%) over the first nine months of 1999. Salary and
benefits expense increased $350,000 (21.9%) in the third quarter of 2000
compared to the third quarter of 1999 and increased $662,000 (14.5%) for the
nine month period ended September 30, 2000 when compared to the nine months
ended September 30, 1999. The increases in salary and benefits expense for both
the quarter and nine-month period are the result of the establishment of a trust
department in late March and the expansion of the mortgage department in June
and the continued expansion in the Company's local market that is reflected in
additions to staff.  Commissions that are based upon production, such as the
mortgage and retail investment functions, have increased over the comparable
1999 quarter and nine-month period due to increased sales production in these
areas. Moderate increases in occupancy expense of $39,000 (9.4%) over the third
quarter of 1999 and $41,000 (3.3%) over the comparable nine months of 1999
resulted from the Company utilizing existing owned facilities for the trust and
mortgage operations expansion and for other staff additions. The decrease in
other operating expenses of $425,000 (33.5%) for the three months ended
September 30, 2000 and $294,000 (10.9%) for the nine months ended September 30,
2000 is primarily a result of the donation expense of $480,000 recognized in the
third quarter of 1999 in conjunction with the donation of Towne Services, Inc.
common stock to Georgia Bank Foundation, Inc.

Income Taxes
------------

Income taxes in the third quarter of 2000 totaled $527,000, an increase of
$66,000 over the third quarter of 1999 and a decrease of $18,000 from the
comparable nine month period in 1999.  The effective tax rate for the nine
months ended September 30, 2000 and 1999 was 34.1% and 34.7%, respectively.
Income taxes are provided in interim periods based on the estimated effective
tax rate expected to be applicable for the full fiscal year.

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

The table on page 14 shows the current and prior period amounts of non-
performing assets.  Non-performing assets were $2.0 million at September 30,
2000, compared to $1.2 million at December 31, 1999 and $2.1 million at
September 30, 1999.  The ratio of non-performing assets to total loans and other
real estate was 0.75% at September 30, 2000, compared to 0.50% at December 31,
1999 and 0.89% at September 30, 1999.  The control and monitoring of non-
performing assets continues to be a priority of management.

Loans past due 90 days or more and still accruing were $31,000 at September 30,
2000 compared to $44,000 at December 31, 1999 and $25,000 at September 30, 1999.

                                       11
<PAGE>

Additions to the allowance for loan losses are made periodically to maintain the
allowance at an appropriate level based upon management's analysis of potential
risk in the loan portfolio.  The amount of the loan loss provision is determined
by an evaluation of the level of loans outstanding, the level of non-performing
loans, historical loan loss experience, delinquency trends, the amount of actual
losses charged to the allowance in a given period, and an assessment of economic
conditions.  A provision for losses in the amount of $250,000 was charged to
expense for the quarter ended September 30, 2000 compared to $591,000 for the
quarter ended September 30, 1999.   At September 30, 2000, the ratio of
allowance for loan losses to total loans was 1.48% compared to 1.50% at December
31, 1999 and 1.47% at September 30, 1999.  The allowance for loan losses  was
slightly lower at September 30, 2000 compared to December 31, 1999 due to an
increase in charge-offs during the third quarter of 2000.  Management considers
the current allowance for loan losses appropriate based upon its analysis of the
potential risk in the portfolio, although there can be no assurance that the
assumptions underlying such analysis will continue to be correct.

Liquidity and Capital Resources
-------------------------------

The Company's liquidity remains adequate to meet operating and loan funding
requirements.  The loan to deposit ratio at September 30, 2000 was 90.14%
compared to 84.43% at December 31, 1999 and 86.99% at September 30, 1999.  The
increasing level of the loan to deposit ratio reflects that loans continue to
grow at a faster rate than deposits as noted previously.  As a result, the
Company has utilized borrowings from the Federal Home Loan Bank and securities
sold under repurchase agreements to fund additional growth. At September 30,
2000, the Company had an additional $7.0 million available on its advances from
the Federal Home Loan Bank.

Stockholders' equity to total assets was 8.53% at September 30, 2000 compared to
8.72% at December 31, 1999.  This decrease reflects the growth of the Company
during the first nine months of the year.  The capital of the Company and the
Bank exceeded all required regulatory guidelines at September 30, 2000.  The
Company's Tier 1 risk-based, total risk-based and the leverage capital ratios
were 11.48%, 12.74%, and 8.90%, respectively, at September 30, 2000.  The
schedule on page 15 reflects the current regulatory capital levels in more
detail, including comparisons to the regulatory minimums.

                                       12
<PAGE>

Effects of Inflation and Changing Prices
----------------------------------------

Inflation generally increases the cost of funds and operating overhead and to
the extent loans and other assets bear variable rates, the yields on such
assets.  Unlike most industrial companies, virtually all of the assets and
liabilities of a financial institution are monetary in nature.  As a result,
interest rates generally have a more significant impact on the performance of a
financial institution than the effects of general levels of inflation.  Although
interest rates do not necessarily move in the same direction and to the same
extent as the prices of goods and services, increases in inflation generally
have resulted in increased interest rates.  In addition, inflation can increase
a financial institution's cost of goods and services purchased, the cost of
salaries and benefits, occupancy expense and similar items.  Inflation and
related increases in interest rates generally decrease the market value of
investments and loans held and may adversely affect liquidity, earnings, and
stockholders' equity.  Mortgage originations and refinancings tend to slow as
interest rates increase, and can reduce the Company's earnings from such
activities and the income from the sale of residential mortgage loans in the
secondary market.

                                       13
<PAGE>

               GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                          CONSOLIDATED FINANCIAL DATA
                            (Dollars in Thousands)
                                  (Unaudited)

                                       Nine Months Ended September 30,
                                       ------------------------------
PROFITABILITY                            2000                  1999
-------------                          -------                -------

Return on average assets *                 1.04%                   1.25%

Return on average equity *                12.13%                  13.60%

ALLOWANCE FOR LOAN LOSSES
-------------------------

Beginning balance, January 1             $3,591                  $2,715
Provision charged to expense                748                   1,015
Recoveries                                   81                      70
Loans charged off                           416                     343
Ending balance, September 30             $4,004                  $3,457

NON-PERFORMING ASSETS  September 30, 2000  December 31, 1999  September 30, 1999
---------------------

Non-accrual loans        $2,000            $1,190             $2,082
Other real estate owned      17                17                 17
Restructured loans           --                --                 --
                         ------            ------             ------
Total non-performing     $2,017            $1,207             $2,099
assets
                         ======            ======             ======

LOANS PAST DUE 90 DAYS
OR MORE AND STILL
ACCRUING                 $   31            $   44             $   25
                         ======            ======             ======


* Annualized

                                       14
<PAGE>

<TABLE>
<CAPTION>
                      Georgia Bank Financial Corporation
                                      and
                         Georgia Bank & Trust Company
                        Regulatory Capital Requirements
                              September 30, 2000
                            (Dollars in Thousands)


                                               Actual                       Required                   Excess
                                        Amount        Percent           Amount     Percent         Amount    Percent
                                 ----------------------------    ---------------------------------------------------
<S>                                <C>          <C>                <C>          <C>            <C>         <C>
Georgia Bank Financial Corporation

Risk-based capital:
   Tier 1 capital                      $33,210          11.48%          11,571        4.00%        21,639       7.48%
   Total capital                        36,840          12.74%          23,142        8.00%        13,698       4.74%
Tier 1 leverage ratio                   33,210           8.90%          14,927        4.00%        18,283       4.90%


Georgia Bank & Trust Company
Risk-based capital:
   Tier 1 capital                      $30,908          10.76%          11,490        4.00%        19,418       6.76%
   Total capital                        34,504          12.01%          22,981        8.00%        11,523       4.01%
Tier 1 leverage ratio                   30,908           8.32%          14,857        4.00%        16,051       4.32%
</TABLE>


                                       15
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company has not provided quantitative and qualitative disclosures about
market risk as required by Item 305 of Regulations S-K because it has previously
met the requirements of a small business issuer. The Company will be required to
provide this disclosure for the year ending December 31, 2000 and interim
periods subsequent to that date.

                                       16
<PAGE>

                                    Part II
                               OTHER INFORMATION

Item 1.   Legal Proceedings

          There are no material pending legal proceedings to which the Company
          or any of its subsidiaries is a party or of which any of their
          property is subject.

Item 2.   Changes in Securities

          Not applicable

Item 3.   Defaults Upon Senior Securities

          Not applicable

Item 4.   Submission of Matters to a Vote of Security Holders

          None

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits

               3.1  Articles of Incorporation of the Company incorporated by
               reference from the Company's registration statement on Form SB-2
               filed August 20, 1997 (Registration No. 333-34037).

               3.2  Bylaws of the Company (Incorporated by reference to the
               Company's Form 10-SB, dated April 29, 1994).

               27.1  Financial Data Schedule

          (b)  Reports on Form 8-K

               None

                                       17
<PAGE>

                      GEORGIA BANK FINANCIAL CORPORATION
                             Form 10-Q Signatures

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

                              GEORGIA BANK FINANCIAL CORPORATION



Date:      November 9, 2000        By:    /s/ Ronald L. Thigpen              .
           ----------------          -----------------------------------------
                                   Ronald L. Thigpen
                                   Executive Vice President, Chief
                                   Operating Officer (Duly Authorized
                                   Officer of Registrant and Principal
                                   Financial Officer)



                                       18