<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                  FORM 10-QSB

(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, 1997
                                    -------------------

---  Transition report under Section 13 or 15(d) of the Exchange Act
     For the transition period from                 to 
                                    ---------------    ----------------

                         Commission File No.  0-28280


                         GREATER ROME BANCSHARES, INC.
                         -----------------------------
       (Exact Name of Small Business Issuer as Specified in its Charter)


               Georgia                            58-2117940
               --------                           ----------
       (State of Incorporation)     (I.R.S. Employer Identification No.)


       P.O. Box 5271, 1490 Martha Berry Blvd., Rome, Georgia 30162-5271
       ----------------------------------------------------------------
                   (Address of Principal Executive Offices)


                                (706) 295-9300
                                --------------
               (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
    -----    -----

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

  700,000 shares of common stock, $.01 par value per share, were issued and
outstanding as of October 28, 1997.

  Transitional Small Business Disclosure Format (check one):  Yes      No  X
                                                                  ---     ---


                                                               Total Pages:
<PAGE>
 
                                    PART I
                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

The unaudited financial statements of Greater Rome Bancshares, Inc. (the
"Company") are set forth on the following pages.  All adjustments have been made
which, in the opinion of management, are necessary in order to make the
financial statements not misleading.


                                                                               2
<PAGE>
                 GREATER ROME BANCSHARES, INC. and subsidiary

                          Consolidated Balance Sheets
                                  (Unaudited)
                   September 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
                                    Assets
                                    ------
                                                                   1997               1996
                                                               -----------        -----------
<S>                                                            <C>                <C>
Cash and due from banks                                        $ 1,256,764            764,891
Federal funds sold                                               2,293,055          4,058,912
                                                               -----------        -----------
  Cash and cash equivalents                                      3,549,819          4,823,803

Securities available for sale                                    2,934,653          1,489,375
  (amortized cost of $2,934,451 and $1,487,715)
Securities held to maturity                                      5,602,475          4,748,925
  (market value $5,576,765 and $4,722,155)

Loans                                                           26,810,414         13,228,943
Allowance for loan losses                                         (387,444)          (133,342)
                                                               -----------        -----------
  Net loans                                                     26,422,970         13,095,601

Premises and equipment, net                                      2,310,213          2,099,035
Accrued interest receivable and other assets                       348,220            251,902
                                                               -----------        -----------
                                                               $41,168,350         26,508,641
                                                               ===========        ===========
                     Liabilities and Stockholders' Equity
                     ------------------------------------
Deposits:
  Demand                                                       $ 4,463,315          3,006,709
  Interest bearing demand                                        2,585,654          1,692,466
  Savings                                                        4,604,824          3,479,435
  Time                                                          20,059,659         11,665,926
                                                               -----------        -----------
    Total deposits                                              31,713,452         19,844,536

Federal Home Loan Bank advances                                  3,000,000                  -
Accrued interest payable and other liabilities                     169,783            286,148
                                                               -----------        -----------
    Total liabilities                                           34,883,235         20,130,684

Commitments

Stockholders' equity:
  Preferred stock, par value $1.00 per share; 100,000 shares
    authorized; no shares issued or outstanding
  Common stock, par value $.01 per share; 10,000,000
    shares authorized; 700,000 shares issued and
    outstanding                                                      7,000              7,000
  Additional paid-in capital                                     6,930,117          6,930,117
  Accumulated deficit                                             (652,204)          (560,820)
  Unrealized gain/(loss) on securities available for sale              202              1,660
                                                               -----------        -----------
    Total stockholder's equity                                   6,285,115          6,377,957
                                                               -----------        -----------
                                                               $41,168,350         26,508,641
                                                               ===========        ===========
 </TABLE>

See accompanying notes to consolidated financial statements.
                                                                               3
<PAGE>
                 GREATER ROME BANCSHARES, INC. and subsidiary

                     Consolidated Statements of Operations
                                  (Unaudited)
    For each of the Nine and Three Months Ended September 30, 1997 and 1996

<TABLE>
<CAPTION>
                                                          Nine Months        Nine Months     Three Months    Three Months
                                                             Ended              Ended            Ended          Ended
                                                         Sep 30, 1997       Sep 30, 1996     Sep 30, 1997    Sep 30, 1996
                                                         ------------       ------------     ------------    ------------
<S>                                                      <C>                <C>              <C>             <C>
Interest income on:
  Federal funds sold and deposits with other banks        $   75,363           135,856           11,451          32,049
  Investment securities                                      349,394           193,125          123,084          82,214
  Loans, including loan fees                               1,526,258           309,586          637,627         209,669
                                                          ----------          --------          -------         -------
          Total interest income                            1,951,015           638,567          772,162         323,932
                                                          ----------          --------          -------         -------
Interest expense on deposits:
  Demand                                                      42,120            16,050           13,196           8,317
  Savings                                                    117,062            44,702           44,799          24,870
  Time                                                       659,459            91,052          267,543          62,336
Interest expense on other borrowings                          30,092                 -           17,082               -
                                                          ----------          --------          -------         -------
          Total interest expense                             848,733           151,804          342,619          95,523
                                                          ----------          --------          -------         -------

          Net interest income                              1,102,282           486,763          429,543         228,409
Provision for loan losses                                    271,968            77,000          106,900          46,593
                                                          ----------          --------          -------         -------
          Net interest income after provision                830,314           409,763          322,643         181,816

Non-interest income                                          110,725            23,431           48,904          14,222

Salaries and employee benefits                               551,178           380,505          194,523         145,395
Occupancy and equipment expense                              175,321           114,957           60,054          46,267
Other operating                                              305,924           226,117          111,140          86,052
                                                          ----------          --------          -------         -------
          Total non-interest expenses                      1,032,423           721,579          365,717         277,714
                                                          ----------          --------          -------         -------
          Net income (loss)                               $  (91,384)         (288,385)           5,830         (81,676)
                                                          ==========          ========          =======         =======
          Net income (loss) per common share              $    (0.13)            (0.41)            0.01           (0.12)
                                                          ==========          ========          =======         =======
Weighted average number of shares outstanding                700,000           700,000          700,000         700,000
                                                          ==========          ========          =======         =======
</TABLE>

See accompanying notes to consolidated financial statements.
                                                                               4
<PAGE>
                 GREATER ROME BANCSHARES, INC. and subsidiary

                     Consolidated Statements of Cash Flows
                                  (Unaudited)
         For each of the Nine Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
                                                                                    1997              1996
                                                                                ------------       -----------
<S>                                                                             <C>                <C>
Cash flows from operating activities:
  Net loss                                                                      $    (91,384)         (288,385)
  Adjustments to reconcile net loss to net cash
   used by operating activities:
   Depreciation, amortization and accretion                                          101,067            44,321
   Provision for loan losses                                                         271,968            77,000
   Change in:
     Interest receivable and other assets                                           (105,382)         (115,090)
     Interest payable and other liabilities                                         (116,365)          (24,705)
                                                                                ------------       -----------
   Net cash (used in) provided by operating activities                                59,904          (306,859)

Cash flows from investing activities:
  Purchases of securities available for sale                                      (1,442,614)       (1,245,853)
  Purchases of securities held to maturity                                        (1,377,762)       (3,248,014)
  Proceeds from maturities and calls of securities held to maturity                  524,655                 -
  Net increase in loans                                                          (13,599,337)      (10,224,609)
  Purchases of premises and equipment                                               (307,745)       (1,149,698)
                                                                                ------------       -----------
   Net cash used by investing activities                                         (16,202,803)      (15,868,174)

Cash flows from financing activities:
  Net change in demand and savings deposits                                        3,475,182         6,692,855
  Net change in time deposits                                                      8,393,733         5,461,355
  Net change in borrowings                                                         3,000,000                 -
                                                                                ------------       -----------
   Net cash provided by financing activities                                      14,868,915        12,154,210

Change in cash and cash equivalents                                               (1,273,984)       (4,020,823)

Cash and cash equivalents at beginning of period                                   4,823,803         5,423,506
                                                                                ------------       -----------
Cash and cash equivalents at end of period                                      $  3,549,819         1,402,683
                                                                                ============       ===========
Supplemental disclosures of cash flow information:
  Cash paid for interest                                                        $    817,856           133,294

  Change in unrealized gain/(loss) on securities available for sale             $     (1,458)              241

</TABLE>

See accompanying notes to consolidated financial statements.
                                                                               5

<PAGE>
 
                  GREATER ROME BANCSHARES, INC. and subsidiary
                   Notes to Consolidated Financial Statements
                                  (Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Organization
   ------------

   Greater Rome Bancshares, Inc. (the "Company") is a bank holding company whose
   business is conducted by its wholly owned bank subsidiary, Greater Rome Bank
   (the "Bank"). The Company is subject to regulation under the Bank Holding
   Company Act of 1956.

   The Bank is a commercial bank that serves Rome, Georgia, a community located
   approximately 50 miles north of metropolitan Atlanta, and surrounding Floyd
   County. The Bank is chartered and regulated by the State of Georgia
   Department of Banking and Finance and is insured and subject to regulation by
   the Federal Deposit Insurance Corporation.

   Operations of the Company for the period from inception (June 17, 1994) to
   February 26, 1996 related primarily to expenditures by the organizers for
   incorporating and organizing the Bank including raising capital and securing
   banking facilities.

   Basis of Presentation and Reclassification
   ------------------------------------------

   The accounting principles followed by Greater Rome Bancshares, Inc. and its
   subsidiary, and the methods of applying these principles, conform with
   generally accepted accounting principles ("GAAP") and with general practices
   within the banking industry. In preparing financial statements in conformity
   with GAAP, management is required to make estimates and assumptions that
   affect the reported amounts in the financial statements. Actual results could
   differ significantly from those estimates. Material estimates common to the
   banking industry that are particularly susceptible to significant change in
   the near term include, but are not limited to, the determination of the
   allowance for loan losses and the valuation of real estate acquired in
   connection with or in lieu of foreclosure on loans.

   Cash and Cash Equivalents
   -------------------------

   For presentation purposes in the consolidated statements of cash flows, cash
   and cash equivalents include cash on hand, amounts due from banks, interest-
   bearing deposits with banks and federal funds sold.

   Investment Securities
   ---------------------

   The Company classifies its securities in one of three categories: trading,
   available for sale, or held to maturity.  Trading securities are bought and
   held principally for sale in the near term.  Held to maturity securities are
   those securities for which the Company has the ability and intent to hold the
   security until maturity.  All other securities not included in trading or
   held to maturity are classified as available for sale.  The Company's current
   investment policy prohibits trading activity.

   Held to maturity securities are recorded at cost, adjusted for the
   amortization or accretion of premiums or discounts. Transfers of securities
   between categories are recorded at fair value at the date of transfer.
   Unrealized holding gains or losses associated with transfers of securities
   from held to maturity to available for sale are recorded as a separate
   component of stockholders' equity.

   Available for sale securities consist of investment securities not classified
   as trading securities or held to maturity securities and are recorded at fair
   value. Unrealized holding gains and losses, net of the related tax effect, on
   securities available for sale are excluded from earnings and are reported as
   a separate component of stockholders' equity until realized.

                                                                               6
<PAGE>
 
   A decline in the market value of any available for sale or held to maturity
   investment below cost that is deemed other than temporary is charged to
   earnings and establishes a new cost basis for the security.

   Premiums and discounts are amortized or accreted over the life of the related
   security as an adjustment to the yield. Realized gains and losses for
   securities classified as available for sale and held to maturity are included
   in earnings and are derived using the specific identification method for
   determining the cost of securities sold.

   Loans, Loan Fees and Interest Income
   ------------------------------------

   Loans that management has the intent and ability to hold for the foreseeable
   future or until maturity are reported at the principal amount outstanding,
   net of the allowance for loan losses and any deferred fees or costs on
   originated loans. Interest on all loans is calculated principally by using
   the simple interest method on the daily balance of the principal amount
   outstanding.

   The Bank accounts for impaired loans in accordance with Statement of
   Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
   Impairment of a Loan" as amended by SFAS No. 118, "Accounting by Creditors
   for Impairment of a Loan - Income Recognition and Disclosure." A loan is
   impaired when, based on current information and events, it is probable that
   all amounts due according to the contractual terms of the loan agreement will
   not be collected. Impaired loans are measured based on the present value of
   expected future cash flows discounted at the loan's effective interest rate,
   or at the loan's observable market price, or at the fair value of the
   collateral of the loan if the loan is collateral dependent. Interest income
   from impaired loans is recognized using a cash basis method of accounting
   during the time within that period in which the loans were impaired.

   Allowance for Loan Losses
   -------------------------

   The Bank's provision for loan losses is based upon management's continuing
   review and evaluation of the loan portfolio and is intended to create an
   allowance adequate to absorb losses on loans outstanding as of the end of
   each reporting period. For individually significant loans, management's
   review consists of evaluations of the financial strength of the borrowers and
   the related collateral. The review of groups of loans, which are individually
   insignificant, is based upon delinquency status of the group, lending
   policies, and collection experience.

   Management believes that the allowance for loan losses is adequate. While
   management uses available information to recognize losses on loans, future
   additions to the allowance may be necessary based on changes in economic
   conditions. In addition, various regulatory agencies, as an integral part of
   their examination process, periodically review the allowance for loan losses.
   Such agencies may require the Bank to recognize additions to the allowance
   based on their judgments of information available to them at the time of
   their examination.

   Premises and Equipment
   ----------------------

   Premises and equipment are stated at cost less accumulated depreciation.
   Major additions and improvements are charged to the asset accounts while
   maintenance and repairs that do not improve or extend the useful lives of the
   assets are expensed currently. When assets are retired or otherwise disposed
   of, the cost and related accumulated depreciation are removed from the
   accounts, and any gain or loss is reflected in earnings for the period.

   Depreciation expense is computed using the straight-line method over the
   following estimated useful lives:

          Buildings                            40 years
          Land improvements                    20 years
          Furniture, fixtures and equipment    3 - 7 years

                                                                               7
<PAGE>
 
   Income Taxes
   ------------

   Deferred tax assets and liabilities are recorded for the future tax
   consequences attributable to differences between the financial statement
   carrying amounts of existing assets and liabilities and their respective tax
   bases. Future tax benefits, such as net operating loss carryforwards, are
   recognized to the extent that realization of such benefits is more likely
   than not. Deferred tax assets and liabilities are measured using enacted tax
   rates expected to apply to taxable income in the years in which the assets
   and liabilities are expected to be recovered or settled. The effect on
   deferred tax assets and liabilities of a change in tax rates is recognized in
   income tax expense in the period that includes the enactment date.
 
   In the event the future tax consequences of differences between the financial
   reporting bases and the tax bases of the Company's assets and liabilities
   results in deferred tax assets, an evaluation of the probability of being
   able to realize the future benefits indicated by such asset is required. A
   valuation allowance is provided for the portion of the deferred tax asset
   when it is more likely than not that some portion or all of the deferred tax
   asset will not be realized. In assessing the realizability of the deferred
   tax assets, management considers the scheduled reversals of deferred tax
   liabilities, projected future taxable income, and tax planning strategies.

   Net Income or Loss Per Share
   ----------------------------

   Net income or loss per share is based on the weighted average number of
   shares actually outstanding during each period. Stock options are considered
   to be common stock equivalents.  These options are not included in the
   computation of net income or loss per share as the effect of inclusion is
   anti-dilutive or is not material.

   Recent Accounting Pronouncements
   --------------------------------

   During 1997, the Financial Accounting Standards Board has issued Statement of
   Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128).
   SFAS 128 simplifies current standards by eliminating the presentation of
   primary earnings per share and requiring the presentation of basic earnings
   per share (EPS), which includes no potential common shares and thus no
   dilution.  The Statement also requires entities with complex capital
   structures to present basic and diluted EPS on the face of the income
   statement and also eliminates the modified treasury stock method of computing
   potential common shares.  The Statement is effective for financial statements
   issued for periods ending after December 15, 1997.  Early application is not
   permitted.  Upon adoption, restatement of all prior-period EPS data presented
   is required.  Based upon the current capital structure of the Company, this
   Statement should have no effect on the present EPS calculation.

                                                                               8
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

FINANCIAL CONDITION

As of September 30, 1997, the Company had concluded nineteen months of banking
operations with $41.2 million in total assets, up $14.7 million over year end
1996. Total deposits had increased $11.9 million over year end to $31.7 million.
Total loans outstanding had increased $13.6 million over year end to $26.8
million. The Bank's loan-to-deposit ratio at September 30, 1997 was 84.5%, as
compared to 66.7% at year end 1996 and 84.6% at the end of the prior quarter.
The Bank has continued to benefit from strong loan demand in the local market,
which has produced steady loan growth over the first three quarters of 1997.
Deposit growth, although strong, has not kept pace with loan demand, despite
competitively priced investment products and banking services.

The equity markets continue to be perceived as producing better investment
results than bank products. Local deposit dollars (similar to the national bank
deposit markets) are being diverted from insured bank deposits to mutual funds
and other forms of equity investments. In the current market environment,
management has found that the Bank can borrow term funds from wholesale
resources, such as the Federal Home Loan Bank, at rates which are less than the
cost of local certificates of deposit. As a result, in the second quarter, the
Bank's Asset/Liability Management Committee changed certain of the financial
guidelines in its policies, to make funding sources other than local market
deposits more acceptable. Management will be placing less emphasis on the Bank's
loan-to-deposit ratio, and more emphasis on the Bank's loan-to-asset ratio and
net-non-core-fund-dependence ratio. The net-non-core-fund-dependence ratio
calculates the percentage of long term earning assets that are funded by short
term borrowed funds and certificates greater than one hundred thousand dollars
after deducting the Bank's short-term investments. This shift in emphasis should
allow the Bank to continue to meet the local market's credit demands and provide
the flexibility to obtain funding from various sources at optimum rates. While
this policy shift opens up greater funding flexibility, in the long run the Bank
will continue to place primary funding emphasis on local deposit growth. At
September 30, 1997, the Bank's loan-to-asset ratio was 65.6%, up from 50.5% at
year end 1996 and down from the prior quarter end at 67.8%. The Bank's net-non-
core-fund-dependence ratio was 6.85%, up from 0.3% at year end 1996 and down
from the prior quarter end at 13.7%. The reduction in this ratio from the prior
quarter end was due to the $2.7 million increase in short term investments and
$550,000 reduction in short term borrowings.

CAPITAL

At September 30, 1997, the Bank's capital position was in excess of FDIC
guidelines to qualify as "well capitalized". Based on the level of the Bank's
risk weighted assets at quarter end, the Bank had $3.4 million more capital than
necessary to satisfy the "well-capitalized" criteria. The Bank's capital
adequacy is monitored quarterly by the Bank's Asset/Liability Committee, as
asset and liability growth, mix and pricing strategies are developed.

LIQUIDITY

The Bank's internal and external liquidity resources are considered by
management to be adequate to handle expected growth and normal cash flow demands
from existing deposits and loans. For the nine months ended September 30, 1997,
loan growth exceeded deposit growth by $1.7 million. Securities held to maturity
increased $900 thousand over year end to $5.6 million, and the securities
available for sale increased $1.4 million to $2.9 million. Investment securities
were purchased in order to improve the yield on the Bank's internal liquidity
resources. U.S. Treasury and government agency securities with final maturities
under five years were purchased with yields 75 to 100 basis points greater than
Federal funds sold at the time of purchase. At September 30, 1997, the average
life of the Bank's security portfolio was 2.6 years with an average yield of
6.22%.

                                                                               9
<PAGE>
 
During the third quarter of 1997, the Bank borrowed $3 million from the Federal
Home Loan Bank ("FHLB") of Atlanta to improve its cost of funds and to improve
its interest rate risk exposure. One million dollars were borrowed at a fixed
rate of 5.93% for one year maturing in July of 1998. Two million dollars were
borrowed at a fixed rate of 5.66% for five years maturing in September 2002,
with a one-time call option in September 1999. These borrowings are secured by
first mortgage real estate loans, which are assigned to the FHLB. In comparison,
during the third quarter of 1997, the Bank paid more than 6.0% for one year time
deposits in the local market and more than 6.2% for two year time deposits in
the local market. The Bank's interest rate risk is improved with this longer
term, fixed rate funding. The Bank has over $7 million in loans, which reprice
from three to five years beyond September 30, 1997.

Net deposit growth, federal funds sold and marketable securities provide the
primary liquidity resource for loan disbursements and Bank working capital. The
Bank's investment securities portfolio provides liquidity in the form of
financing through master repurchase agreements executed with the Bank's
correspondent banks. At quarter end the funds available for liquidity purposes
consisted of $8.0 million in securities (eligible for sale under repurchase
agreements), plus Federal funds sold of $2.3 million, for a total of $10.3
million. Under these repurchase agreements, margin requirements range from 3% to
10% of the current market value of the underlying security, and the borrowing
rate tends to have a spread of approximately 25 to 40 basis points over the
Federal funds sold rate. The repurchase agreements allow the Bank to raise funds
out of its total securities portfolio without being forced to sell the
securities and recognize gains or losses as a result of the sale. In addition to
these sources of funds, the Bank has unsecured Federal funds purchase lines of
credit totaling $3.0 million, all of which were available at September 30, 1997.
The correspondent banks may revoke these lines at any time.

Given the potential need to use its securities to raise liquidity, the Bank's
current investment practices limit securities to final maturities not exceeding
five years from the date of purchase settlement and to U.S. Treasuries and
triple A rated government agency securities.

The Bank became a member of the Federal Home Loan Bank of Atlanta in June of
1997. FHLB membership provides an additional source of liquidity through credit
programs, which can provide term funding for up to 10 years and, in certain
qualified programs, up to 20 years. The Bank's first mortgage loans are assigned
as collateral for such financing. The Bank has $5.7 million in eligible
residential first mortgage loans that have been assigned to the FHLB. These
loans provide approximately $4.4 million in lendable value, $3 million of which
is already used. The Bank also has $7.0 million in commercial first mortgage
loans that may qualify as collateral for advances with the FHLB.

Management monitors its liquidity position daily and the officers' loan
committee reviews a liquidity management report on a weekly basis, which
reflects the Bank's results against policy guidelines and the Bank's unfunded
commitments and capital position. The reports reflect funding capacity
projections based on capital limits and policy limits assuming no further local
market deposit growth (a worst case scenario). As of September 30, 1997, the
Bank had unfunded loan commitments, primarily on commercial lines of credit,
totaling $3.9 million.

The Bank intends to manage its loan growth such that deposit flows will provide
the primary funding for all loans as well as cash reserves for working capital
and short to intermediate term marketable investments. Management will continue
to seek cost effective alternative funding sources for both the short and long
term, in the event that local deposit growth does not keep pace with local loan
demand. Such funding sources may include institutional certificates of deposit
("CD's"), local market CD's and brokered CD's.

                                                                              10
<PAGE>
 
RESULTS OF OPERATIONS

The Company had a net loss of $91,384 ($0.13 per share) for the nine months
ended September 30, 1997 and net income of $5,831 ($0.01 per share) for the
third quarter of 1997. This compares to a net loss of $288,385 ($0.41 per share)
for the nine months ended September 30, 1996 and a net loss of $81,676 ($0.12
per share) for the third quarter of 1996. The third quarter of 1997 is the first
quarter in which the Bank has produced an operating profit since inception.

Net interest income increased from $486,763 for the nine months ended September
30, 1996 to $1,102,282 for the nine months ended September 30, 1997. This was
due to the increase in average earning assets from $11.7 million for 1996 to
$29.7 million for 1997 and the improvement in the earning asset mix. For 1997,
average loans comprised 68% of average earning assets. For 1996, average loans
were only 36% of average earning assets. The high growth rate in earning assets
and the significant improvement in earning asset mix are primarily due to the
fact that the Bank opened for business on February 26, 1996. Prior to that date
the Bank had no loans and no deposits. The net yield on average earning assets,
before the provision for loan losses, was 4.96% for 1997. This compares to 5.55%
for 1996. The higher yield for 1996 was primarily due to the lower funding cost
associated with almost 70% of average earning assets being funded by the Bank's
capital and non-interest bearing deposits. For 1997, 23% of average earning
assets were funded by capital and non-interest bearing deposits.

The provision for loan losses was $271,968 for the nine months ended September
30, 1997, up from $77,000 in the same period last year. Third quarter 1997 was
$106,900, up from $46,593 for the same period last year. This increase was due
to the growth in the Bank's loan portfolio. At September 30, 1997 the allowance
for loan losses was $387,444 representing 1.45% of total loans. At year end
1996, the allowance was $133,342, which was 1.00% of total loans. Total loans
charged off, net of recoveries, for the nine months ended September 30, 1997
were $17,866 (0.09% of average loans outstanding) and were all consumer loans.
At quarter end, the Bank had 15 loans totaling $79,708 in non-accrual status,
all of which were consumer loans. Other than non-accrual loans, no loans were in
a past-due status more than 90 days. The Bank had no troubled debt
restructurings. For the same periods last year, the Bank had no charged off
loans, no non-accrual loans and no loans past-due more than 90 days.

Management takes a number of factors into consideration when determining the
additions to be made to the loan loss allowance. Since the Bank has just
concluded its first nineteen months of operations, it does not have sufficient
history in its portfolio performance on which to base additions. Accordingly,
additions to the reserve are primarily based on achieving a targeted ratio for
the allowance for loan losses to total loans of 1.50% by the end of 1997. This
target is based on national peer group ratios and Georgia banking industry
ratios. Under this methodology, charge-offs will increase the amount of
additions to the allowance and recoveries will reduce additions.

In addition, management performs an on-going loan review process. All new loans
are risk rated under loan policy guidelines. On a monthly basis, the composite
risk ratings are evaluated in a model that assesses the adequacy of the current
allowance for loan losses, and this evaluation is presented to the Board of
Directors each month. On a weekly basis, loan reviews are performed on new loans
and presented in the officers' weekly loan meeting. Large loans are reviewed
periodically. Risk ratings may be changed if it appears that new loans may not
have received the proper initial grading or, if on existing loans, credit
conditions have improved or worsened.

The Bank's policy is to place loans on non-accrual status when it appears that
the collection of principal and interest in accordance with the terms of the
loan is doubtful. Any loan that becomes 90 days past due as to principal or
interest is automatically placed on non-accrual.

                                                                              11
<PAGE>
 
As the Bank matures, the additions to the loan loss allowance will be based more
on historical performance, the detailed loan review and allowance adequacy
evaluation. Management expects to incur losses on loans from time to time when
borrowers' financial conditions deteriorate. Where feasible, loans charged down
or charged off will continue to be collected. Management considers the quarter
end allowance adequate to cover potential losses in the loan portfolio.

Non-interest income for the nine months ended September 30, 1997 was $110,725
($48,904 for the third quarter of 1997), up from $23,431 ($14,222 for the third
quarter of 1996) for the same period of 1996. This consists primarily of service
charges on deposit accounts totaling $67,191 ($25,865 for the third quarter) and
credit life and disability insurance income which was $14,826 ($4,950 for the
third quarter). Non-interest income was significantly greater for 1997 over the
same period for 1996 due to the opening of the Bank on February 26,1996. No
deposit or loan accounts were opened prior to that date. Service charges on
deposit accounts are evaluated annually against service charges from other banks
in the local market and against the Bank's own cost structure in providing the
deposit services. This income should grow with the growth in the Bank's demand
deposit account base. The credit life and disability insurance is sold primarily
on consumer installment debt and should grow with the growth in the Bank's
consumer loan portfolio.

Non-interest expenses increased $310,843 or 43% to $1,032,422 for the nine
months ended September 30, 1997 over the same period in 1996. For the third
quarter of 1997 non-interest expenses increased $88,003 or 32% to $365,716 over
the third quarter of 1996. Average earning assets for the nine months ended
September 30, 1997 increased $18.0 million or 154% to $29.7 million over the
same period in 1996. This indicates that the Bank's operating efficiencies
continue to improve. Part of this increase in expenses is due to the fact that
the Bank was operational only seven months out of the first nine months of 1996.

Salaries and benefits for the nine months ended September 30, 1997 increased
170,673 or 45% to $551,178 over the same period in 1996. This is due primarily
to the growth in the number of full-time-equivalent employees from 14 in the
first quarter of 1996 to 23 in the third quarter of 1997. Occupancy costs for
the nine months ended September 30, 1997 increased by $60,364 or 53% to $175,321
over the same period in 1996. In the fourth quarter of 1996, the Bank moved from
modular office units, containing 2,600 square feet of leased office space and
leased furniture, to its newly constructed bank building containing 9,000 square
feet of office space as well as purchased furniture, fixtures and equipment.
Other operating expenses increased $79,806 or 35% to $305,923 over the same
period in 1996. The nine months ended September 30, 1997 included expenses for a
full nine months necessary to the operations of an established bank, such as
data processing services, business development and marketing expenses,
professional fees, postage and communications costs. The same period in 1996
included banking operations for seven months, as the Bank was just becoming
operational. As noted above, the Bank's average earning assets in the nine
months ended September 30, 1997 increased $18.0 million or 154% to $29.7
million, over four times the growth rate of other operating expenses. Management
continues to focus on improving operating expense efficiencies, through the use
of current banking technologies, out-sourcing solutions and human resource
training and development.

INTEREST RATE SENSITIVITY

Improvement in the earnings of the Company depends upon continued earning asset
growth, good asset quality and a relatively stable economic environment.
Management feels it is reasonable for the Bank to continue to experience steady
earning asset growth as long as interest rates remain relatively stable. The
Bank is liability sensitive out to the one year time horizon (meaning that
falling rates tend to be beneficial) and asset sensitive (meaning that rising
rates tend to be beneficial) in the long term. If interest rates were to rise in
excess of 200 basis points, the Bank could experience reduced earnings in the
near term, and such a rate increase might significantly reduce the demand for
loans in the Bank's local market, thus diminishing the prospects for improved
earnings. If interest rates were to fall in excess of 200 basis points, the Bank
could 

                                                                              12
<PAGE>
 
experience a short term increase in net interest margin but may have difficulty
retaining maturing certificates of deposit without having to pay above market
rates.

The Asset/Liability Committee monitors the Bank's exposure to interest rate risk
on a quarterly basis. As of its most recent review, the effect of an immediate
and simultaneous change in interest rates, either up or down by 200 basis
points, was estimated to have less than a 10% impact on current net interest
income over the next twelve months. This estimate assumes that all repricing
assets and liabilities will be replaced by similar term instruments.


                                    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 the subject.

ITEM 2.  CHANGES IN SECURITIES.

         (a) Not applicable.

         (b) 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) The following documents are filed as part of this report:

3.1    Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to
       the Company's Registration Statement No. 33-82858 on Form SB-2).

3.2    Bylaws (Incorporated by reference to Exhibit 3.2 to the Company's
       Registration Statement No. 33-82858 on Form SB-2).

4.1    Provisions of Company's Articles of Incorporation and Bylaws Defining the
       Rights of Shareholders (Incorporated by reference to Exhibit 4.1 to the
       Company's Registration Statement No. 33-82858 on Form SB-2).

4.2    Form of Stock Certificate (Incorporated by reference to Exhibit 4.2 to
       the Company's Registration Statement No. 33-82858 on Form SB-2).

                                                                              13
<PAGE>
 
10.1   *Employment Agreement between the Company and Thomas D. Caldwell, III
        dated September 1, 1997.

10.2   *Greater Rome Bancshares, Inc. 1996 Stock Incentive Plan (Incorporated by
        reference to the Company's Annual Report on Form 10-KSB for the year
        ended December 31, 1995).

10.3   *Form of Incentive Stock Option Agreement (Incorporated by reference to
        the Company's Annual Report on Form 10-KSB for the year ended December
        31, 1996).

10.4   *Form of Stock Option Award to Non-employee Directors (Incorporated by
        reference to Appendix A to the Company's Proxy Statement for the 1997
        Annual Meeting of the Shareholders held May 15, 1997).

10.5   *Employment Agreement between the Company and E. Grey Winstead, III dated
        September 1, 1997.

27.1    Financial Data Schedule (for S.E.C. use only).

------------
* Indicates a management contract or compensatory arrangement.

(b) Reports on Form 8-K
    -------------------

    No reports on Form 8-K were filed during the quarter ended September 30,
1997.

                                                                              14
<PAGE>
 
                                 SIGNATURES

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

                                       GREATER ROME BANCSHARES, INC.



Date:  November 5, 1997                By: /s/ Thomas D. Caldwell, III
                                           ---------------------------
                                           Thomas D. Caldwell, III
                                           President, Chief Executive Officer

 
                                       By: /s/ E. Grey Winstead, III
                                           -------------------------
                                           E. Grey Winstead, III
                                           Principal Financial and 
                                           Accounting Officer

                                                                              15
<PAGE>
 
                         GREATER ROME BANCSHARES, INC.
          Form 10-QSB for the quarterly period ended September 30,1997

                               INDEX TO EXHIBITS
 
Exhibit                                                              Sequential
Number                       Description                                Page
-------  ----------------------------------------------------------  ----------
 
3.1      Articles of Incorporation (Incorporated by reference to 
         Exhibit 3.1 to the Company's Registration Statement 
         No. 33-82858 on Form SB-2).                                    N/A
 
3.2      Bylaws (Incorporated by reference to Exhibit 3.2 to the 
         Company's Registration Statement No. 33-82858 
         on Form SB-2).                                                 N/A

4.1      Provisions of Company's Articles of Incorporation and 
         Bylaws Defining the Rights of Shareholders (Incorporated 
         by reference to Exhibit 4.1 to the Company's Registration 
         Statement No. 33-82858 on Form SB-2).                          N/A

4.2      Form of Stock Certificate (Incorporated by reference to 
         Exhibit 4.2 to the Company's Registration Statement 
         No. 33-82858 on Form SB-2).                                    N/A

10.1     *Employment Agreement between the Company and 
          Thomas D. Caldwell, III dated September 1, 1997.

10.2     *Greater Rome Bancshares, Inc. 1996 Stock Incentive Plan 
          (Incorporated by reference to the Company's Annual Report 
          on Form 10-KSB for the year ended December 31, 1995).         N/A

10.3     *Form of Incentive Stock Option Agreement (Incorporated 
          by reference to the Company's Annual Report on 
          Form 10-KSB for the year ended December 31, 1996).            N/A

10.4     *Form of Stock Option Award to Non-employee Directors 
          (Incorporated by reference to Appendix A to the 
          Company's Proxy Statement for the 1997 Annual
          Meeting of the Shareholders held May 15, 1997).               N/A

10.5     *Employment Agreement between the Company and 
          E. Grey Winstead, III dated September 1, 1997.

27.1     Financial Data Schedule (for S.E.C. use only).
------------
* Indicates a management contract or compensatory arrangement.

                                                                              17