<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              ---------------------

                                  FORM 10-KSB

                 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934.

                  For the fiscal year ended December 31, 2002

                [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                         OF THE SECURITIES ACT OF 1934.

             For the transition period from _________ to _________

                       Commission File Number: 333-19081

                               GBC BANCORP, INC.
         --------------------------------------------------------------
                 (Name of small business issuer in its charter)

                GEORGIA                                 58-2265327
----------------------------------------    ------------------------------------
   (State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
    Incorporation or Organization)


             165 Nash Street
         Lawrenceville, Georgia                             30045
----------------------------------------    ------------------------------------
(Address of Principal Executive Offices)                 (Zip Code)

                                 (770) 995-0000
                           ---------------------------
                           (Issuer's Telephone Number,
                              Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act: None*


          *The issuer filed a Registration Statement on Form SB-2 (Registration
No. 333-19081) effective pursuant to the Securities Act of 1933, as amended, on
April 16, 1997. Accordingly, the Issuer files this report pursuant to Section
15(d) of the Securities Exchange Act of 1934, as amended, and Rule 15d-1 of the
regulations thereunder.

         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 [ ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         The Issuer's revenues for the fiscal year ended December 31, 2002, were
$12,107,683.

         The aggregate market value of the voting and nonvoting common equity
held by persons other than directors and executive officers of the Registrant as
of March 15, 2003, was $19,538,470, based on a private sale price of $14.00 per
share.

         There were 1,711,083 shares of the Registrant's common stock
outstanding as of March 15, 2003.

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

                       DOCUMENT INCORPORATED BY REFERENCE

         Portions of the Proxy Statement for the 2003 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission within 120
days of the Registrant's 2002 fiscal year end are incorporated by reference into
Part III of this Report.



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                                TABLE OF CONTENTS

<TABLE>
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                                                                                                                PAGE
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<S>                                                                                                             <C>
PART I............................................................................................................1

     ITEM 1.    DESCRIPTION OF BUSINESS...........................................................................1
     ITEM 2.    DESCRIPTION OF PROPERTY..........................................................................10
     ITEM 3.    LEGAL PROCEEDINGS................................................................................10
     ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............................................10
PART II..........................................................................................................10
     ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........................................10
     ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........................................11
     ITEM 7.    FINANCIAL STATEMENTS.............................................................................25
     ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.............26
PART III.........................................................................................................26
     ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
                OF THE EXCHANGE ACT..............................................................................26
     ITEM 10.   EXECUTIVE COMPENSATION...........................................................................26
     ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS...26
     ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................27
     ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K.................................................................27
     ITEM 14.   CONTROLS AND PROCEDURES..........................................................................27
</TABLE>

                                      -i-

<PAGE>

                                     PART I

ITEM 1.       DESCRIPTION OF BUSINESS

GBC BANCORP

         We were organized in August 1996 as a Georgia corporation for the
purpose of acquiring all of the common stock of Gwinnett Banking Company, a
Georgia bank that opened for business in October 1997 (the "Bank"). We are a
bank holding company within the meaning of the Bank Holding Company Act of 1956,
and the Georgia Bank Holding Company Act.

         We were organized to facilitate the Bank's ability to serve its
customers' requirements for financial services. The holding company structure
provides flexibility for expansion of our banking business through the possible
acquisition of other financial institutions and the provision of additional
banking-related services that the traditional commercial bank may not provide
under present laws. We have no present plans to acquire any operating
subsidiaries other than the Bank. It is expected, however, that we may make
additional acquisitions in the future if such acquisitions are deemed to be in
the best interest of our shareholders. Any acquisitions will be subject to
certain regulatory approvals and requirements.

GWINNETT BANKING COMPANY

         The Bank is a full service commercial bank located at 165 Nash Street,
Lawrenceville, Gwinnett County, Georgia and 11675 Rainwater Drive, Alpharetta,
Fulton County, Georgia. The Bank's primary service area is Gwinnett County,
Georgia. The Bank, however, also serves the adjacent counties, or parts thereof,
of Cobb, DeKalb and Fulton. The principal business of the Bank is to accept
deposits from the public and to make loans and other investments. The principal
source of funds for the Bank's loans and investments are demand, time, savings,
and other deposits (including negotiable orders of withdrawal or NOW accounts),
amortization and prepayments of loans and borrowings. The principal sources of
income for the Bank are interest and fees collected on loans, interest and
dividends collected on other investments and service charges. The principal
expenses of the Bank are interest paid on savings and other deposits (including
NOW accounts), interest paid on other borrowings by the Bank, employee
compensation, office expenses and other overhead expenses.

INDUSTRY AND COMPETITION

         We believe that Gwinnett County has a very active and competitive
banking market. The largest financial institutions serving Gwinnett County are
Bank of America, Wachovia, N.A., SunTrust Bank, and SouthTrust Bank, N.A. The
largest Gwinnett County based banks are The Brand Banking Company,
Lawrenceville; Peoples Bank & Trust, Buford; and First Capital Bank, Norcross.
There are approximately 16 financial institutions that have offices in the
immediate vicinity of the main office of the Bank.

EMPLOYEES

         The Bank had 39 total employees as of March 15, 2003, all of whom were
full-time employees. GBC Bancorp does not have any employees who are not also
employees of the Bank.

ENVIRONMENTAL LAWS

         Compliance with environmental laws has not had a material impact on the
operations of the Bank or the Company, although the Bank faces potential
liability or losses if its borrowers fail to comply with such laws and the Bank
acquires contaminated properties in foreclosure.


                                      -1-
<PAGE>

SUPERVISION AND REGULATION

         General

         We are subject to state and federal banking laws and regulations that
impose specific requirements or restrictions and provide for general regulatory
oversight over virtually all aspects of our operations. These laws and
regulations generally are intended to protect depositors, not shareholders. This
discussion is only a summary of various statutory and regulatory provisions.
This summary is qualified by reference to the particular statutory and
regulatory provisions. Any change in applicable laws or regulations may have a
material effect on our business and prospects.

         Beginning with the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, numerous additional regulatory
requirements have been placed on the banking industry during the past ten years.
On November 12, 1999, the President signed into law a financial services
modernization act which effectively repealed the anti-affiliation provisions of
the 1933 Glass-Steagall Act and the 1956 Bank Holding Company Act. Legislative
changes and the policies of various regulatory authorities may affect our
operations. We are unable to predict the nature or the extent of the effect on
our business and earnings that fiscal or monetary policies, economic control or
new federal or state legislation may have in the future.

         The Company

         GBC Bancorp is a bank holding company registered with the Board of
Governors of the Federal Reserve System and the Georgia Department of Banking
and Finance under the Bank Holding Company Act of 1956, as amended, and the
Georgia Bank Holding Company Act. We are subject to the supervision, examination
and reporting requirements of the Bank Holding Company Act and the regulations
of the Federal Reserve, and the Georgia Bank Holding Company Act and the
regulations of the Georgia Department of Banking and Finance.

         The Bank Holding Company Act requires every bank holding company to
obtain the prior approval of the Federal Reserve before:

         -        it may acquire direct or indirect ownership or control of any
                  voting shares of any bank if, after such acquisition, the bank
                  holding company will directly or indirectly own or control
                  more than 5% of the voting shares of the bank;

         -        it or any of its subsidiaries, other than a bank, may acquire
                  all or substantially all of the assets of any bank; or

         -        it may merge or consolidate with any other bank holding
                  company.

         The Bank Holding Company Act further provides that the Federal Reserve
may not approve any transaction that would result in a monopoly or would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States. In
addition, the Federal Reserve will not approve a transaction the effect of which
may be substantially to lessen competition or to tend to create a monopoly, or
that in any other manner would be in restraint of trade. However, such
transactions mat be approved in the event the anti-competitive effects of the
proposed transaction are clearly outweighed by the public interest in meeting
the convenience and needs of the communities to be served. The Federal Reserve
is also required to consider the financial and managerial resources and future
prospects of the bank holding companies and banks involved and the convenience
and needs of the communities to be served. Consideration of financial resources
generally focuses on capital adequacy, and consideration of convenience and
needs issues generally focuses on the parties' performance under the Community
Reinvestment Act of 1977.

         The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
facilitates interstate branching and permits the establishment of agency
relationships across state lines. The Interstate Banking Act also permits bank
holding companies to acquire banks in any state without regard to whether the
transaction is prohibited under


                                      -2-
<PAGE>

the laws of such state, subject to certain state provisions, including minimum
age requirements of banks that are the target of the acquisition. The minimum
age of local banks subject to interstate acquisition is limited to a maximum of
five years.

         In response to the Interstate Banking Act, the Georgia General Assembly
adopted the Georgia Interstate Banking Act, which provides that:

         -        interstate acquisitions by institutions located in Georgia
                  will be permitted in states which also allow interstate
                  acquisitions; and

         -        interstate acquisitions of institutions located in Georgia
                  will be permitted by institutions located in states which
                  allow interstate acquisitions.

         Additionally, in 1996, the Georgia General Assembly adopted the Georgia
Interstate Branching Act which permits Georgia-based banks and bank holding
companies owning banks outside of Georgia and all non-Georgia banks and bank
holding companies owning banks in Georgia the right to merge any bank into an
interstate branch network. The Georgia Interstate Branching Act also allows
banks to establish de novo branches on an unlimited basis throughout Georgia,
subject to the prior approval of the Georgia Department of Banking and Finance.

         Except as amended by the Gramm-Leach-Bliley Act of 1999 discussed
below, the Bank Holding Company Act generally prohibits a bank holding company
from engaging in activities other than banking or managing or controlling banks
or other permissible subsidiaries. Bank holding companies are also generally
prohibited from acquiring or retaining direct or indirect control of any company
engaged in any activities other than those activities determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto. Activities determined by the Federal Reserve to
fall within this category include acquiring or servicing loans, leasing personal
property, conducting discount securities brokerage activities, performing
certain data processing services, acting as agent or broker in selling certain
types of credit insurance, and performing certain insurance underwriting
activities. The BHC Act does not place territorial limitations on permissible
non-banking activities of bank holding companies. The Federal Reserve has the
power to order a bank holding company or its subsidiaries to terminate any
non-banking activity when it has reasonable cause to believe that continuation
of such activity constitutes a serious risk to the safety and soundness of any
bank subsidiary of that bank holding company.

         The Bank

         The Bank is incorporated under the laws of the State of Georgia and is
subject to examination by the Georgia Department of Banking and Finance. The
Georgia Department regulates all areas of the Bank's commercial banking
operations, including, without limitation, loans, deposits, reserves, mergers,
reorganizations, issuance of securities, payment of dividends, and the
establishment of branches.

         The Bank is also a member of the Federal Deposit Insurance Corporation,
and as such, the FDIC, to the maximum extent provided by law, insures its
deposits. The Bank is also subject to numerous state and federal statutes and
regulations that affect its business, activities, and operations. The FDIC and
the Georgia Department regularly examine the operations of the Bank and have the
power to prevent the continuance or development of unsafe or unsound banking
practices or other violations of law.

         Gramm-Leach-Bliley Act of 1999

         On November 12, 1999, the President signed into law the
Gramm-Leach-Bliley Act of 1999, which breaks down many of the barriers to
affiliations among banks and securities firms, insurance companies, and other
financial service providers. This new law provides financial organizations with
the flexibility to structure new affiliations through a holding company
structure or a financial subsidiary. As a result, the number and type of
entities competing with us in our markets could increase.


                                      -3-
<PAGE>

         The Gramm-Leach-Bliley Act also covers various topics such as
insurance, unitary thrifts, privacy protection provisions for customers of
financial institutions, the Federal Home Loan Bank system's modernization,
automatic teller machine reform, the Community Reinvestment Act and certain
changes related to the securities industry.

         The legislation amends the Bank Holding Company Act to clarify that a
bank holding company may hold shares of any company that the Federal Reserve has
determined to be engaged in activities that were sufficiently closely related to
banking. This act also amends the Bank Holding Company Act to establish a new
type of bank holding company - the "financial holding company." Financial
holding companies have the authority to engage in financial activities in which
other bank holding companies may not engage. Financial holding companies may
also affiliate with companies that are engaged in financial activities. These
financial activities include activities that are:

         -        financial in nature;

         -        incidental to an activity that is financial in nature; or

         -        complimentary to a financial activity and does not pose a
                  substantial risk to the safety and soundness of depository
                  institutions or the financial system in general.

         The Federal Reserve and the Secretary of the Treasury may determine
which activities meet these standards. However, the Gramm-Leach-Bliley Act
explicitly lists certain activities as being financial in nature. For example,
some of these activities are:

         -        lending, exchanging, transferring or investing for others;

         -        safeguarding money or securities;

         -        insuring, guaranteeing, or indemnifying against loss, harm,
                  damage, illness, disability, or death, or providing and
                  issuing annuities, and acting as principal, agent, or broker
                  for these purposes in any state;

         -        providing financial, investment or economic advice;

         -        issuing or selling interests in pools of assets that a bank
                  could hold directly;

         -        underwriting, dealing in or making markets in securities; and

         -        engaging within the United States in any activity that a bank
                  holding company could engage in outside of the United States,
                  if the Federal Reserve has found that the activity was usual
                  in connection with banking or other financial operations
                  internationally.

         The Gramm-Leach-Bliley Act also directs the Federal Reserve to adopt a
regulation or order defining certain additional activities as financial in
nature, to the extent that they are consistent with that act. These include:

         -        lending, exchanging, transferring or investing for others or
                  safeguarding financial assets other than money or securities;

         -        providing any device or other instrumentality for transferring
                  financial assets; and

         -        arranging, effecting or facilitating financial transactions
                  for third parties.

         Not all bank holding companies may become financial holding companies.
A bank holding company must meet three requirements before becoming a financial
holding company:

         -        all of the bank holding company's depository institution
                  subsidiaries must be well capitalized;


                                      -4-
<PAGE>

         -        all of the bank holding company's depository institution
                  subsidiaries must be well managed; and

         -        the bank holding company must file with the Federal Reserve a
                  declaration of its election to become a financial holding
                  company, including a certification that its depository
                  institution subsidiaries meet the prior two criteria.

         With only a few exceptions, in order to exercise the powers granted to
them under the Gramm-Leach-Bliley Act, a financial holding company or insured
depository institution also must meet the Community Reinvestment Act's
requirements. If any insured depository institution did not receive a Community
Reinvestment Act rating of at least "satisfactory" at its most recent
examination, the regulatory agencies are to prevent the insured depository
institution or financial holding company from exercising the new powers, either
directly or through a subsidiary.

         Payment of Dividends

         We are a legal entity separate and distinct from our banking
subsidiary. Our principal source of cash flow, including cash flow to pay
dividends to our shareholders, is dividends from the Bank. There are statutory
and regulatory limitations on the payment of dividends by the Bank, as well as
by us to our shareholders.

         If, in the opinion of the federal banking regulators, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such authority
may require, after notice and hearing, that such institution cease and desist
from such practice. The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "--Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.

         In addition, the Georgia Financial Institutions Code and the
regulations of the Georgia Department of Banking and Finance provide:

         -        that dividends of cash or property may be paid only out of the
                  retained earnings of the Bank;

         -        that dividends may not be paid if the Bank's paid-in capital
                  and retained earnings which are set aside for dividend payment
                  and other distributions do not, in combination, equal at least
                  20% of the Bank's capital stock; and

         -        that dividends may not be paid without prior approval of the
                  Georgia Department of Banking and Finance if:

                  -        the Bank's total classified assets exceed 80% of its
                           equity capital;

                  -        the aggregate amount of dividends to be declared
                           exceeds 50% of the Bank's net profits after taxes but
                           before dividends for the previous calendar year; or

                  -        the ratio of equity capital to total adjusted assets
                           is less than 6%.

         Applying these dividend restrictions, and without prior approval of the
Georgia Department of Banking and Finance, as of December 31, 2002, the Bank
could pay a $499,000 dividend to us. Our ability to pay dividends may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.


                                      -5-
<PAGE>

         Capital Adequacy

         We are required to comply with the capital adequacy standards
established by the Federal Reserve, and the Federal Deposit Insurance
Corporation in the case of the Bank. There are two basic measures of capital
adequacy for bank holding companies that have been promulgated by the Federal
Reserve: a risk-based measure and a leverage measure. All applicable capital
standards must be satisfied for a bank holding company to be considered in
compliance.

         The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks
and bank holding companies, to account for off-balance sheet exposure, and to
minimize disincentives for holding liquid, low-risk assets. Assets and
off-balance-sheet items are assigned to broad risk categories, each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance sheet items.

         The minimum guideline for the ratio of total capital to risk-weighted
assets is 8.0%. At least half of total capital must be comprised of Tier 1
Capital, which is common stock, undivided profits, minority interests in the
equity accounts of consolidated subsidiaries and noncumulative perpetual
preferred stock, less goodwill and certain other intangible assets. The
remainder may consist of Tier 2 Capital, which is subordinated debt, other
preferred stock and a limited amount of loan loss reserves. As of December 31,
2002, GBC Bancorp's total risk-based capital ratio and its Tier 1 risk-based
capital ratio were 13.70% and 12.45%, respectively.

         In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets, of 3.0% for bank holding companies that meet specified
criteria. All other bank holding companies generally are required to maintain a
leverage ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis
points. GBC Bancorp's leverage ratio as of December 31, 2002 was 10.90%. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. Furthermore, the Federal Reserve has indicated that it
will consider a "tangible Tier 1 Capital leverage ratio" and other indicia of
capital strength in evaluating proposals for expansion or new activities. The
Federal Reserve has not advised GBC Bancorp's of any specific minimum leverage
ratio or tangible Tier 1 leverage ratio applicable to it.

         The Bank is subject to risk-based and leverage capital requirements
adopted by the Federal Deposit Insurance Corporation, which are substantially
similar to those adopted by the Federal Reserve for bank holding companies. The
Bank was in compliance with applicable minimum capital requirements as of
December 31, 2002. We have not been advised by any federal banking agency of any
specific capital ratio requirement applicable to the Bank.

         Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the Federal Deposit Insurance Corporation, a prohibition
on the taking of brokered deposits, and certain other restrictions on its
business. As described below, substantial additional restrictions can be imposed
upon FDIC-insured depository institutions that fail to meet applicable capital
requirements. See "--Prompt Corrective Action."

         The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve and the Federal Deposit Insurance
Corporation have recently adopted regulations requiring regulators to consider
interest rate risk in the evaluation of a bank's capital adequacy. The bank
regulatory agencies have recently established a methodology for evaluating
interest rate risk which sets forth guidelines for banks with excessive interest
rate risk exposure to hold additional amounts of capital against such exposures.

         In addition to the capital standards imposed by federal banking
regulators, the Georgia Department of Banking and Finance imposed a requirement
for the Bank to maintain a primary capital ratio of not less than 8.0%


                                      -6-
<PAGE>

during the first three years of the Bank's operation. Following the expiration
of this initial period, the Bank became subject to a 6.0% primary capital ratio.
Such standard is calculated as the ratio of total equity to total assets, each
as adjusted for unrealized gains and losses on securities and allowance for loan
losses.

         Support of Subsidiary Institution

         Under Federal Reserve policy, we are expected to act as a source of
financial strength for, and to commit resources to support, the Bank. This
support may be required at times when, absent such Federal Reserve policy, we
may not be inclined to provide such support. In addition, any capital loans by a
bank holding company to its banking subsidiary are subordinate in right of
payment to deposits and to certain other indebtedness of such bank. In the event
of a bank holding company's bankruptcy, any commitment by a bank holding company
to a federal bank regulatory agency to maintain the capital of a banking
subsidiary will be assumed by the bankruptcy trustee and entitled to a priority
of payment.

         Prompt Corrective Action

         The Federal Deposit Insurance Corporation Improvement Act of 1991 was
enacted in large measure to improve the supervision and examination of insured
depository institutions in an effort to reduce the number of bank failures and
the resulting demands on the deposit insurance system. This law establishes a
system of prompt corrective action to resolve the problems of undercapitalized
institutions. Under this system, the federal banking regulators have established
five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and are required to take certain mandatory supervisory
actions, and are authorized to take other discretionary actions, with respect to
institutions in the three undercapitalized categories. The severity of such
actions depends upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the banking regulator is required to
appoint a receiver or conservator for an institution that is critically
undercapitalized. The federal banking agencies have specified by regulation the
relevant capital level for each category.

         Under the regulations, a FDIC-insured bank will be:

         -        "well capitalized" if it has a total capital ratio of 10.0% or
                  greater, a tier 1 capital ratio of 6.0% or greater and a
                  leverage ratio of 5.0% or greater and is not subject to any
                  order or written directive by the appropriate regulatory
                  authority to meet and maintain a specific capital level for
                  any capital measure;

         -        "adequately capitalized" if it has a total capital ratio of
                  8.0% or greater, a tier 1 capital ratio of 4.0% or greater and
                  a leverage ratio of 4.0% or greater (3.0% in certain
                  circumstances) and is not "well capitalized";

         -        "undercapitalized" if it has a total capital ratio of less
                  than 8.0%, a tier 1 capital ratio of less than 4.0% or a
                  leverage ratio of less than 4.0% (3.0% in certain
                  circumstances);

         -        "significantly undercapitalized" if it has a total capital
                  ratio of less than 6.0%, a tier 1 capital ratio of less than
                  3.0% or a leverage ratio of less than 3.0%; and

         -        "critically undercapitalized" if its tangible equity is equal
                  to or less than 2.0% of average quarterly tangible assets.

         A depository institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfactory examination rating in any one of four categories. As
a depository institution moves downward through the capitalization categories,
the degree of regulatory scrutiny will increase and the permitted activities of
the institution will decrease.

         An FDIC-insured bank is generally prohibited from making any capital
distribution, including dividend payments, or paying any management fee to its
holding company if the bank would thereafter be "undercapitalized."


                                      -7-
<PAGE>

"Undercapitalized" banks are subject to growth limitations and are required to
submit a capital restoration plan. The federal regulators may not accept a
capital plan without determining, among other things, that the plan is based on
realistic assumptions and is likely to succeed in restoring the bank's capital.
In addition, for a capital restoration plan to be acceptable, the bank's parent
holding company must guarantee that the institution will comply with such
capital restoration plan. The aggregate liability of the parent company is
limited to the lesser of an amount equal to 5.0% of the bank's total assets at
the time it became "undercapitalized" and the amount necessary to bring the
institution into compliance with all applicable capital standards. If a bank
fails to submit an acceptable plan, it is treated as if it is "significantly
undercapitalized." "Significantly undercapitalized" institutions may be subject
to a number of requirements and restrictions, including orders to sell
sufficient voting stock to become "adequately capitalized," requirements to
reduce total assets, and cessation of receipt of deposits from correspondent
banks. "Critically undercapitalized" institutions are subject to the appointment
of a receiver or conservator. A bank that is not "well capitalized" is subject
to certain limitations relating to so-called "brokered" deposits.

         As of December 31, 2002, the Bank had the requisite capital levels to
qualify as "well capitalized."

         FDIC Insurance Assessments

         The Federal Deposit Insurance Corporation has adopted a risk-based
assessment system for insured depository institutions that takes into account
the risks attributable to different categories and concentrations of assets and
liabilities. The risk-based assessment system assigns an institution to one of
three capital categories: well capitalized, adequately capitalized, and
undercapitalized. These three categories are substantially similar to the prompt
corrective action categories described above, with the "undercapitalized"
category including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective action
purposes. The FDIC also assigns an institution to one of three supervisory
subgroups within each capital group. The supervisory subgroup to which an
institution is assigned is based on an evaluation provided to the FDIC by the
institution's primary federal regulator and information which the FDIC
determines to be relevant to the risk posed to the deposit insurance funds. An
institution's insurance assessment rate is then determined based on the capital
category and supervisory category to which it is assigned. The combination of
capital groups and supervisory subgroups results in nine assessment risk
classifications to which different assessment rates are applied.

         The FDIC may terminate the insurance of the deposits of the Bank upon a
finding that the bank has engaged in unsafe and unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order, or condition the FDIC has imposed.

         Safety and Soundness Standards

         The federal bank regulatory agencies have adopted a set of guidelines
prescribing safety and soundness standards. The guidelines establish general
standards relating to internal controls and information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, asset quality, earnings and compensation, fees and benefits. In general,
the guidelines require, among other things, appropriate systems and practices to
identify and manage the risks and exposures specified in the guidelines. The
guidelines prohibit excessive compensation as an unsafe and unsound practice and
describe compensation as excessive when the amounts paid are unreasonable or
disproportionate to the services performed by an executive officer, employee,
director, or principal shareholder. In addition, the agencies adopted
regulations that authorize, but do not require, an agency to order an
institution that has been given notice by an agency that it is not satisfying
any of such safety and soundness standards to submit a compliance plan. If an
institution fails to submit or implement such a plan, the agency must issue an
order directing action to correct the deficiency and may require other actions
of the types to which an undercapitalized institution is subject under the
"prompt corrective action" provisions described above. If an institution fails
to comply with such an order, the agency may seek to enforce such order in
judicial proceedings and to impose civil money penalties.


                                      -8-
<PAGE>

         Community Reinvestment Act

         The Community Reinvestment Act requires federal bank regulatory
agencies to encourage financial institutions to meet the credit needs of low-
and moderate-income borrowers in their local communities. An institution's size
and business strategy determines the type of examination that it will receive.
Large, retail-oriented institutions will be examined using a performance-based
lending, investment and service test. Small institutions will be examined using
a streamlined approach. All institutions may opt to be evaluated under a
strategic plan formulated with community input and pre-approved by the bank
regulatory agency.

         Community Reinvestment Act regulations provide for certain disclosure
obligations. Each institution must post a notice advising the public of its
right to comment to the institution and its regulator on the institution's
Community Reinvestment Act performance and to review the institution's Community
Reinvestment Act public file. Each lending institution must maintain for public
inspection a public file that includes a listing of branch locations and
services, a summary of lending activity, a map of its communities and any
written comments from the public on its performance in meeting community credit
needs. The Community Reinvestment Act requires public disclosure of a financial
institution's written Community Reinvestment Act evaluations. This promotes
enforcement of Community Reinvestment Act requirements by providing the public
with the status of a particular institution's community reinvestment record.

         The Gramm-Leach-Bliley Act makes various changes to the CRA. Among
other changes, CRA agreements with private parties must be disclosed and annual
CRA reports must be made to a bank's primary federal regulator. A bank holding
company will not be permitted to become a financial holding company and no new
activities authorized under this Act may be commenced by a holding company if
any of its bank subsidiaries received less than a "satisfactory" CRA rating in
its latest CRA examination.

         Anti-Terrorism Legislation

         In the wake of the tragic events of September 11th, 2001, on October
26, 2001, the President signed the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
Patriot) Act of 2001. Under the USA Patriot Act, financial institutions are
subject to prohibitions against specified financial transactions and account
relationships as well as enhanced due diligence and "know your customer"
standards in their dealings with foreign financial institutions and foreign
customers. For example, the enhanced due diligence policies, procedures and
controls generally require financial institutions to take reasonable steps:

         -        to conduct enhanced scrutiny of account relationships to guard
                  against money laundering and report any suspicious
                  transaction;

         -        to ascertain the identity of the nominal and beneficial owners
                  of, and the source of funds deposited into, each account as
                  needed to guard against money laundering and report any
                  suspicious transactions;

         -        to ascertain for any foreign bank, the shares of which are not
                  publicly traded, the identity of the owners of the foreign
                  bank and the nature and extent of the ownership interest of
                  each such owner; and

         -        to ascertain whether any foreign bank provides correspondent
                  accounts to other foreign banks and, if so, the identity of
                  those foreign banks and related due diligence information.

         Under the USA Patriot Act, financial institutions had until April 25,
2002, to establish anti-money laundering programs. The USA Patriot Act sets
forth minimum standards for these programs, including:

         -        the development of internal policies, procedures and controls;

         -        the designation of a compliance officer;


                                      -9-
<PAGE>

         -        an ongoing employee training program; and

         -        an independent audit function to test the programs.

         Pursuant to the mandate of the USA Patriot Act, the Secretary of the
Treasury issued regulations effective April 24, 2002, applicable to financial
institutions. Because all federally insured depository institutions are required
to have anti-money laundering programs, the regulations provide that a financial
institution which is subject to regulation by a "federal functional" is in
compliance with the regulations if it complies with the rules of its primary
federal regulator governing the establishment and maintenance of anti-money
laundering programs.

         In addition, the USA Patriot Act authorizes the Secretary of the
Treasury to adopt rules increasing the cooperation and information sharing
between financial institutions, regulators and law enforcement authorities
regarding individuals, entities and organizations engaged in, or reasonably
suspected based on credible evidence of engaging in, terrorist acts or money
laundering activities. Any financial institution complying with these rules will
not be deemed to have violated the privacy requirements discussed above.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Bank leases its offices located at 165 Nash Street, Lawrenceville,
Gwinnett County, Georgia. The Bank also leases its branch banking offices
located at 11675 Rainwater Drive, Suite 150, Alpharetta, Fulton County, Georgia
30004.

ITEM 3.  LEGAL PROCEEDINGS

         We are subject to claims and litigation in the ordinary course of
business. We believe that any pending claims and litigation will not have a
material adverse effect on our consolidated position.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not Applicable.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is currently no public trading market for shares of our common
stock and it is not likely that a public trading market will develop for our
common stock in the future. There are no present plans for our common stock to
be traded on any stock exchange or over-the-counter market. For the year ended
December 31, 2002, there were approximately ten private trades of shares of our
common stock.

         As of March 15, 2003, there were approximately 750 holders of our
common stock.

         We have not paid any dividends to date. Under the Georgia Business
Corporation Code, we may from time to time make distributions, including the
payment of dividends, to our shareholders in money, indebtedness or other
property (except our own shares) unless, after giving effect to such
distribution, we would not be able to pay our debts as they become due in the
usual course of business or our total assets would be less than the sum of our
total liabilities plus the amount that would be needed, if we were to be
dissolved at the time of distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution. We may also distribute our shares pro rata and
without consideration to our shareholders or to the shareholders of one or more
classes or series, which constitutes a share dividend.

         Subject to certain conditions imposed by our regulators, we, as the
sole holder of common stock of the Bank, are entitled to such dividends as may
be declared from time to time by the Board of Directors of the Bank out of funds
legally available therefor. Dividends paid may not exceed 50% of net profits
after taxes for the previous


                                      -10-
<PAGE>

fiscal year without prior approval of the Georgia Department of Banking and
Finance. The Bank may not pay cumulative dividends on its common stock.

         In the absence of other activities conducted by us, our ability to pay
dividends will depend upon the earnings of the Bank. However, we cannot assure
the future payment of dividends, either in cash or in stock.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following is a discussion of our financial condition and the
financial condition of our bank subsidiary, Gwinnett Banking Company, at
December 31, 2002 and 2001 and the results of operations for the years then
ended. The purpose of this discussion is to focus on information about our
financial condition and results of operations that are not otherwise apparent
from our audited consolidated financial statements. Reference should be made to
those statements and the selected financial data presented elsewhere in this
report for an understanding of the following discussion and analysis.

FORWARD-LOOKING STATEMENTS

         We may from time to time make written or oral forward-looking
statements, including statements contained in our filings with the Securities
and Exchange Commission and reports to stockholders. Statements made in this
Annual Report, other than those concerning historical information, should be
considered forward-looking and subject to various risks and uncertainties.
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. Our 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, interest rate risk management, the effects
of competition in the banking business from other commercial banks, thrifts,
mortgage banking firms, consumer finance companies, credit unions, securities
brokerage firms, insurance companies, money market funds and other financial
institutions operating in our 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. We caution that these factors are not exclusive. We do not
undertake to update any forward-looking statement that may be made from time to
time by, or on behalf of, us.

CRITICAL ACCOUNTING POLICIES

         We have adopted various accounting policies which govern the
application of accounting principles generally accepted in the United States in
the preparation of our financial statements. Our significant accounting policies
are described in the footnotes to the consolidated financial statements at
December 31, 2002.

         Certain accounting policies involve significant judgments and
assumptions by us which have a material impact on the carrying value of certain
assets and liabilities. We consider these accounting policies to be critical
accounting policies. The judgments and assumptions we use are based on
historical experience and other factors, which we believe to be reasonable under
the circumstances. Because of the nature of the judgments and assumptions we
make, actual results could differ from these judgments and estimates which could
have a material impact on our carrying values of assets and liabilities and our
results of operations.

         We believe the allowance for loan losses is a critical accounting
policy that requires the most significant judgments and estimates used in
preparation of our consolidated financial statements. Please see the portion of
this discussion that addresses our allowance for loan losses for a description
of our processes and methodology for determining our allowance for loan losses.


                                      -11-
<PAGE>
OVERVIEW

         Our 2002 results were highlighted by continued loan and deposit growth
despite a downturn in the national and state economy. Our net income increased
to $955,000, as compared to $418,000 in 2001, primarily due to an increase in
our net interest income resulting from an increase in total loans while
maintaining the net interest margin. We raised approximately $10.2 million in
capital through a public offering that closed on March 15, 2002.

FINANCIAL CONDITION AT DECEMBER 31, 2002 AND 2001

         Following is a summary of our balance sheets for the years indicated:

<TABLE>
<CAPTION>
                                           DECEMBER 31,
                                    ------------------------
                                      2002            2001
                                    --------        --------
                                     (Dollars in Thousands)
<S>                                 <C>             <C>
Cash and due from banks ........... $  3,360        $  4,347
Federal funds sold ................   10,827           5,301
Securities ........................   20,282           9,327
Loans, net ........................  157,992         120,626
Premises and equipment ............      626             810
Other assets ......................    5,119           4,500
                                    --------        --------

                                    $198,206        $144,911
                                    ========        ========

Total deposits .................... $174,784        $125,924
Repurchase agreements .............      541             586
Other liabilities .................    1,451             983
Stockholders' equity ..............   21,430          17,418
                                    --------        --------

                                    $198,206        $144,911
                                    ========        ========
</TABLE>

         As of December 31, 2002, we had total assets of $198.21 million, an
increase of 37% over December 31, 2001. Total interest-earning assets were
$191.28 million at December 31, 2002, or 97% of total assets, as compared to 96%
of total assets at December 31, 2001. Our primary interest-earning assets at
December 31, 2002, were loans, which made up 84% of total interest-earning
assets, as compared to 86% at December 31, 2001. Our loan to deposit ratio was
92% at December 31, 2002, as compared to 97% at December 31, 2001. Deposit
growth of $48.86 million and net proceeds of $2.91 million received from our
stock sale funded loan growth of $38.01 million and investment in federal funds
and securities of $16.48 million.

         Our securities portfolio, consisting of U.S. Agency, State, County and
Municipals and mortgage-backed securities, amounted to $20.28 million at
December 31, 2002. Unrealized gains on securities amounted to $308,000 at
December 31, 2002, as compared to an unrealized gain of $92,000 at December 31,
2001. Management has not specifically identified any securities for sale in
future periods that, if so designated, would require a charge to operations if
the market value would not be reasonably expected to recover prior to the time
of sale.

         We have 77% of our loan portfolio collateralized by real estate located
in our primary market area of Gwinnett County, Georgia and surrounding counties.
Our real estate construction portfolio consists of loans collateralized by loans
to build one- to four-family residential properties. We generally require that
loans collateralized by real estate not exceed 75%-85% of the collateral value.


                                      -12-
<PAGE>

         The remaining 23% of the loan portfolio consists of commercial,
consumer and other loans. We require collateral commensurate with the repayment
ability and creditworthiness of the borrower.

         The specific economic and credit risks associated with our loan
portfolio, especially the real estate portfolio, include, but are not limited
to, a general downturn in the economy which could affect unemployment rates in
our market area, general real estate market deterioration, interest rate
fluctuations, deteriorated or non-existing collateral, title defects, inaccurate
appraisals, financial deterioration of borrowers, fraud, and any violation of
banking protection laws. Construction lending can also present other specific
risks to the lender such as whether the builders can obtain financing for the
construction, whether the builders can sell the home to a buyer, and whether the
buyer can obtain permanent financing. Currently, real estate values and
employment trends in our market area are stable.

         We attempt to reduce these economic and credit risks not only by
adhering to loan to value guidelines, but also by investigating the credit
worthiness of the borrower and monitoring the borrower's financial position.
Also, we establish and periodically review our lending policies and procedures
as well as having independent loan review. State banking regulations limit
exposure by prohibiting secured loan relationships that exceed 25% of the Bank's
statutory capital and unsecured loan relationships that exceed 15% of the Bank's
statutory capital.

LIQUIDITY AND CAPITAL RESOURCES

         The purpose of liquidity management is to ensure that there are
sufficient cash flows to satisfy demands for credit, deposit withdrawals, and
our other needs. Traditional sources of liquidity include asset maturities and
growth in core deposits. A company may achieve its desired liquidity objectives
from the management of assets and liabilities and through funds provided by
operations. Funds invested in short-term marketable instruments and the
continuous maturing of other earning assets are sources of liquidity from the
asset perspective. The liability base provides sources of liquidity through
deposit growth, the maturity structure of liabilities, and accessibility to
market sources of funds.

         Scheduled loan payments are a relatively stable source of funds, but
loan payoffs and deposit flows fluctuate significantly, being influenced by
interest rates and general economic conditions and competition. We attempt to
price deposits to meet asset/liability objectives consistent with local market
conditions.

         Our liquidity and capital resources are monitored on a periodic basis
by management and State and Federal regulatory authorities. We monitor our
liquidity requirements under two categories, operational needs and emergency
needs. The operational needs category establishes the cash requirements to
sufficiently fund our deposit reserve requirements and pay operating expenses.
The emergency needs category establishes sufficient cash requirements to fund
the volatility of deposits. As determined under these categories, our liquidity
was considered satisfactory.

         At December 31, 2002, we had loan commitments outstanding of $65.26
million. Because these commitments generally have fixed expiration dates and
many will expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. If needed, we have the ability
on a short-term basis to borrow funds and purchase Federal funds from other
financial institutions. At December 31, 2002, we had arrangements with four
commercial banks for additional short-term advances of $17.10 million.

         At December 31, 2002, our capital ratios were considered adequate based
on regulatory minimum capital requirements. Our stockholders' equity increased
due to net income in 2002 of $955,000, net proceeds received from our common
stock sale of $2.92 million and to an increase in other comprehensive income
related to our securities of $143,375. For regulatory purposes, the net
unrealized gains on securities available-for-sale are excluded in the
computation of the capital ratios.

         In the future, the primary source of funds available to us will be the
payment of dividends by the Bank. Banking regulations limit the amount of the
dividends that may be paid without prior approval of the Bank's regulatory
agency. Currently, the Bank could pay us a $499,000 dividend without regulatory
approval.


                                      -13-
<PAGE>

         The minimum capital requirements to be considered well capitalized
under prompt corrective action provisions and the actual capital ratios for the
holding company and the Bank as of December 31, 2002, are as follows:

<TABLE>
<CAPTION>
                                                            ACTUAL
                                                      ---------------------        REGULATORY
                                                      CONSOLIDATED    BANK        REQUIREMENTS
                                                      ------------    -----       ------------

<S>                                                   <C>             <C>         <C>
Leverage capital ratio.......................             10.90%      10.58%           5.00%
Risk-based capital ratios:
   Core capital..............................             12.45       12.09            6.00
   Total capital.............................             13.70       13.34           10.00
</TABLE>

         At December 31, 2002, we had no material commitments for capital
expenditures.

         These ratios may decline as asset growth continues, but are expected to
exceed regulatory minimum requirements. Anticipated future earnings and
additional proceeds received from our stock offering will assist in keeping
these ratios at satisfactory levels.

         We believe that our liquidity and capital resources, inclusive of the
results of our current stock offering, will be adequate and will meet our
foreseeable short and long-term needs. We anticipate that we will have
sufficient funds available to meet current loan commitments and to fund or
refinance, on a timely basis, our other material commitments and liabilities.

         Management is not aware of any known trends, events or uncertainties,
other than those discussed above, that will have or that are reasonably likely
to have a material effect on our liquidity, capital resources or operations.
Management is also not aware of any current recommendations by the regulatory
authorities that, if they were implemented, would have such an effect.

         Effects of Inflation

         The impact of inflation on banks differs from its impact on
non-financial institutions. Banks, as financial intermediaries, have assets that
are primarily monetary in nature and that tend to fluctuate in concert with
inflation. A bank can reduce the impact of inflation if it can manage its rate
sensitivity gap. This gap represents the difference between rate sensitive
assets and rate sensitive liabilities. We, through our asset/liability
committee, attempt to structure the assets and liabilities and manage the rate
sensitivity gap, thereby seeking to minimize the potential effects of inflation.
For information on the management of our interest rate sensitive assets and
liabilities, see "Asset/Liability Management".

OFF-BALANCE SHEET RISK

         We are a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of our customers.
These financial instruments include commitments to extend credit and standby
letters of credit. Such commitments involve, to varying degrees, elements of
credit risk and interest rate risk in excess of the amount recognized in the
balance sheets.

         Our exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those instruments.
We use the same credit policies in making commitments and conditional
obligations as we do for on-balance sheet instruments. A summary of our
commitments is as follows:


                                      -14-
<PAGE>



<TABLE>
<CAPTION>
                                                                                DECEMBER 31,
                                                                       -----------------------------
                                                                          2002              2001
                                                                       -----------      ------------

         <S>                                                           <C>              <C>
         Letters of credit.........................................    $ 3,732,872      $    910,190
         Commitments to extend credit..............................     66,067,474        40,306,684
                                                                       -----------      ------------
                                                                       $69,800,346      $ 41,216,874
                                                                       ===========      ============
</TABLE>

         Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements.

         Standby letters of credit are conditional commitments that we issue to
guarantee the performance of a customer to a third party. Those letters of
credit are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans to customers.
Collateral is required in instances which we deem necessary.

RELATED PARTY TRANSACTIONS

         We lease our main office banking facilities under a noncancelable
operating lease agreement from GBC Properties, LLC, a limited liability company
formed by our organizers. The lease term is for 15 years with the monthly rental
payment adjusting every fifth year for changes in the Consumer Price Index. The
lease agreement requires us to pay normal operating and occupancy expenses of
the facilities.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

         The following is a summary of our operations for the years indicated.

<TABLE>
<CAPTION>
                                        YEARS ENDED DECEMBER 31,
                                          2002            2001
                                        --------        --------
                                         (Dollars in Thousands)
<S>                                     <C>             <C>
Interest income ................        $ 11,430        $ 10,217
Interest expense ...............           5,009           5,423
                                        --------        --------

Net interest income ............           6,421           4,794

Provision for loan losses ......             644             426
Other income ...................             678             388
Other expenses .................           5,044           4,171
                                        --------        --------

Pretax income ..................           1,411             585
                                        --------        --------
Income taxes ...................             456             167
                                        --------        --------

Net income .....................        $    955        $    418
                                        ========        ========
</TABLE>

         Net Interest Income

         Our results of operations are determined by our ability to manage
interest income and expense effectively, to minimize loan and investment losses,
to generate non-interest income, and to control operating expenses. Because
interest rates are determined by market forces and economic conditions beyond
our control, our ability to generate net interest income depends on our ability
to obtain an adequate net interest spread between the rate we pay on
interest-bearing liabilities and the rate we earn on interest-earning assets.


                                      -15-
<PAGE>

         Our net yield on average interest-earning assets was 3.90% in 2002, as
compared to 4.25% in 2001. Average loans increased by $45.56 million that
accounted for the most significant change in the $51.75 million increase in
total average interest-earning assets. Average interest-bearing liabilities
increased by $39.85 million, with average interest-bearing demand and time
deposits accounting for the vast majority of this increase. The rate earned on
average interest-earning assets decreased to 6.94% in 2002 from 9.05% in 2001.
The rate paid on average interest-bearing liabilities decreased to 3.63% in 2002
from 5.57% in 2001. The decrease in net yield was due primarily to the falling
rate environment experienced during 2002. As our interest-bearing liabilities
mature and are repriced, we expect to see our net yield increase.

         Provision for Loan Losses

         The provision for loan losses was $644,000 in 2002, as compared to
$426,000 in 2001. The amounts provided were due primarily to the growth of the
loan portfolio and to inherent risk in the loan portfolio. We had $1,800 in net
charge-offs in 2002, as compared to no charge-offs in 2001. As of December 31,
2002, we had $446,000 of nonperforming loans or assets, as compared to none at
December 31, 2001. Through our fourth full year of operations, we have incurred
no significant loan losses. Based upon our evaluation of the loan portfolio, we
believe the allowance for loan losses to be adequate to absorb losses on
existing loans that may become uncollectible. Our evaluation considers
significant factors relative to the credit risk and loss exposure in the loan
portfolio, including past due and classified loans, past experience, underlying
collateral values and current economic conditions that may affect the borrower's
ability to repay. The allowance for loan losses is evaluated by segmenting the
loan portfolio into unclassified and classified loans. The unclassified loans
are further segmented by loan type with an allowance percentage applied to each
type in order to establish a general allowance for loan losses. The allowance
percentage determined is based upon our experience specifically and the
historical experience of the banking industry generally. The classified loans,
including impaired loans, are analyzed individually in order to establish a
specific allowance for losses. The allowance for loan losses as a percentage of
total loans at December 31, 2002, was 1.36%, as compared to 1.25% at December
31, 2001.

         Other Income

         Other income consists of service charges on deposit accounts, mortgage
loan origination fees and other miscellaneous revenue and fees. Other income
increased to $678,000 in 2002 from $388,000 in 2001. This increase is due to an
increase in service charges on deposit accounts of $11,000, an increase in
mortgage loan origination fees of $45,000, an increase in income recognized on
life insurance policies of $58,000 and an increase in gain on sale of loans of
$152,000.

         Other Expenses

         Other expenses were $5.04 million in 2002, as compared to $4.17 million
in 2001, an increase of $873,000. Salaries and employee benefits increased by
$688,000 due to an increase in the number of full time employees to 36 from 30
and other annual salary increases primarily attributable to our executive
officers. Equipment and occupancy expenses decreased by $12,000, due primarily
to decreased depreciation of furniture and fixtures and to decreased in
janitorial expenses. Other operating expenses increased by $196,000, due
primarily to a $10,000 increase in data processing costs, increased directors'
fees of $15,000, increased professional and consulting expense of $105,000 and a
$66,000 increase in other operating costs. The overall increase in other
expenses is primarily attributable to the growth of the Bank.

         Income Tax

         We have reported income tax expense for 2002 of $456,000, as compared
to $167,000 in 2001. Our effective income tax rate was 32% in 2002, as compared
to 29% for 2001.


                                      -16-
<PAGE>

         Asset/Liability Management

         Our objective is to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the framework of
established cash, loan, investment, borrowing, and capital policies. Specific
officers are charged with the responsibility for monitoring policies and
procedures that are designed to ensure acceptable composition of the
asset/liability mix. Our management's overall philosophy is to support asset
growth primarily through growth of core deposits of all categories made by local
individuals, partnerships, and corporations.

         Our asset/liability mix is monitored on a regular basis with a report
reflecting the interest rate-sensitive assets and interest rate-sensitive
liabilities being prepared and presented to the Bank's Board of Directors on a
monthly basis. The objective of this policy is to monitor interest
rate-sensitive assets and liabilities so as to minimize the impact of
substantial movements in interest rates on earnings. An asset or liability is
considered to be interest rate-sensitive if it will reprice or mature within the
time period analyzed, usually one year or less. The interest rate-sensitivity
gap is the difference between the interest-earning assets and interest-bearing
liabilities scheduled to mature or reprice within such time period. A gap is
considered positive when the amount of interest rate-sensitive assets exceeds
the amount of interest rate-sensitive liabilities. A gap is considered negative
when the amount of interest rate-sensitive liabilities exceeds the interest
rate-sensitive assets. During a period of rising interest rates, a negative gap
would tend to affect net interest income adversely, while a positive gap would
tend to result in an increase in net interest income. Conversely, during a
period of falling interest rates, a negative gap would tend to result in an
increase in net interest income, while a positive gap would tend to affect net
interest income adversely. If our assets and liabilities were equally flexible
and moved concurrently, the impact of any increase or decrease in interest rates
on net interest income would be minimal.

         A simple interest rate "gap" analysis by itself may not be an accurate
indicator of how net interest income will be affected by changes in interest
rates. Accordingly, we also evaluate how the repayment of particular assets and
liabilities is impacted by changes in interest rates. Income associated with
interest-earning assets and costs associated with interest-bearing liabilities
may not be affected uniformly by changes in interest rates. In addition, the
magnitude and duration of changes in interest rates may have a significant
impact on net interest income. For example, although certain assets and
liabilities may have similar maturities or periods of repricing, they may react
in different degrees to changes in market interest rates. Interest rates on
certain types of assets and liabilities fluctuate in advance of changes in
general market rates, while interest rates on other types may lag behind changes
in general market rates. In addition, certain assets, such as adjustable rate
mortgage loans, have features (generally referred to as interest rate caps and
floors), which limit changes in interest rates. Prepayment and early withdrawal
levels also could deviate significantly from those assumed in calculating the
interest rate gap. The ability of many borrowers to service their debts also may
decrease during periods of rising interest rates.

         Changes in interest rates also affect our liquidity position. We
currently price deposits in response to market rates and it is management's
intention to continue this policy. If deposits are not priced in response to
market rates, a loss of deposits could occur that would negatively affect our
liquidity position.

         At December 31, 2002, our cumulative one year interest rate-sensitivity
gap ratio was 124%. Our targeted ratio is 80% to 120% in this time horizon. This
indicates that our interest-earning assets will reprice during this period at a
rate faster than our interest-bearing liabilities.

         The following table sets forth the distribution of the repricing of our
interest-earning assets and interest-bearing liabilities as of December 31,
2002, the interest rate-sensitivity gap, the cumulative interest
rate-sensitivity gap, the interest rate-sensitivity gap ratio and the cumulative
interest rate-sensitivity gap ratio. The table also sets forth the time periods
in which interest-earning assets and interest-bearing liabilities will mature or
may reprice in accordance with their contractual terms. However, the table does
not necessarily indicate the impact of general interest rate movements on the
net interest margin as the repricing of various categories of assets and
liabilities is subject to competitive pressures and the needs of our customers.
In addition, various assets and liabilities indicated as repricing within the
same period may in fact, reprice at different times within such period and at
different rates.


                                      -17-
<PAGE>

<TABLE>
<CAPTION>
                                                                           AFTER            AFTER
                                                                           THREE             ONE
                                                                           MONTHS          YEAR BUT
                                                           WITHIN            BUT            WITHIN           AFTER
                                                           THREE           WITHIN            FIVE            FIVE
                                                           MONTHS         ONE YEAR          YEARS            YEARS           TOTAL
                                                          --------        --------         --------         --------        --------
                                                                         (Dollars in Thousands)
<S>                                                       <C>             <C>              <C>              <C>             <C>
Interest-earning assets:
     Federal funds sold ..........................        $ 10,827        $      0         $      0         $      0        $ 10,827
     Securities ..................................           2,101               0                0           18,181          20,282
     Loans .......................................         134,243          10,346           14,574            1,281         160,444
                                                          --------        --------         --------         --------        --------

                                                           147,171          10,346           14,574           19,462         191,553
                                                          --------        --------         --------         --------        --------

Interest-bearing liabilities:
     Interest-bearing demand deposits ............          30,245               0                0                0          30,245
     Savings .....................................           9,383               0                0                0           9,383
     Certificates, less than $100,000 ............          10,955          36,018           20,662              159          67,794
     Certificates, $100,000 and over .............          12,997          26,478           13,112            1,485          54,072
     Repurchase agreements .......................             541               0                0                0             541
                                                          --------        --------         --------         --------        --------

                                                            64,121          62,496           33,774            1,644         162,035
                                                          --------        --------         --------         --------        --------

Interest rate sensitivity gap ....................        $ 83,050        $(52,150)        $(19,200)        $ 17,818        $ 29,518
Cumulative interest rate sensitivity gap .........        $ 83,050        $ 30,900         $ 11,700         $ 29,518
                                                          ========         ========         ========        ========
Interest rate sensitivity gap ratio ..............            2.30              .17              .43           11.84
                                                          ========         ========         ========        ========
Cumulative interest rate sensitivity gap ratio ...            2.30             1.24             1.07            1.19
                                                          ========         ========         ========        ========
</TABLE>

               SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA

         The tables and schedules on the following pages set forth certain
significant financial information and statistical data with respect to: the
distribution of our assets, liabilities and stockholders' equity, the interest
rates we experience; our investment portfolio; our loan portfolio, including
types of loans, maturities, and sensitivities of loans to changes in interest
rates and information on nonperforming loans; summary of the loan loss
experience and allowance for loan losses; types of deposits and the return on
equity and assets.

         DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY:
                    INTEREST RATES AND INTEREST DIFFERENTIALS

AVERAGE BALANCES

         The condensed average balance sheet for the years indicated is
presented below. (1)


                                      -18-
<PAGE>
<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                                          2002             2001
                                                        --------         --------
                                                         (Dollars in Thousands)
<S>                                                     <C>              <C>
                   ASSETS

Cash and due from banks ........................        $  2,994         $  2,547
Securities .....................................          12,670            9,492
Securities valuation account ...................              81               64
Federal funds sold .............................          11,436            8,427
Loans (2) ......................................         140,512           94,951
Allowance for loan losses ......................          (1,847)          (1,271)
Other assets ...................................           5,520            4,683
                                                        --------         --------
                                                        $171,366         $118,893
                                                        ========         ========

Total interest-earning assets ..................        $164,618         $112,870
                                                        ========         ========

     LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
     Noninterest-bearing demand ................        $ 13,294         $ 10,578
     Interest-bearing demand ...................          23,912           10,270
     Savings ...................................           9,952            8,035
     Time ......................................         102,801           78,532
                                                        --------         --------
              Total deposits ...................         149,959          107,415

     Repurchase agreements .....................             583              559
     Other liabilities .........................           1,112              960
                                                        --------         --------
              Total liabilities ................         151,654          108,934
     Stockholders' equity ......................          19,712            9,959
                                                        --------         --------
                                                        $171,366         $118,893
                                                        ========         ========

     Total interest-bearing liabilities..........       $137,248         $ 97,396
                                                        ========         ========
</TABLE>

(1)      For each category, average balances were determined using the daily
         average balances during the year.
(2)      The average balance of nonaccrual loans included in average loans for
         2002 and 2001 was $126,000 and $108,000, respectively.

INTEREST INCOME AND INTEREST EXPENSE

         The following tables set forth the amount of our interest income and
interest expense for each category of interest-earning assets and
interest-bearing liabilities and the average interest rate for total
interest-earning assets and total interest-bearing liabilities, net interest
spread and net yield on average interest-earning assets.


                                      -19-
<PAGE>

<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,
                                                                   2002                          2001
                                                          -------------------------     ----------------------
                                                                            AVERAGE                    AVERAGE
                                                          INTEREST            RATE      INTEREST         RATE
                                                          --------          -------     --------       -------
                                                                        (Dollars in Thousands)
<S>                                                       <C>               <C>         <C>            <C>
INTEREST INCOME:
     Interest and fees on loans (1) ...............        $10,606            7.55%     $ 9,236          9.73%
     Interest on securities .......................            641            5.06          618          6.51
     Interest on federal funds sold ...............            183            1.60          363          4.31
                                                           -------                      -------
     Total interest income ........................         11,430            6.94       10,217          9.05
                                                           -------                      -------

INTEREST EXPENSE:
     Interest on interest-bearing
       demand deposits ............................            546            2.28          352          3.43
     Interest on savings deposits .................            261            2.62          330          4.11
     Interest on time deposits ....................          4,189            4.07        4,716          6.01
     Interest on repurchase agreements ............             13            2.23           25          4.37
     Total interest expense .......................          5,009            3.65        5,423          5.57
                                                           -------                      -------

NET INTEREST INCOME  .............................         $ 6,421                      $ 4,794
                                                           =======                      =======

       Net interest spread..........................                          3.29%                      3.48%
       Net yield on average interest-earning assets..                         3.90%                      4.25%
                                                                              ====                       ====
</TABLE>

(1)      Interest and fees on loans includes $1,705,000 and $1,271,000 of loan
         fee income for the years ended December 31, 2002 and 2001,
         respectively. There was no interest income recognized on nonaccrual
         loans during 2002 or 2001.

RATE AND VOLUME ANALYSIS

         The following table describes the extent to which changes in interest
rates and changes in volume of interest-earning assets and interest-bearing
liabilities have affected our interest income and expense during the year
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to:

         -        change in volume (change in volume multiplied by old rate);

         -        change in rate (change in rate multiplied by old volume); and

         -        a combination of change in rate and change in volume.

         The changes in interest income and interest expense attributable to
both volume and rate have been allocated proportionately on a consistent basis
to the change due to volume and the change due to rate.


                                      -20-
<PAGE>

<TABLE>
<CAPTION>
                                                                    YEARS ENDED DECEMBER 31,
                                                                         2002 VS. 2001
                                                                        CHANGES DUE TO:
                                                              RATE          VOLUME         TOTAL
                                                            -------         ------        -------
                                                                    (Dollars in Thousands)
<S>                                                         <C>             <C>           <C>
Increase (decrease) in:
     Income from interest-earning assets:
     Interest and fees on loans ....................        $(2,385)        $3,755        $ 1,370
     Interest on securities ........................           (151)           174             23
     Interest on federal funds sold ................           (280)           100           (180)
                                                            -------         ------        -------
              Total interest income ................         (2,816)         4,029          1,213
                                                            -------         ------        -------

     Expense from interest-bearing liabilities:
     Interest on interest-bearing
       demand deposits .............................           (137)           331            194
     Interest on savings deposits ..................           (136)            67            (69)
     Interest on time deposits .....................         (1,755)         1,228           (527)
     Interest on repurchase agreements .............            (13)             1            (12)
                                                            -------         ------        -------
              Total interest expense ...............         (2,041)         1,627            414
                                                            -------         ------        -------

              Net interest income ..................        $  (775)        $2,402        $ 1,627
                                                            =======         ======        =======
</TABLE>

                              INVESTMENT PORTFOLIO

TYPES OF INVESTMENTS

         The carrying amounts of securities at the dates indicated, which are
all classified as available-for-sale, are summarized as follows:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                          2002            2001
                                                        --------        --------
                                                         (Dollars in Thousands)
<S>                                                     <C>             <C>
Mortgage-backed securities .....................        $ 11,563        $  2,242
U.S. Government agencies .......................           6,076           7,085
State, County & Municipal ......................           2,643               0
                                                        --------        --------
                                                        $ 20,282        $  9,327
                                                        ========        ========
</TABLE>

MATURITIES

         The amounts of securities, including the weighted average yield in each
category as of December 31, 2002, are shown in the following table according to
contractual maturity classifications one year or less, after one through five
years, after five through ten years and after ten years.

<TABLE>
<CAPTION>
                                                                     AFTER ONE THROUGH         AFTER FIVE THROUGH
                                          ONE YEAR OR LESS                FIVE YEARS                TEN YEARS
                                         ------------------         -------------------     ------------------------
                                         AMOUNT    YIELD(1)         AMOUNT     YIELD(1)      AMOUNT         YIELD(1)
                                         ------    --------         ------     --------     --------        --------
<S>                                      <C>       <C>              <C>        <C>          <C>             <C>
Mortgage-backed securities..........     $   0        --             $  0         --        $  4,315          4.72%
U.S. Government agencies............         0        --                0         --           6,076          4.99
State, County & Municipal...........         0        --                0         --           1,020          3.58

                                         -----                       ----                   --------
                                         $   0        --             $  0         --        $ 11,411          4.76%
                                         =====                       ====                   ========

</TABLE>


                                      -21-
<PAGE>

<TABLE>
<CAPTION>
                                                       AFTER TEN YEARS                          TOTAL
                                                 ---------------------------          --------------------------
                                                   AMOUNT           YIELD(1)            AMOUNT          YIELD(1)
                                                 ---------          --------          ---------         --------
<S>                                              <C>                <C>               <C>               <C>
Mortgage-backed securities................       $   7,248            4.09%           $  11,563           4.33%
U.S.  Government agencies.................               0            0.00%               6,076           4.99
State, County & Municipal.................           1,623            3.69                2,643           3.65
                                                 ---------                            ---------
                                                 $   8,871            4.02%           $  20,282           4.44%
                                                 =========                            =========
</TABLE>

(1)      Yields were computed using coupon interest, adding discount accretion
or subtracting premium amortization, as appropriate, on a ratable basis over the
life of each security. The weighted average yield for each maturity range was
computed using the carrying value of each security in that range.

LOAN PORTFOLIO

         Types of Loans

         The amount of loans outstanding at the indicated dates is shown in the
following table according to the type of loan.

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         2002              2001
                                                      ---------         ---------
                                                         (Dollars in Thousands)
<S>                                                   <C>               <C>
Commercial ...................................        $  31,946         $  31,534
Construction loans secured by real estate ....           84,547            56,859
Commercial loans secured by real estate ......           37,983            27,902
Consumer installment loans and other .........            5,690             5,863
                                                      ---------         ---------
                                                        160,166           122,158
Less allowance for loan losses ...............           (2,174)           (1,532)
                                                      ---------         ---------
              Net loans ......................        $ 157,992         $ 120,626
                                                      =========         =========
</TABLE>

         Maturities and Sensitivities of Loans to Changes in Interest Rates

         Total loans as of December 31, 2002, are shown in the following table
according to contractual maturity classifications one year or less, after one
year through five years, and after five years.

                                                       (Dollars in Thousands)
          Commercial:
                   One year or less..................      $ 55,646
                   After one through five years......        12,974
                   After five years..................         1,309
                                                           --------
                                                             69,929

          Construction:
                   One year or less..................        84,083
                   After one through five years......           464
                   After five years..................             0
                                                           --------
                                                             84,547

          Other:
                   One year or less..................         4,582
                   After one through five years......         1,105
                   After five years..................             3
                                                           --------
                                                              5,690

                                                           $160,166
                                                           ========


                                      -22-
<PAGE>

         The following table summarizes loans at December 31, 2002, with the due
dates after one year that have predetermined and floating or adjustable interest
rates.

                                                      (Dollars in Thousands)

          Predetermined interest rates................       $ 1,384
          Floating or adjustable interest rates.......        14,471
                                                             -------
                                                             $15,855
                                                             =======

         Risk Elements

         Information with respect to nonaccrual, past due, and restructured
loans at December 31, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                                  2002            2001
                                                                  ----            ----
                                                                 (Dollars in Thousands)
<S>                                                              <C>              <C>
Nonaccrual loans .....................................            $446            $  0
Loans contractually past due ninety
     days or more as to interest or
     principal payments and still accruing ...........               0              50
Restructured loans ...................................               0               0
Potential problem loans ..............................               0               0
Interest income that would have been recorded
     on nonaccrual and restructured loans under
     original terms ..................................               8               6
Interest income that was recorded on
     nonaccrual and restructured loans ...............               0               0
</TABLE>

         Potential problem loans are defined as loans about which we have
serious doubts as to the ability of the borrower to comply with the present loan
repayment terms and which may cause the loan to be placed on nonaccrual status,
to become past due more than 90 days, or to be restructured.

         It is our policy to discontinue the accrual of interest income when, in
the opinion of management, collection of interest becomes doubtful. This status
is accorded interest when:

         -        there is a significant deterioration in the financial
                  condition of the borrower and full repayment of principal and
                  interest is not expected; and

         -        the principal or interest is more than 90 days past due,
                  unless the loan is both well-secured and in the process of
                  collection.

         Loans classified for regulatory purposes as loss, doubtful,
substandard, or special mention that have not been included in the table above
do not represent or result from trends or uncertainties that management
reasonably expects will materially impact future operating results, liquidity,
or capital resources. These classified loans do not represent material credits
about which management is aware of any information that causes management to
have serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.

                         SUMMARY OF LOAN LOSS EXPERIENCE

         The following table summarizes average loan balances for the year
determined using the daily average balances during the year; changes in the
allowance for loan losses arising from loans charged off and recoveries on loans
previously charged off; additions to the allowance which have been charged to
operating expense; and the ratio of net charge-offs during the year to average
loans.


                                      -23-
<PAGE>

<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                          2002             2001
                                                        --------         --------
                                                          (Dollars in Thousands)
<S>                                                     <C>              <C>
Average amount of loans outstanding ............        $140,512         $ 94,951
                                                        ========         ========

Balance of allowance for loan losses
     at beginning of year ......................        $  1,532         $  1,106
                                                        --------         --------

Loans charged off:
     Commercial and financial ..................               7                0
     Real estate mortgage ......................               0                0
     Installment ...............................               0                0
                                                        --------         --------
                                                               7                0
                                                        --------         --------

Loans recovered:
     Commercial and financial ..................               5                0
     Real estate mortgage ......................               0                0
     Installment ...............................               0                0
                                                        --------         --------
                                                               5                0
                                                        --------         --------

Net charge-offs ................................               2                0
                                                        --------         --------

Additions to allowance charged to operating
     expense during year .......................             644              426
                                                        --------         --------

Balance of allowance for loan losses
     at end of year ............................        $  2,174         $  1,532
                                                        ========         ========

Ratio of net loans charged off during the
year to average loans outstanding ..............             .01%              0%
                                                        ========         ========
</TABLE>

         Allowance for Loan Losses

         The allowance for loan losses is maintained at a level that is deemed
appropriate by management to adequately cover all known and inherent risks in
the loan portfolio. Our evaluation of the loan portfolio includes a periodic
review of loan loss experience, current economic conditions that may affect the
borrower's ability to pay and the underlying collateral value of the loans.

         As of December 31, 2002, and 2001, the allocation of our allowance for
loan losses does not specifically correspond to the categories of loans listed
below. Based on our best estimate, the allocation of the allowance for loan
losses to types of loans, as of the indicated dates, is as follows:

<TABLE>
<CAPTION>
                                                         PERCENT OF LOANS IN                   PERCENT OF LOANS IN
                                                            EACH CATEGORY                         EACH CATEGORY
                                               AMOUNT      TO TOTAL LOANS         AMOUNT         TO TOTAL LOANS
                                               ------    -------------------      ------       -------------------
                                                                     (Dollars in Thousands)
<S>                                            <C>       <C>                      <C>          <C>
Commercial...................................  $  296           20                  $411               26%
Construction loans secured by real estate....   1,268           53                   820               47
Commercial loans secured by real estate......     554           24                   200               15
Consumer installment loans and other.........      57            3                   101               12
                                                -----          ---                ------              ---
                                               $2,175          100%               $1,532              100%
                                                =====          ===                ======              ===
</TABLE>


                                      -24-
<PAGE>

                                    DEPOSITS

         Average amount of deposits and average rates paid thereon, classified
as to noninterest-bearing demand deposits, interest-bearing demand deposits,
savings deposits, and time deposits is presented below. (1)

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                        2002                                     2001
                                                ----------------------                 -----------------------
                                                AMOUNT         PERCENT                 AMOUNT          PERCENT
                                                ------         -------                 ------          -------
                                                                     (Dollars in Thousands)
<S>                                          <C>               <C>                     <C>             <C>
Noninterest-bearing demand deposits........  $ 13,294            0.00%                 $ 10,578          0.00%
Interest-bearing demand deposits...........    23,912            2.28                    10,270          3.43
Savings deposits...........................     9,952            2.62                     8,035          4.11
Time deposits..............................   102,801            4.07                    78,532          6.01
                                              -------                                   -------
                                             $149,959                                  $107,415
                                              =======                                   =======
</TABLE>

         (1)      Average balances were determined using the daily average
                  balances.

         The amounts of time certificates of deposit issued in amounts of
$100,000 or more as of December 31, 2002, are shown below by category, which is
based on time remaining until maturity of three months or less, over three
through six months, over six through twelve months, and over 12 months.

                                              (Dollars in Thousands)

         Three months or less..................      $12,997
         Over three through six months.........       11,256
         Over six through twelve months........       15,222
         Over twelve months....................       14,597
                                                      ------
                  Total........................      $54,072
                                                      ======

                    RETURN ON ASSETS AND STOCKHOLDERS' EQUITY

         The following rate of return information for the years indicated is
presented below.

                                         YEARS ENDED
                                         DECEMBER 31,
                                       2002        2001
                                     -------      ------

Return on assets (1) ...............    0.56%     0.35%
Return on equity (2) ...............    4.84      4.20
Dividend payout ratio (3) ..........    0.00      0.00
Equity to assets ratio (4) .........   11.50      8.38

(1)      Net income divided by average total assets.
(2)      Net income divided by average equity.
(3)      Dividends declared per share of common stock divided by net income per
         share.
(4)      Average common equity divided by average total assets.

ITEM 7.  FINANCIAL STATEMENTS

         The financial statements of GBC Bancorp, Inc., the Notes to financial
statements and the Independent Auditors' Report of Mauldin & Jenkins, LLC,
independent certified public accountants, required by this Item 7 commence on
page F-1 and are incorporated herein by this reference. The Financial Statements
filed as part of this Annual Report on Form 10-KSB are listed in the Index to
Financial Statements below:


                                      -25-
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE NO.
                                                                                                                --------
<S>                                                                                                             <C>
Independent Auditor's Report ..............................................................................        F-1

Consolidated Balance Sheets as of December 31, 2002 and December 31, 2001 .................................        F-2

Consolidated Statements of Income for the Years Ended December 31, 2002 and December 31, 2001 .............        F-3

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2002 and
     December 31, 2001.....................................................................................        F-4

Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2002 and
     December 31, 2001.....................................................................................        F-5

Consolidated Statements of Cash Flows for the Years Ended December 31, 2002 and December 31, 2001 .........        F-6

Notes to Consolidated Financial Statements ................................................................        F-7
</TABLE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         The information set forth under the captions "Election of Directors,"
"Executive Officers" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Proxy Statement used in connection with the Company's 2003
Annual Shareholders' meeting is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

         The information set forth under the caption "Executive Compensation" in
the Proxy Statement used in connection with the Company's 2003 Annual
Shareholders' meeting is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

         The information set forth under the captions "Security Ownership of
Principal Shareholders and Management" and "Equity Compensation Plan
Information" in the Proxy Statement used in connection with the Company's 2003
Annual Shareholders' meeting is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information set forth under the caption "Certain Relationships and
Related Transactions" in the Proxy Statement used in connection with the
Company's 2003 Annual Shareholders' meeting is incorporated herein by reference.


                                      -26-
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits required by Item 601 of Regulation S-B.

      EXHIBIT
       NUMBER                            DESCRIPTION
      -------     --------------------------------------------------------------

         3.1      Articles of Incorporation of the Company, as amended (filed as
                  Exhibit 3.1 to the Registration Statement on Form SB-2, as
                  amended (Registration No. 333-19081)).

         3.2      Amended and Restated Bylaws (filed as Exhibit 3.2 to the
                  Registration Statement on Form SB-2, as amended, Registration
                  No. 333-52494).

         4.1      Specimen Common Stock Certificate (filed as Exhibit 4.2 to the
                  Registration Statement on Form SB-2, as amended (Registration
                  No. 333-19081)).

         10.1     1998 Stock Option Plan (filed as Exhibit 99 to the
                  Registration Statement on Form S-8 Registration Statement
                  filed in July 25, 2002.)

         10.2     Director Deferred Stock Unit Plan.

         10.3     Real Estate Commercial Lease Contract dated as of January 1,
                  2000, by and between GBC Properties, LLC and Gwinnett Banking
                  Company (filed as Exhibit 10.4 to the Annual Report on Form
                  10-KSB for the year ended December 31, 1999).

         10.4     Real Estate Commercial Lease Contract dated as of July 26,
                  2000, by and between Northwinds Center, L.P. and Gwinnett
                  Banking Company (filed as Exhibit 10.4 to the Annual Report on
                  Form 10-KSB for the year ended December 31, 2000).

         21.1     Subsidiaries of the Company (filed as Exhibit 21.1 to the
                  Registration Statement on Form SB-2, as amended (Registration
                  No. 333-19081)).

         23.1     Consent of Mauldin & Jenkins, LLC.

         99.1     Proxy Materials and Proxy for 2002 Annual Shareholders'
                  Meeting.

         99.2     Certification pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.

         99.3     Certification pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.

(b)      Reports on Form 8-K filed in the fourth quarter of 2001:  None.

ITEM 14. CONTROLS AND PROCEDURES

         Within 90 days prior to the date of filing of this report, we carried
out an evaluation, under the supervision and with the participation of our Chief
Executive Officer and the Chief Financial Officer, of the design and operation
of our disclosure controls and procedures. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the information that we are required to disclose in the reports we file under
the Securities Exchange Act of 1934, within the time periods specified in the
SEC's rules and forms. Our Chief Executive Officer and Chief Financial Officer
also concluded that our disclosure controls and procedures are effective in
timely alerting them to material information relating to our company required to
be included in our periodic SEC filings. In connection with the new rules, we
are in the process of further reviewing and documenting our disclosure controls
and procedures, including


                                      -27-
<PAGE>

our internal controls and procedures for financial reporting, and may from time
to time make changes designed to enhance their effectiveness and to ensure that
our systems evolve with our business.

         There have been no significant changes in our internal controls or in
other factors that could significantly affect our internal controls subsequent
to the date of this evaluation.


                                      -28-
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                               GBC BANCORP, INC.



                               By:      /s/ Larry D. Key
                                        ----------------------------------
                                        Larry D. Key, President and Chief
                                           Executive Officer

                               Date:  March 15, 2003

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant in the capacities and on
the date indicated.

<TABLE>
<CAPTION>
                SIGNATURE                                                    TITLE
                ---------                                                    -----
<S>                                                  <C>
/s/ Larry D. Key                                     President, Chief Executive Officer and Chairman of the
--------------------------------------------         Company and the Bank
Larry D. Key

/s/ John T. Hopkins III                              Executive Vice President, Chief Financial Officer,
--------------------------------------------         Secretary and Treasurer of the Company and the Bank
John T. Hopkins III

/s/ James B. Ballard                                 Director of the Company and the Bank
--------------------------------------------
James B. Ballard

/s/ Jerry M. Boles                                   Director of the Company and the Bank
--------------------------------------------
Jerry M. Boles

/s/ W. H. Britt                                      Director of the Company and the Bank
--------------------------------------------
W. H. Britt

/s/ Richard F. Combs                                 Director of the Company and the Bank
--------------------------------------------
Richard F. Combs

/s/ William G. Hayes                                 Director of the Company and the Bank
--------------------------------------------
William G. Hayes

/s/ Douglas A. Langley                               Director of the Company and the Bank
--------------------------------------------
Douglas A. Langley

/s/ Norris J. Nash                                   Director of the Company and the Bank
--------------------------------------------
Norris J. Nash

/s/ J. Joseph Powell                                 Director of the Company and the Bank
--------------------------------------------
J. Joseph Powell

/s/ William S. Stanton, Jr.                          Director of the Company and the Bank
--------------------------------------------
William S. Stanton, Jr.
</TABLE>
<PAGE>
                                 CERTIFICATIONS

I, Larry D. Key, certify that:

         1.       I have reviewed this annual report on Form 10-KSB of GBC
Bancorp, Inc.;

         2.       Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

         3.       Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

                  a.       Designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;

                  b.       Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and

                  c.       Presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

         5.       The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):

                  a.       All significant deficiencies in the design or
operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal
controls; and

                  b.       Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and

         6.       The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date:  March 15, 2003



/s/ Larry D. Key

Larry D. Key
Chief Executive Officer
<PAGE>

                                 CERTIFICATIONS

I, John T. Hopkins, III, certify that:

         1.       I have reviewed this annual report on Form 10-KSB of GBC
Bancorp, Inc.;

         2.       Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

         3.       Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:

                  a.       Designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;

                  b.       Evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and

                  c.       Presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

         5.       The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):

                  a.       All significant deficiencies in the design or
operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal
controls; and

                  b.       Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and

         6.       The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date:  March 15, 2003



/s/ John T. Hopkins, III

John T. Hopkins, III
Chief Financial Officer
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                          CONSOLIDATED FINANCIAL REPORT

                                DECEMBER 31, 2002
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                          CONSOLIDATED FINANCIAL REPORT
                                DECEMBER 31, 2002

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                        PAGE

<S>                                                                                                                     <C>
INDEPENDENT AUDITOR'S REPORT........................................................................................     F-1

FINANCIAL STATEMENTS

     CONSOLIDATED BALANCE SHEETS....................................................................................     F-2
     CONSOLIDATED STATEMENTS OF INCOME..............................................................................     F-3
     CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ...............................................................     F-4
     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY ...............................................................     F-5
     CONSOLIDATED STATEMENTS OF CASH FLOWS..........................................................................     F-6
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.....................................................................  F-7-23
</TABLE>
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

TO THE BOARD OF DIRECTORS
GBC BANCORP, INC.
LAWRENCEVILLE, GEORGIA

                  We have audited the accompanying consolidated balance sheets
of GBC BANCORP, INC. AND SUBSIDIARY as of December 31, 2002 and 2001, and the
related consolidated statements of income, comprehensive income, stockholders'
equity, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

                  We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

                  In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of GBC
Bancorp, Inc. and subsidiary as of December 31, 2002 and 2001, and the results
of their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.



                                    /s/ Mauldin & Jenkins, LLC

Atlanta, Georgia
February 27, 2003


                                      F-1
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                    2002                2001
                                                                                ------------        ------------
<S>                                                                             <C>                 <C>
                                     ASSETS

Cash and due from banks                                                         $  3,360,345        $  4,347,480
Federal funds sold                                                                10,827,000           5,301,000
Securities available-for-sale                                                     20,282,371           9,327,376

Loans                                                                            160,166,104         122,157,943
Less allowance for loan losses                                                     2,174,339           1,532,300
                                                                                ------------        ------------
          Loans, net                                                             157,991,765         120,625,643

Premises and equipment                                                               625,548             809,535
Other assets                                                                       5,118,949           4,500,319
                                                                                ------------        ------------

          TOTAL ASSETS                                                          $198,205,978        $144,911,353
                                                                                ============        ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
    Noninterest-bearing                                                         $ 13,390,690        $ 11,241,302
    Interest-bearing                                                             161,392,763         114,683,007
                                                                                ------------        ------------
           Total deposits                                                        174,783,453         125,924,309
    Securities sold under repurchase agreements                                      541,214             585,997
    Other liabilities                                                              1,451,388             982,958
                                                                                ------------        ------------
          TOTAL LIABILITIES                                                      176,776,055         127,493,264
                                                                                ------------        ------------

Commitments and contingencies

Stockholders' equity
    Common stock, par value $1; 3,000,000 shares authorized;
       1,711,083 and 1,502,216 issued and outstanding, respectively                1,711,083           1,502,216
    Capital surplus                                                               18,068,979          15,364,153
    Retained earnings                                                              1,449,690             494,924
    Accumulated other comprehensive income                                           200,171              56,796
                                                                                ------------        ------------

          TOTAL STOCKHOLDERS' EQUITY                                              21,429,923          17,418,089
                                                                                ------------        ------------

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $198,205,978        $144,911,353
                                                                                ============        ============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-2
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                              2002               2001
                                                                          -----------        -----------
<S>                                                                       <C>                <C>
INTEREST INCOME
    Loans, including fees                                                 $10,605,682        $ 9,235,601
    Taxable securities                                                        636,047            617,828
    Nontaxable securities                                                       5,093                 --
    Federal funds sold                                                        182,760            363,241
                                                                          -----------        -----------
          TOTAL INTEREST INCOME                                            11,429,582         10,216,670
                                                                          -----------        -----------

INTEREST EXPENSE
      Deposits                                                              4,996,652          5,398,383
      Other borrowings                                                         12,656             24,388
                                                                          -----------        -----------
           TOTAL INTEREST EXPENSE                                           5,009,308          5,422,771
                                                                          -----------        -----------

          NET INTEREST INCOME                                               6,420,274          4,793,899
PROVISION FOR LOAN LOSSES                                                     643,850            426,116
                                                                          -----------        -----------
          NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES               5,776,424          4,367,783
                                                                          -----------        -----------

OTHER INCOME
    Service charges on deposit accounts                                       140,965            129,953
    Other operating income                                                    537,136            258,446
                                                                          -----------        -----------
          TOTAL OTHER INCOME                                                  678,101            388,399
                                                                          -----------        -----------

OTHER EXPENSES
    Salaries and employee benefits                                          3,032,720          2,344,811
    Equipment and occupancy expenses                                          902,631            914,358
    Other operating expenses                                                1,108,336            911,977
                                                                          -----------        -----------
          TOTAL OTHER EXPENSES                                              5,043,687          4,171,146
                                                                          -----------        -----------

          INCOME BEFORE INCOME TAXES                                        1,410,838            585,036

INCOME TAX EXPENSE                                                            456,072            166,689
                                                                          -----------        -----------

                    NET INCOME                                            $   954,766        $   418,347
                                                                          ===========        ===========

BASIC EARNINGS PER SHARE                                                  $      0.57        $      0.44
                                                                          ===========        ===========

DILUTED EARNINGS PER SHARE                                                $      0.55        $      0.42
                                                                          ===========        ===========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-3
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                            2002             2001
                                                                         ----------        --------
<S>                                                                      <C>               <C>
NET INCOME                                                               $  954,766        $418,347

OTHER COMPREHENSIVE INCOME:

        Unrealized holding gains on securities
            available-for-sale arising during period, net of
            tax of $72,973 and $39,136                                      143,375          63,853
                                                                         ----------        --------

COMPREHENSIVE INCOME                                                     $1,098,141        $482,200
                                                                         ==========        ========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-4
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                                    ACCUMULATED
                                               COMMON STOCK                                            OTHER             TOTAL
                                       -------------------------       CAPITAL         RETAINED    COMPREHENSIVE    STOCKHOLDERS'
                                         SHARES       PAR VALUE        SURPLUS         EARNINGS    INCOME (LOSS)        EQUITY
                                       ----------    -----------    -------------     ----------   -------------    ------------
<S>                                    <C>           <C>            <C>               <C>          <C>              <C>
BALANCE, DECEMBER 31, 2000               951,580     $  951,580     $  8,540,327      $   76,577     $  (7,057)     $  9,561,427
    Net income                                --             --               --         418,347            --           418,347
    Issuance of common stock             550,636        550,636        7,158,268              --            --         7,708,904
    Stock offering costs                      --             --         (334,442)             --            --          (334,442)
    Other comprehensive income                --             --               --              --        63,853            63,853
                                       ---------     ----------     ------------      ----------     ---------      ------------
BALANCE, DECEMBER 31, 2001             1,502,216      1,502,216       15,364,153         494,924        56,796        17,418,089
    Net income                                --             --               --         954,766            --           954,766
    Issuance of common stock             208,867        208,867        2,715,269              --            --         2,924,136
    Stock offering costs                      --             --          (10,443)             --            --           (10,443)
    Other comprehensive income                --             --               --              --       143,375           143,375
                                       ---------     ----------     ------------      ----------     ---------      ------------
BALANCE, DECEMBER 31, 2002             1,711,083     $1,711,083     $ 18,068,979      $1,449,690     $ 200,171      $ 21,429,923
                                       =========     ==========     ============      ==========     =========      ============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-5
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                           2002                 2001
                                                                                       ------------         ------------
<S>                                                                                    <C>                  <C>
OPERATING ACTIVITIES
    Net income                                                                         $    954,766         $    418,347
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                                        273,588              289,366
        Deferred income taxes                                                              (342,077)            (133,232)
        Gain on sale of other real estate owned                                                  --               (2,618)
        Gain on sale of loans                                                              (152,277)                  --
        Provision for loan losses                                                           643,850              426,116
        (Increase) decrease in interest receivable                                         (102,865)             120,383
        Decrease in interest payable                                                        (73,692)              (5,052)
        Increase (decrease) in income taxes payable                                          97,887             (364,929)
        Net other operating activities                                                      197,574              150,806
                                                                                       ------------         ------------

              Net cash provided by operating activities                                   1,496,754              899,187
                                                                                       ------------         ------------

INVESTING ACTIVITIES
    Purchases of securities available-for-sale                                          (18,601,825)          (9,525,611)
    Proceeds from maturities of securities available-for-sale                             7,863,178            9,340,074
    Net (increase) decrease in federal funds sold                                        (5,526,000)          12,504,000
    Net increase in loans                                                               (37,857,695)         (49,826,809)
    Purchase of premises and equipment                                                      (89,601)            (324,857)
    Proceeds from sale of other real estate owned                                                --              533,092
    Purchase of life insurance policies                                                          --             (933,000)
                                                                                       ------------         ------------

            Net cash used in investing activities                                       (54,211,943)         (38,233,111)
                                                                                       ------------         ------------

FINANCING ACTIVITIES
    Net increase in deposits                                                             48,859,144           29,578,334
    Net increase (decrease) in securities sold under repurchase agreements                  (44,783)             585,997
    Proceeds from sale of common stock                                                    2,924,136            7,708,904
    Stock offering costs                                                                    (10,443)            (303,351)
                                                                                       ------------         ------------

            Net cash provided by financing activities                                    51,728,054           37,569,884
                                                                                       ------------         ------------

Net increase (decrease) in cash and due from banks                                         (987,135)             235,960

Cash and due from banks at beginning of year                                              4,347,480            4,111,520
                                                                                       ------------         ------------

Cash and due from banks at end of year                                                 $  3,360,345         $  4,347,480
                                                                                       ============         ============

SUPPLEMENTAL DISCLOSURES
      Cash paid for:
            Interest                                                                   $  5,083,000         $  5,427,823

            Income taxes                                                               $    700,262         $    664,850

NONCASH TRANSACTION
    Principal balances of loans transferred to other real estate owned                 $         --         $    526,394
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-6
<PAGE>

                                GBC BANCORP, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  NATURE OF BUSINESS

                     GBC Bancorp, Inc. (the "Company") is a bank holding company
                     whose business is conducted by its wholly-owned subsidiary,
                     Gwinnett Banking Company (the "Bank"). The Bank is a
                     commercial bank located in Lawrenceville, Gwinnett County,
                     Georgia with a branch in Alpharetta, Fulton County,
                     Georgia. The Bank provides a full range of banking services
                     in its primary market area of Gwinnett County and
                     surrounding counties.

                  BASIS OF PRESENTATION AND ACCOUNTING ESTIMATES

                     The consolidated financial statements include the accounts
                     of the Company and its subsidiary. Significant intercompany
                     transactions and balances have been eliminated in
                     consolidation.

                     In preparing financial statements in conformity with
                     accounting principles generally accepted in the United
                     States of America, management is required to make estimates
                     and assumptions that affect the reported amounts of assets
                     and liabilities and the disclosure of contingent assets and
                     liabilities as of the balance sheet date and the reported
                     amounts of revenues and expenses during the reporting
                     period. Actual results could differ from those estimates.
                     Material estimates that are particularly susceptible to
                     significant change in the near term relate to the
                     determination of the allowance for loan losses, the
                     valuation of foreclosed real estate, and deferred taxes.

                  CASH, DUE FROM BANKS AND CASH FLOWS

                     For purposes of reporting cash flows, cash and due from
                     banks includes cash on hand, cash items in process of
                     collection and amounts due from banks. Cash flows from
                     loans, federal funds sold, deposits, and securities sold
                     under repurchase agreements are reported net.

                     The Bank is required to maintain reserve balances in cash
                     or on deposit with the Federal Reserve Bank, based on a
                     percentage of deposits. The total of those reserve balances
                     was approximately $299,000 and $185,000 at December 31,
                     2002 and 2001.

                  SECURITIES

                     Debt securities that management has the positive intent and
                     ability to hold to maturity are classified as
                     held-to-maturity and recorded at amortized cost. Securities
                     not classified as held-to-maturity are classified as
                     available-for-sale and recorded at fair value with
                     unrealized gains and losses excluded from earnings and
                     reported in other comprehensive income, net of the related
                     deferred tax effect.

                     Purchase premiums and discounts are recognized in interest
                     income using the interest method over the terms of the
                     securities. Gains and losses on the sale of securities are
                     determined using the specific identification method.
                     Declines in the fair value of held-to-maturity and
                     available-for-sale securities below their cost that are
                     deemed to be other than temporary are reflected in earnings
                     as realized losses.


                                      F-7
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  LOANS

                     Loans are reported at their outstanding principal balances
                     less deferred fees and the allowance for loan losses.
                     Interest income is accrued on the principal balance.

                     Nonrefundable loan fees and costs incurred for loans are
                     deferred and recognized in income over the estimated life
                     of the loans using a method which approximates a level
                     yield.

                     The accrual of interest on loans is discontinued when, in
                     management's opinion, the borrower may be unable to meet
                     payments as they become due, unless the loan is
                     well-secured. All interest accrued but not collected for
                     loans that are placed on nonaccrual or charged off is
                     reversed against interest income. Interest income on
                     nonaccrual loans is subsequently recognized only to the
                     extent cash payments are received, until the loans are
                     returned to accrual status.

                     The allowance for loan losses is established through a
                     provision for loan losses charged to expense. Loan losses
                     are charged against the allowance when management believes
                     the collectibility of the principal is unlikely. Subsequent
                     recoveries are credited to the allowance.

                     The allowance is an amount that management believes will be
                     adequate to absorb estimated losses in the loan portfolio.
                     The allowance for loan losses is evaluated on a regular
                     basis by management and is based upon management's periodic
                     review of the collectibility of the loans in light of
                     historical experience, the nature and volume of the loan
                     portfolio, adverse situations that may affect the
                     borrower's ability to repay, estimated value of any
                     underlying collateral and prevailing economic conditions.
                     This evaluation is inherently subjective as it requires
                     estimates that are susceptible to significant revision as
                     more information becomes available. While management uses
                     the best information available to make its evaluation,
                     future adjustments to the allowance may be necessary if
                     there are significant changes in economic conditions. In
                     addition, regulatory agencies, as an integral part of their
                     examination process, periodically review the Company's
                     allowance for loan losses, and may require the Company to
                     make additions to the allowance based on their judgment
                     about information available to them at the time of their
                     examinations.

                     A loan is considered impaired when it is probable the
                     Company will be unable to collect all principal and
                     interest payments due in accordance with the contractual
                     terms of the loan agreement. Impaired loans are measured by
                     either the present value of expected future cash flows
                     discounted at the loan's effective interest rate, the
                     loan's obtainable market price, or the fair value of the
                     collateral if the loan is collateral dependent. The amount
                     of impairment, if any, and any subsequent changes are
                     included in the allowance for loan losses.

                     The Company originates and sells participations in certain
                     loans. Gains are recognized at the time the sale is
                     consummated. The amount of gain recognized on the sale of a
                     specific loan is equal to the percentage resulting from
                     determining the fair value of the portion of the loan sold
                     relative to the fair value of the entire loan. Losses are
                     recognized at the time the loan is identified as held for
                     sale and the loan's carrying value exceeds its fair value.

                  PREMISES AND EQUIPMENT

                     Premises and equipment are carried at cost less accumulated
                     depreciation. Depreciation is computed by the straight-line
                     method over the estimated useful lives of the assets.


                                      F-8
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  OTHER REAL ESTATE OWNED

                     Other real estate owned represents properties acquired
                     through foreclosure. Other real estate owned is held for
                     sale and is carried at the lower of cost or fair value less
                     estimated costs to sell. Any write-down to fair value at
                     the time of transfer to other real estate owned is charged
                     to the allowance for loan losses. Revenue and expenses from
                     operations and changes in the valuation allowance are
                     included in net expenses from foreclosed assets. The was no
                     other real estate owned at either December 31, 2002 or
                     2001.

                  INCOME TAXES

                     Deferred income tax assets and liabilities are determined
                     using the balance sheet method. Under this method, the net
                     deferred tax asset or liability is determined based on the
                     tax effects of the temporary differences between the book
                     and tax bases of the various balance sheet assets and
                     liabilities and gives current recognition to changes in tax
                     rates and laws.

                  STOCK COMPENSATION PLAN

                     At December 31, 2002, the Company has a stock-based
                     employee compensation plan, which is described more fully
                     in Note 10. The Company accounts for this plan under the
                     recognition and measurement principles of APB Opinion No.
                     25, Accounting for Stock Issued to Employees, and related
                     Interpretations. No stock-based employee compensation cost
                     is reflected in net income, as all options granted under
                     this plan had an exercise price equal to the market value
                     of the underlying stock on the date of grant. The following
                     table illustrates the effect on net income and earnings per
                     share if the Company had applied the fair value recognition
                     provisions of SFAS No. 123, Accounting for Stock-Based
                     Compensation, to stock-based employee compensation.

<TABLE>
<CAPTION>
                                                                                         YEARS ENDED DECEMBER 31,
                                                                                        --------------------------
                                                                                             2002             2001
                                                                                        ----------      ----------
                     <S>                                                                <C>             <C>
                     Net income, as reported                                            $  954,766      $  418,347
                     Deduct: Total stock-based employee compensation
                           expense determined under fair value based
                           method for all awards, net of related tax effects              (105,672)       (107,041)
                                                                                        ----------      ----------
                     Pro forma net income                                               $  849,094      $  311,306
                                                                                        ==========      ==========
                     Earnings per share:
                        Basic - as reported                                             $      .57      $     0.44
                                                                                        ==========      ==========
                        Basic - pro forma                                               $      .51      $     0.33
                                                                                        ==========      ==========
                        Diluted - as reported                                           $      .55      $     0.42
                                                                                        ==========      ==========
                        Diluted - pro forma                                             $      .49      $     0.32
                                                                                        ==========      ==========
</TABLE>


                                      F-9
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  EARNINGS PER SHARE

                     Basic earnings per share are computed by dividing net
                     income by the weighted average number of shares of common
                     stock outstanding. Diluted earnings per share are computed
                     by dividing net income by the sum of the weighted-average
                     number of shares of common stock outstanding and potential
                     common shares. Potential common shares consist of stock
                     options.

                  COMPREHENSIVE INCOME

                     Accounting principles generally require that recognized
                     revenue, expenses, gains and losses be included in net
                     income. Although certain changes in assets and liabilities,
                     such as unrealized gains and losses on available-for-sale
                     securities, are reported as a separate component of the
                     equity section of the balance sheet, such items, along with
                     net income, are components of comprehensive income.

                  ACCOUNTING STANDARDS

                     In December 2002, the FASB issued SFAS No. 148, Accounting
                     for Stock-Based Compensation-Transition and Disclosure.
                     SFAS No. 148 amends SFAS No. 123, Accounting for
                     Stock-Based Compensation, to provide alternative methods of
                     transition for an entity that voluntarily changes to the
                     fair value based method of accounting for stock-based
                     employee compensation. It also amends the disclosure
                     provisions of SFAS No. 123 to require prominent disclosure
                     about the effects on reported net income of an entity's
                     accounting policy decisions with respect to stock-based
                     employee compensation. The Company has not elected to adopt
                     the recognition provisions of this Statement for
                     stock-based employee compensation and has elected to
                     continue with accounting methodology in Opinion No. 25 as
                     permitted by SFAS No. 123.

NOTE 2. SECURITIES

                  The amortized cost and fair value of securities are summarized
as follows:

<TABLE>
<CAPTION>
                                                                            GROSS          GROSS
                                                            AMORTIZED     UNREALIZED     UNREALIZED         FAIR
                                                              COST          GAINS          LOSSES           VALUE
                                                           -----------    ----------    ------------     -----------
                     <S>                                   <C>            <C>           <C>              <C>
                     SECURITIES AVAILABLE-FOR-SALE
                        DECEMBER 31, 2002:
                        U.S. GOVERNMENT AND
                           AGENCY SECURITIES               $ 5,995,516    $  81,054     $         --     $ 6,076,570
                        STATE AND MUNICIPAL                  2,642,170        1,011              (44)      2,643,137
                        MORTGAGE-BACKED SECURITIES          11,336,730      225,934               --      11,562,664
                                                           -----------    ---------     ------------     -----------
                                                           $19,974,416    $ 307,999     $        (44)    $20,282,371
                                                           ===========    =========     ============     ===========

                        December 31, 2001:
                        U.S. Government and
                           agency securities               $ 6,990,696    $  96,064     $     (1,684)    $ 7,085,076
                        Mortgage-backed securities           2,245,073          431           (3,204)      2,242,300
                                                           -----------    ---------     ------------     -----------
                                                           $ 9,235,769    $  96,495     $     (4,888)    $ 9,327,376
                                                           ===========    =========     ============     ===========
</TABLE>


                                      F-10
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. SECURITIES (CONTINUED)

                  Securities with a carrying value of $3,038,090 and $2,551,225
                  at December 31, 2002 and 2001, respectively, were pledged to
                  secure public deposits and for other purposes required or
                  permitted by law.

                  The amortized cost and fair value of securities as of December
                  31, 2002 by contractual maturity are shown below. Maturities
                  may differ from contractual maturities of mortgage-backed
                  securities because the mortgages underlying the securities may
                  be called or repaid without penalty, Therefore, these
                  securities are not included in the maturity categories in the
                  following summary.

<TABLE>
<CAPTION>
                                                         AMORTIZED         FAIR
                                                           COST            VALUE
                                                        -----------     -----------
                     <S>                                <C>             <C>
                     Due from five to ten years         $ 7,015,167     $ 7,096,542
                     Due after ten years                  1,622,519       1,623,165
                     Mortgage-backed securities          11,336,730      11,562,664
                                                        -----------     -----------
                                                        $19,974,416     $20,282,371
                                                        ===========     ===========
</TABLE>

NOTE 3. LOANS

                  The composition of loans is summarized as follows:

<TABLE>
<CAPTION>
                                                                                                  DECEMBER 31,
                                                                                       --------------------------------
                                                                                            2002               2001
                                                                                       -------------      -------------
                         <S>                                                           <C>                <C>
                         Commercial                                                    $  31,945,581      $  31,534,171
                         Commercial loans secured by real estate                          37,983,404         27,901,411
                         Construction loans secured by real estate                        84,828,691         57,050,303
                         Consumer installment and other                                    5,689,558          5,863,010
                                                                                       -------------      -------------
                                                                                         160,447,234        122,348,895
                         Deferred fees                                                      (281,130)          (190,952)
                         Allowance for loan losses                                        (2,174,339)        (1,532,300)
                                                                                       -------------      -------------
                         Loans, net                                                    $ 157,991,765      $ 120,625,643
                                                                                       =============      =============

                     Changes in the allowance for loan losses are as follows:

                                                                                           YEARS ENDED DECEMBER 31,
                                                                                       --------------------------------
                                                                                            2002               2001
                                                                                       -------------      -------------

                     Balance, beginning of year                                        $   1,532,300      $   1,106,184
                        Provision for loan losses                                            643,850            426,116
                        Loans charged off                                                     (6,911)                --
                        Recoveries of loans previously charged off                             5,100                 --
                                                                                       -------------      -------------
                       Balance, end of year                                            $   2,174,339      $   1,532,300
                                                                                       =============      =============
</TABLE>


                                      F-11
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. LOANS (CONTINUED)

                  The total recorded investment in impaired loans, consisting
                  solely of loans on nonaccrual status, was $445,774 and $0 at
                  December 31, 2002 and 2001, respectively. There were no
                  impaired loans that had related allowances for loan losses
                  determined in accordance with SFAS No. 114, Accounting by
                  Creditors for Impairment of a Loan, at December 31, 2002 and
                  2001. The average recorded investment in impaired loans for
                  2002 and 2001 was $125,823 and $107,800, respectively.
                  Interest income recognized on impaired loans for cash payments
                  received was not material for the years ended 2002 and 2001.

                  Loans past due ninety days or more and still accruing interest
                  were $-0- and $50,000 at December 31, 2002 and 2001,
                  respectively.

                  In the ordinary course of business, the Company has granted
                  loans to certain related parties, including directors,
                  executive officers, and their affiliates. The interest rates
                  on these loans were substantially the same as rates prevailing
                  at the time of the transaction and repayment terms are
                  customary for the type of loan. Changes in related party loans
                  for the year ended December 31, 2002 are as follows:

<TABLE>
<CAPTION>
                     <S>                                           <C>
                     Balance, beginning of year                    $ 5,692,112
                        Advances                                     3,514,463
                        Repayments                                  (3,109,824)
                                                                   -----------
                     Balance, end of year                          $ 6,096,751
                                                                   ===========
</TABLE>

NOTE 4. PREMISES AND EQUIPMENT

         Premises and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                       --------------------------------
                                                                                           2002                2001
                                                                                       -------------      -------------
                     <S>                                                               <C>                <C>
                     Equipment                                                         $   1,414,132      $   1,328,351
                     Leasehold improvements                                                  320,635            316,815
                                                                                       -------------      -------------
                                                                                           1,734,767          1,645,166
                     Accumulated depreciation                                             (1,109,219)          (835,631)
                                                                                       -------------      -------------
                                                                                       $     625,548      $     809,535
                                                                                       =============      =============
</TABLE>

NOTE 5. DEPOSITS

                  The aggregate amount of time deposits in denominations of
                  $100,000 or more at December 31, 2002 and 2001 was $54,071,984
                  and $42,165,973, respectively. The Company had brokered
                  certificates of deposit at December 31, 2002 and 2001 of
                  $3,597,604 and $0, respectively. The scheduled maturities of
                  time deposits at December 31, 2002 are as follows:

<TABLE>
                     <S>                                                                <C>
                     2003                                                               $ 86,408,170
                     2004                                                                 21,919,773
                     2005                                                                  8,546,206
                     2006                                                                  2,812,025
                     2007                                                                  2,079,861
                                                                                        ------------
                                                                                        $121,766,035
                                                                                        ============
</TABLE>


                                      F-12
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

                  Securities sold under repurchase agreements, which are secured
                  borrowings, generally mature within one to four days from the
                  transaction date. Securities sold under repurchase agreements
                  are reflected at the amount of cash received in connection
                  with the transactions. The Company may be required to provide
                  additional collateral based on the fair value of the
                  underlying securities. The Company monitors the fair value of
                  the underlying securities on a daily basis. Securities sold
                  under repurchase agreements at December 31, 2002 and 2001 were
                  $541,214 and $585,997, respectively.

NOTE 7. DEFERRED COMPENSATION PLANS

                  The Company has a deferred compensation plan providing for
                  death and retirement benefits for its executive officers. The
                  estimated amounts to be paid under the compensation plan are
                  being funded through the purchase of life insurance policies
                  on the executive officers. The balance of the policy cash
                  surrender values included in other assets at December 31, 2002
                  and 2001 is $3,053,719 and $2,911,868, respectively. Income
                  recognized on the policies amounted to $141,851 and $84,084
                  for the years ended December 31, 2002 and 2001, respectively.
                  Deferred compensation liability and expense recognized as of
                  and for the years ended December 31, 2002 and 2001 amounted to
                  $122,621 and $0, respectively.

                  Effective January 1, 2001, the Company established a "Deferred
                  Stock Unit" plan in which members of the Board of Directors
                  and Executive Officers may choose to receive "deferred fee
                  units" as consideration for their directors' fees in lieu of
                  cash. The deferred fee units assigned to the members equal the
                  number of shares of common stock that could be purchased at
                  the fair market value with the amount of fees deferred. The
                  units will be settled in cash when the member terminates
                  service as a director or there is a change in control of the
                  Company at the fair market value of the Company's common
                  stock. The member may receive a lump sum cash payment for the
                  value of the units or defer cash payments for a period of up
                  to ten years. At December 31, 2002 and 2001, 14,559 and 6,730
                  units, respectively, have been assigned to the members under
                  this plan. The fair market value of the units included in
                  other liabilities amounted to $203,800 and $94,200 at December
                  31, 2002 and 2001, respectively. The units are not considered
                  to be potential common shares.

NOTE 8. INCOME TAXES

                  Income tax expense consists of the following:

<TABLE>
<CAPTION>
                                                                                            YEARS ENDED DECEMBER 31,
                                                                                       -------------      -------------
                                                                                            2002               2001
                                                                                       -------------      -------------
                     <S>                                                               <C>                <C>
                     Current                                                           $     798,149      $     299,921
                     Deferred                                                               (342,077)          (133,232)
                                                                                       -------------      -------------
                             Income tax expense                                        $     456,072      $     166,689
                                                                                       =============      =============
</TABLE>


                                      F-13
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. INCOME TAXES

                  The Company's income tax expense differs from the amounts
                  computed by applying the federal income tax statutory rates to
                  income before income taxes. A reconciliation of the
                  differences is as follows:

<TABLE>
<CAPTION>
                                                                                           YEARS ENDED DECEMBER 31,
                                                                                       --------------------------------
                                                                                           2002                2001
                                                                                       -------------      -------------
                     <S>                                                               <C>                <C>
                     Income taxes at statutory rate                                    $     479,684      $     198,912
                     Nontaxable interest and other income                                    (49,507)                --
                     Other                                                                    25,895            (32,223)
                                                                                       -------------      -------------
                     Income tax expense                                                $     456,072      $     166,689
                                                                                       =============      =============

                     The components of deferred income taxes are as follows:
</TABLE>

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                       --------------------------------
                                                                                            2002               2001
                                                                                       -------------      -------------
                     <S>                                                               <C>                <C>
                     Deferred tax assets:
                       Loan loss reserves                                              $     738,573      $     495,169
                       Loan fees                                                             106,150             72,057
                       Preopening and organization expenses                                       --             59,333
                       Depreciation                                                           21,798             21,137
                       Deferred compensation                                                 123,252                 --
                                                                                       -------------      -------------
                                                                                             989,773            647,696
                                                                                       -------------      -------------

                       Deferred tax liabilities, securities available-for-sale               107,784             34,811
                                                                                       -------------      -------------
                       Net deferred tax assets                                         $     881,989      $     612,885
                                                                                       =============      =============
</TABLE>


                                      F-14
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9. RELATED PARTY TRANSACTIONS AND LEASES

                  The Company leases its main office banking facilities under a
                  noncancelable operating lease agreement from GBC Properties,
                  LLC, a partnership formed by the organizers of the Company.
                  The lease term is for fifteen years with the monthly rental
                  payment adjusting every fifth year for changes in the Consumer
                  Price Index. The Company also leases its branch facilities
                  under a noncancelable operating lease from a third party. The
                  initial lease term is for five years with the monthly rental
                  payment increasing every year by 3%. The lease also includes
                  two five-year extension terms. Both lease agreements require
                  the Company to pay normal operating and occupancy expenses of
                  the facilities. The total minimum rental commitments under the
                  leases at December 31, 2002 are due as follows:

<TABLE>
                       <S>                                                                              <C>
                         During the next five years                                                     $   1,990,680
                         During the remaining term of the leases                                            2,009,497
                                                                                                        -------------
                                                                                                        $   4,000,177
                                                                                                        =============

                       Total rental expense is summarized as follows:
</TABLE>

<TABLE>
<CAPTION>
                                                                                          YEARS ENDED DECEMBER 31,
                                                                                       ------------------------------
                                                                                            2002             2001
                                                                                       --------------   -------------
                       <S>                                                             <C>              <C>
                         GBC Properties, LLC                                           $      286,596   $     286,596
                         Other third parties                                                  117,865         111,743
                                                                                       --------------   -------------
                                                                                       $      404,461   $     398,339
                                                                                       ==============   =============
</TABLE>

NOTE 10. STOCK COMPENSATION PLAN

                  The Company has reserved 398,500 shares of common stock for
                  issuance to employees and directors under an incentive stock
                  option plan. The options granted are exercisable at a price
                  equal to fair value on the date of grant and expire ten years
                  from the grant date.

                  Other pertinent information related to the options is as
follows:

<TABLE>
<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                 -------------------------------------------------
                                                                           2002                     2001
                                                                 -----------------------   -----------------------
                                                                               WEIGHTED-                 Weighted-
                                                                                AVERAGE                   Average
                                                                               EXERCISE                  Exercise
                                                                   NUMBER       PRICE        Number       Price
                                                                 ----------   ----------   ----------   ----------
                     <S>                                         <C>          <C>          <C>          <C>
                     Under option, beginning of year               186,000    $   10.00      186,000    $   10.00
                        Granted                                     76,325        14.00           --           --
                        Exercised                                       --                        --           --
                        Terminated                                      --                        --           --
                                                                 ---------                 ---------
                     Under option, end of year                     262,325        11.16      186,000        10.00
                                                                 =========                 =========
                     Exercisable, end of year                      224,163        10.68      186,000        10.00
                                                                 =========                 =========

                     Weighted average fair value of
                        options granted during the year                            4.45                        --
</TABLE>


                                      F-15
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10. STOCK COMPENSATION PLAN (CONTINUED)

                  Information pertaining to options outstanding at December 31,
2002 is as follows:

<TABLE>
<CAPTION>
                                                           OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                                              ----------------------------------------------  ------------------------------
                                                                WEIGHTED-
                                                                 AVERAGE        WEIGHTED-                       WEIGHTED-
                                                                REMAINING        AVERAGE                         AVERAGE
                           RANGE OF              NUMBER        CONTRACTUAL       EXERCISE        NUMBER         EXERCISE
                       EXERCISE PRICES         OUTSTANDING         LIFE           PRICE        EXERCISABLE        PRICE
                   -------------------------  --------------  ---------------  -------------  --------------  --------------
                   <S>                        <C>             <C>              <C>            <C>             <C>
                       $10.00 - $14.00           262,325         8 years        $   11.16         224,163       $   10.68
</TABLE>

                  The fair value of each option grant is estimated on the date
                  of grant using the Black-Scholes option-pricing model with the
                  following weighted-average assumptions:

<TABLE>
<CAPTION>
                                                                                                           YEAR ENDED
                                                                                                          DECEMBER 31,
                                                                                                              2002
                                                                                                         ---------------
                        <S>                                                                              <C>
                        Dividend yield                                                                               0%
                        Expected life                                                                          10 years
                        Expected volatility                                                                       0.01%
                        Risk-free interest rate                                                                   3.86%
</TABLE>

NOTE 11. EARNINGS PER SHARE

                  Presented below is a summary of the components used to
calculate basic and diluted earnings per share.

<TABLE>
<CAPTION>
                                                                                           YEARS ENDED DECEMBER 31,
                                                                                       --------------------------------
                                                                                           2002                2001
                                                                                       -------------      -------------
                     <S>                                                               <C>                <C>
                     Basic Earnings Per Share:
                     Weighted average common shares outstanding                            1,680,884            956,106
                                                                                       =============      =============

                     Net income                                                        $     954,766      $     418,347
                                                                                       =============      =============

                     Basic earnings per share                                          $         .57      $         .44
                                                                                       =============      =============
</TABLE>


                                      F-16
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
                                                                                           YEARS ENDED DECEMBER 31,
                                                                                       --------------------------------
                                                                                           2002                2001
                                                                                       -------------      -------------
                     <S>                                                               <C>                <C>
                     Diluted Earnings Per Share:
                        Weighted average common shares outstanding                         1,680,884            956,106
                        Net effect of the assumed exercise of stock
                           options based on the treasury stock method
                           using average market prices for the year                           53,143             29,750
                                                                                       -------------      -------------
                        Total weighted average common shares and
                           common stock equivalents outstanding                            1,734,027            985,856
                                                                                       =============      =============

                        Net income                                                     $     954,766      $     418,347
                                                                                       =============      =============

                        Diluted earnings per share                                     $         .55      $         .42
                                                                                       =============      =============
</TABLE>

NOTE 12. COMMITMENTS AND CONTINGENCIES

                  LOAN COMMITMENTS

                     The Company is a party to financial instruments with
                     off-balance sheet risk in the normal course of business to
                     meet the financing needs of its customers. These financial
                     instruments include commitments to extend credit and
                     standby letters of credit. Such commitments involve, to
                     varying degrees, elements of credit risk and interest rate
                     risk in excess of the amount recognized in the balance
                     sheets.

                     The Company's exposure to credit loss in the event of
                     nonperformance by the other party to the financial
                     instrument for commitments to extend credit and standby
                     letters of credit is represented by the contractual amount
                     of those instruments. The Company uses the same credit
                     policies in making commitments and conditional obligations
                     as it does for on-balance sheet instruments. A summary of
                     the Company's commitments is as follows:

<TABLE>
<CAPTION>
                                                                                                DECEMBER 31,
                                                                                       --------------------------------
                                                                                            2002              2001
                                                                                       -------------      -------------
                     <S>                                                               <C>                <C>
                     Letters of credit                                                 $   3,732,872      $     910,190
                     Commitments to extend credit                                         66,067,474         40,306,684
                                                                                       -------------      -------------
                                                                                       $  69,800,346      $  41,216,874
                                                                                       =============      =============
</TABLE>

                     Commitments to extend credit are agreements to lend to a
                     customer as long as there is no violation of any condition
                     established in the contract. Since many of the commitments
                     are expected to expire without being drawn upon, the total
                     commitment amounts do not necessarily represent future cash
                     requirements.

                     Standby letters of credit are conditional commitments
                     issued by the Company to guarantee the performance of a
                     customer to a third party. Those letters of credit are
                     primarily issued to support public and private borrowing
                     arrangements. The credit risk involved in issuing letters
                     of credit is essentially the same as that involved in
                     extending loans to customers. Collateral is required in
                     instances which the Company deems necessary.


                                      F-17
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. COMMITMENTS AND CONTINGENCIES (CONTINUED)

                  CONTINGENCIES

                     In the normal course of business, the Company is involved
                     in various legal proceedings. In the opinion of management,
                     any liability resulting from such proceedings would not
                     have a material effect on the Company's financial
                     statements.

NOTE 13. CONCENTRATIONS OF CREDIT

                  The Company originates primarily commercial, residential, and
                  consumer loans to customers in Gwinnett County and surrounding
                  counties. The ability of the majority of the Company's
                  customers to honor their contractual loan obligations is
                  dependent on the economy in these areas.

                  Seventy-seven percent the Company's loan portfolio is
                  concentrated in loans secured by real estate, of which a
                  substantial portion is secured by real estate in the Company's
                  primary market area. Accordingly, the ultimate collectibility
                  of the loan portfolio is susceptible to changes in market
                  conditions in the Company's primary market area. The other
                  significant concentrations of credit by type of loan are set
                  forth in Note 3.

                  The Company does not generally extend credit to any single
                  borrower or group of related borrowers in excess of 25% of
                  statutory capital, or approximately $4,750,000.

NOTE 14. REGULATORY MATTERS

                  The Bank is subject to certain restrictions on the amount of
                  dividends that may be declared without prior regulatory
                  approval. At December 31, 2002, approximately $499,000 of
                  dividends could be declared without regulatory approval.

                  The Company and the Bank are subject to various regulatory
                  capital requirements administered by the federal banking
                  agencies. Failure to meet minimum capital requirements can
                  initiate certain mandatory, and possibly additional
                  discretionary actions by regulators that, if undertaken, could
                  have a direct material effect on the financial statements.
                  Under capital adequacy guidelines and the regulatory framework
                  for prompt corrective action, the Company and Bank must meet
                  specific capital guidelines that involve quantitative measures
                  of the assets, liabilities, and certain off-balance sheet
                  items as calculated under regulatory accounting practices.
                  Capital amounts and classification are also subject to
                  qualitative judgments by the regulators about components, risk
                  weightings, and other factors. Prompt corrective provisions
                  are not applicable to bank holding companies.

                  Quantitative measures established by regulation to ensure
                  capital adequacy require the Company and the Bank to maintain
                  minimum amounts and ratios of Total and Tier I capital to
                  risk-weighted assets, as defined, and of Tier I capital to
                  average assets, as defined. Management believes, as of
                  December 31, 2002 and 2001, the Company and the Bank met all
                  capital adequacy requirements to which they are subject.

                  As of December 31, 2002, the most recent notification from the
                  Federal Deposit Insurance Corporation categorized the Bank as
                  well capitalized under the regulatory framework for prompt
                  corrective action. To be categorized as well capitalized, the
                  Bank must maintain minimum Total risk-based, Tier I
                  risk-based, and Tier I leverage ratios as set forth in the
                  following table. There are no conditions or events since that
                  notification that management believes have changed the Bank's
                  category.


                                      F-18
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14. REGULATORY MATTERS (CONTINUED)

                  The Company and the Bank's actual capital amounts and ratios
are presented in the following table:

<TABLE>
<CAPTION>
                                                                                                             TO BE WELL
                                                                                       FOR CAPITAL       CAPITALIZED UNDER
                                                                                        ADEQUACY         PROMPT CORRECTIVE
                                                                   ACTUAL               PURPOSES         ACTION PROVISIONS
                                                            ---------------------  --------------------  -------------------
                                                             AMOUNT      RATIO      AMOUNT      RATIO     AMOUNT     RATIO
                                                            ----------  ---------  ----------  --------  ----------  -------
                                                                                (DOLLARS IN THOUSANDS)
                                                            ----------------------------------------------------------------
                     DECEMBER 31, 2002:
                     TOTAL CAPITAL TO RISK WEIGHTED ASSETS:
                     <S>                                    <C>         <C>        <C>         <C>       <C>         <C>
                        CONSOLIDATED                        $  23,362     13.70%   $  13,640        8%   $     N/A      N/A
                        BANK                                $  22,785     13.34%   $  13,640        8%   $  17,050      10%
                     TIER I CAPITAL TO RISK WEIGHTED
                     ASSETS:
                        CONSOLIDATED                        $  21,230     12.45%   $   6,820        4%   $     N/A      N/A
                        BANK                                $  20,611     12.09%   $   6,820        4%   $  10,230       6%
                     TIER I CAPITAL TO AVERAGE ASSETS:
                        CONSOLIDATED                        $  21,230     10.90%   $   7,789        4%   $     N/A      N/A
                        BANK                                $  20,611     10.58%   $   7,789        4%   $   9,737       5%

                     December 31, 2001:
                     Total Capital to Risk Weighted Assets:
                        Consolidated                        $  18,893     14.89%   $  10,148        8%   $     N/A      N/A
                        Bank                                $  18,744     14.78%   $  10,148        8%   $  12,685      10%
                     Tier I Capital to Risk Weighted
                     Assets:
                        Consolidated                        $  17,361     13.69%   $   5,074        4%   $     N/A      N/A
                        Bank                                $  17,212     13.54%   $   5,074        4%   $   7,611       6%
                     Tier I Capital to Average Assets:
                        Consolidated                        $  17,361     12.61%   $   5,508        4%   $     N/A      N/A
                        Bank                                $  17,212     12.50%   $   5,508        4%   $   6,885       5%
</TABLE>


                                      F-19
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. FAIR VALUE OF FINANCIAL INSTRUMENTS

                  The fair value of a financial instrument is the current amount
                  that would be exchanged between willing parties, other than in
                  a forced liquidation. Fair value is best determined based upon
                  quoted market prices. However, in many instances, there are no
                  quoted market prices for the Company's various financial
                  instruments. In cases where quoted market prices are not
                  available, fair values are based on estimates using present
                  value or other valuation techniques. Those techniques are
                  significantly affected by the assumptions used, including the
                  discount rate and estimates of future cash flows. Accordingly,
                  the fair value estimates may not be realized in an immediate
                  settlement of the instrument. SFAS No. 107, Disclosures about
                  Fair Values of Financial Instruments, excludes certain
                  financial instruments and all nonfinancial instruments from
                  its disclosure requirements. Accordingly, the aggregate fair
                  value amounts presented may not necessarily represent the
                  underlying fair value of the Company.

                  CASH, DUE FROM BANKS AND FEDERAL FUNDS SOLD: The carrying
                  amounts of cash, due from banks, and federal funds sold
                  approximate fair values.

                  SECURITIES: Fair values for securities are based on available
                  quoted market prices.

                  LOANS: For variable-rate loans that reprice frequently and
                  have no significant change in credit risk, fair values are
                  based on carrying values. For other loans, the fair values are
                  estimated using discounted cash flow analyses, using interest
                  rates currently being offered for loans with similar terms to
                  borrowers with similar credit quality. Fair values for
                  impaired loans are estimated using discounted cash flow
                  analyses or underlying collateral values, where applicable.

                  DEPOSITS: The carrying amounts of demand deposits, savings
                  deposits, and variable-rate certificates of deposit
                  approximate their fair values. Fair values for fixed-rate
                  certificates of deposit are estimated using a discounted cash
                  flow calculation that applies interest rates currently being
                  offered on certificates to a schedule of aggregated expected
                  monthly maturities on time deposits.

                  SECURITIES SOLD UNDER REPURCHASE AGREEMENTS: The carrying
                  amount of securities sold under repurchase agreements
                  approximate fair value.

                  ACCRUED INTEREST: The carrying amounts of accrued interest
                  approximate their fair values.

                  OFF-BALANCE SHEET INSTRUMENTS: Fair values of the Company's
                  off-balance sheet financial instruments are based on fees
                  currently charged to enter into similar agreements. Since the
                  majority of the Company's off-balance sheet instruments
                  consist of non fee-producing, variable-rate commitments, the
                  Company has determined they do not have a distinguishable fair
                  value.


                                      F-20
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

                  The carrying amounts and estimated fair values of the
Company's financial instruments were as follows:

<TABLE>
<CAPTION>
                                                                DECEMBER 31, 2002                  December 31, 2001
                                                         --------------------------------   --------------------------------
                                                            CARRYING           FAIR            Carrying           Fair
                                                             AMOUNT           VALUE             Amount           Value
                                                         ---------------  ---------------   ---------------  ---------------
                      <S>                                <C>              <C>               <C>              <C>
                      FINANCIAL ASSETS:
                         Cash, due from banks,
                            and federal funds sold       $   14,187,345   $   14,187,345    $    9,648,480   $    9,648,480
                         Securities available-for-sale       20,282,371       20,282,371         9,327,376        9,327,376
                         Loans                              157,991,765      162,163,000       120,625,643      123,217,887
                         Accrued interest receivable            982,359          982,359           879,494          879,494

                      FINANCIAL LIABILITIES:
                         Deposits                           174,783,453      177,000,000       125,924,309      127,503,961
                         Accrued interest payable               461,392          461,392           535,084          535,084
                         Securities sold under
                            repurchase agreements               541,214          541,214           585,997          585,997
</TABLE>

NOTE 16. SUPPLEMENTAL FINANCIAL DATA

                  Components of other operating income and expenses in excess of
1% of total revenue are as follows:

<TABLE>
<CAPTION>
                                                                                                YEARS ENDED DECEMBER 31,
                                                                                            ---------------------------------
                                                                                                  2002              2001
                                                                                            ---------------   ---------------
                         <S>                                                                <C>               <C>
                         Other operating income:
                            Mortgage origination fees                                       $      151,235    $      106,064
                            Gain on sale of loans                                                  152,277               -
                            Income on life insurance policies                                      141,851            84,084

                         Other operating expenses:
                            Professional and consulting                                            214,938           110,027
                            Data processing                                                        143,221           133,016
</TABLE>


                                      F-21
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. PARENT COMPANY FINANCIAL INFORMATION

                  The following information presents the condensed balance
                  sheets, statements of income and cash flows of GBC Bancorp,
                  Inc., as of and for the years ended December 31, 2002 and
                  2001.

                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                2002                2001
                                                                                          --------------     ---------------
                      <S>                                                                 <C>                <C>
                      ASSETS
                         Cash                                                             $      585,370     $       136,157
                         Investment in subsidiary                                             20,810,778          17,268,813
                         Other assets                                                             33,775              13,119
                                                                                          --------------     ---------------

                            Total assets                                                  $   21,429,923     $    17,418,089
                                                                                          ==============     ===============

                              TOTAL STOCKHOLDERS' EQUITY                                  $   21,429,923     $    17,418,089
                                                                                          ==============     ===============
</TABLE>

                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                                2002               2001
                                                                                          -------------       --------------
                      <S>                                                                 <C>                <C>
                      INTEREST INCOME                                                     $      19,365       $       23,173

                      EXPENSES, OTHER                                                            89,693               16,000
                                                                                          -------------       --------------

                             INCOME (LOSS) BEFORE INCOME TAX
                                 EXPENSE (BENEFIT) AND EQUITY IN
                                 UNDISTRIBUTED EARNINGS OF SUBSIDIARY                           (70,328)               7,173

                      INCOME TAX EXPENSE (BENEFIT)                                              (26,504)               2,707
                                                                                          -------------       --------------

                             INCOME (LOSS) BEFORE EQUITY IN UNDISTRIBUTED
                                 EARNINGS OF SUBSIDIARY                                         (43,824                4,466

                      EQUITY IN UNDISTRIBUTED EARNINGS
                         OF SUBSIDIARY                                                          998,590              413,881
                                                                                          -------------       --------------

                              NET INCOME                                                  $     954,766       $      418,347
                                                                                          =============       ==============
</TABLE>

                                      F-22


<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                               2002              2001
                                                                                         ---------------   ----------------
                      <S>                                                                <C>               <C>
                     OPERATING ACTIVITIES
                        Net income                                                       $     954,766     $      418,347
                        Adjustments to reconcile net income to net
                           cash provided by (used in) operating activities:
                           Equity in undistributed earnings of subsidiary                     (998,590)          (413,881)
                           Net other operating activities                                      (20,656)            70,112
                                                                                         -------------     --------------

                               Net cash provided by (used in) operating activities             (64,480)            74,578
                                                                                         -------------     --------------

                     INVESTING ACTIVITIES
                        Investment in subsidiary                                            (2,400,000)        (7,600,000)
                                                                                         -------------     --------------

                               Net cash used in investing activities                        (2,400,000)        (7,600,000)
                                                                                         -------------     --------------

                     FINANCING ACTIVITIES
                        Proceeds from sale of common stock                                   2,924,136          7,708,904
                        Stock offering costs                                                   (10,443)          (303,351)
                                                                                         -------------     --------------

                               Net cash provided by financing activities                     2,913,693          7,405,553
                                                                                         -------------     --------------

                     Net increase (decrease) in cash                                           449,213           (119,869)

                     Cash at beginning of year                                                 136,157            256,026
                                                                                         -------------     --------------

                     Cash at end of year                                                 $     585,370     $      136,157
                                                                                         =============     ==============
</TABLE>


                                      F-23